All three mortgage-production channels generated solid increases in new origination volume during the third quarter of 2014, but the correspondent market had a measurably bigger gain, according to a new Inside Mortgage Finance ranking and analysis. An estimated $105 billion of home loans were produced by correspondent originators during the third quarter, up 14.1 percent from the previous quarter. That lifted the correspondent share of new originations to 30.4 percent for the quarter, and 30.3 percent on a year-to-date basis. Correspondents are...[Includes four data charts]

Bank and thrift holdings of non-mortgage ABS hit a record $184.16 billion at the end of September, according to a new Inside MBS & ABS ranking and analysis. That represented a significant 7.6 percent increase in bank ABS investment in just one quarter. But the sharp increase in industry holdings was fueled by a massive acquisition of credit card ABS by TD Bank, the U.S. operation of the Canadian-based Toronto-Dominion Bank. TD Bank reported...[Includes one data chart]

Two large banks got a break recently as the Securities and Exchange Commission agreed to grant penalty relief to one bank while a New York federal judge dismissed certain claims against the second bank because they were overly speculative. In the first case, the SEC cleared the way for Bank of America to close a $16.7 billion global settlement after SEC commissioners voted to waive additional sanctions that would have taken effect when the settlement is entered into court, according to a report by Bloomberg. The commission agreed...

The most significant blockages to the return of a healthy and sustainable non-agency residential MBS market in the United States are low volume issuance, regulation, weak AAA demand and missing structural reforms, according to top market professionals. “What’s holding back the recovery?” asked Rui Pereira, managing director at Fitch Ratings, during a panel discussion at a residential MBS reform symposium sponsored by the Structured Finance Industry Group and Information Management Network in New York City earlier this month. “Other sectors have rebounded and we’re starting to see new asset classes emerge. And yet, we’re seeing very little momentum in our market. So the question is, what’s stalling the RMBS recovery?” In the run-up to the discussion, Pereira polled...

In the wake of the Federal Reserve’s announced end to its multi-part quantitative easing program, look for private investors to face a number of challenges when it comes to increasing their share of the MBS market, concluded a white paper by the Mortgage Bankers Association. The MBA paper, issued late last week, noted there is no single player waiting in the wings able to pick up the slack when the Fed relinquishes its role as the dominant purchaser of agency MBS. “Many of the potential private investors face...

Recent court rulings in Washington, DC, and Nevada allowed foreclosures brought by homeowner associations over unpaid dues to extinguish mortgage liens, increasing the risk of loss for investors in non-agency MBS and single-family rental securitizations, according to Moody’s Investors Service. Although both jurisdictions are relatively small in the grand scheme of things, other courts could adopt the same interpretations, the rating service said. Nevada has already seen some 1,000 similar cases, and more homeowner and condo associations are like to bring similar lawsuits. In Nevada, the court decided...

Banks and thrifts held a combined $1.535 trillion of residential MBS at the end of September, a modest 0.6 percent increase from the previous quarter, according to a new Inside MBS & ABS analysis of bank call reports. Bank MBS holdings had spiked higher in the first quarter of this year, only to fall back in the following period. Compared to a year ago, the industry’s aggregate MBS portfolio was up 1.4 percent. Bank and thrift MBS holdings first crossed...[Includes two data charts]

The Federal Reserve Bank of New York announced this week that it selected three firms to participate in a pilot project to expand agency MBS sellers beyond the large primary dealers that work with the NY Fed. The pilot will last for about one year and the firms will participate as counterparties on the Open Market Trading Desk along with primary dealers in the Desk’s agency MBS operations. Brean Capital, Loop Capital Markets and Mischler Financial Group were selected to participate in the Mortgage Operations Counterparty Pilot Program, which was announced in August. The NY Fed didn’t disclose the number of firms that applied for the pilot but noted that the intent was always to work with a small number of firms to speed the pilot and keep costs low for the NY Fed. The pilot program participants are set...

The benchmark non-agency mortgage-backed security that the Treasury Department is organizing will vary significantly from recent non-agency MBS. Michael Stegman, counselor on housing finance policy to the Treasury, revealed new details about the planned transaction last week in New York City at the Private-Label RMBS Symposium hosted by the Structured Finance Industry Group and Information Management Network. Stegman said the benchmark non-agency MBS will ideally be ...

As leading figures in the secondary market continue their efforts to reboot the non-agency mortgage-backed securities sector, attracting private capital remains the single most critical factor in the equation. However, during a recent industry conference, institutional investors made it clear that in order for them to return, the market’s infrastructure will need to provide stronger protections, enhanced transparency and an improved ability to respond when a deal starts to go sour ...