Purchase-mortgage originations jumped 44.3 percent from the first quarter of 2014 to the second quarter, according to a new Inside Mortgage Finance analysis and ranking, with first-time homebuyers representing about 43.9 percent of agency activity in the sector. Purchase mortgages accounted for 64.1 percent of total mortgage production during the second quarter. That’s the highest purchase share since 1995, when financing for home purchases represented 67.2 percent of total originations. At the midway point of 2014, purchase-mortgage originations were up...[Includes four data charts]

Among the many challenges associated with the Consumer Financial Protection Bureau’s pending integrated disclosure rule is expanded legal liability for lenders based on the more threatening Truth in Lending Act, as opposed to the more palatable liability framework of the Real Estate Settlement Procedures Act. During a webinar sponsored last week by Inside Mortgage Finance, Rich Horn, a partner with the Dentons law firm and one of the architects of the rule while a regulator at the CFPB, noted there is no private right of action for integrated disclosures under RESPA. On the other hand, with TILA liability, “there is...

The recent adoption by the Securities and Exchange Commission of its Regulation AB II disclosure rule is expected to be a “credit positive” for the auto loan and lease ABS sector, but it probably will also raise costs for market participants and, ultimately, consumers, according to an industry consensus of the new rule. The new regulatory regime mandates standardized loan-level disclosures for ABS backed by auto loans and leases, as well as other classes, as reported previously. The loan-level data have to be provided on the SEC’s free online database known as the EDGAR system. Although specific data requirements vary by asset class, the new asset-level disclosures generally will include...

A former analyst at Moody’s Ratings has accused the credit rating agency of complicity in the financial meltdown in 2008, while a federal judge in Texas dismissed a government lawsuit against major banks involving non-agency MBS because it was filed too late. In his 2012 whistleblower lawsuit against Moody’s, Ilya Kolchinsky, a former analyst with the firm, alleged that the rating service issued inflated ratings, often “Aaa,” to most risky residential MBS and collateralized debt obligations it reviewed from 2004 to 2007. The lawsuit was brought...

MBS industry observers had hoped that federal banking regulators would clear up any confusion about the treatment of collateralized mortgage obligations and real estate mortgage investment conduits when they finalized new liquidity coverage ratio rules last week. The regulators gave some hints, but did not spell out a position. The rubber will meet the road when examiners start going over individual banks’ portfolios for compliance with the LCR rule, which requires banks to maintain sufficient quantities of highly liquid assets to meet their cash needs in a financial emergency. The final rule classifies...

Investors are paying up for distressed mortgages these days, fueling talk that the market might see more in the way of securitizations. “Buyers of non-performing loans want to securitize,” said Brian Dunn, senior vice president of MountainView Capital Group. “They like the [real estate mortgage investment conduit] structure.” According to Dunn, the securitization of nonperforming mortgages “has taken off...

Redwood Trust’s planned $329.95 million jumbo mortgage-backed security is the second straight MBS from the issuer to have adequate geographic diversity, according to Fitch Ratings. Almost every jumbo MBS issued since 2010 has taken a hit from default expectations and had higher credit enhancement because of geographic concentration. Sequoia Mortgage Trust 2014-3 is scheduled to be issued around Sept. 19. Fitch, Kroll Bond Rating Agency and Moody’s Investors Service gave the deal preliminary triple-A ratings with credit enhancement of 6.55 percent on the top-rated tranche. The credit enhancement level is one of the lowest in recent years on jumbo MBS backed by 30-year fixed-rate mortgages. It is particularly low considering that due diligence was completed on less than 100 percent of the loans, and the MBS will include two loans that do not meet standards for qualified mortgages.

Issuers of non-agency MBS and commercial MBS, among other structured finance asset classes, are set to face increased costs to comply with a rule from the Securities and Exchange Commission that increases disclosure requirements. But deals that are not issued publicly would avoid the increased costs. Last week, the SEC unanimously adopted a wide-ranging final rule known as Reg AB2, which was first proposed in 2010. By the beginning of 2017, newly issued, publicly registered non-agency MBS will have to include 270 loan-level data points disclosed via the SEC’s Electronic Data Gathering, Analysis, and Retrieval system, known as EDGAR. The required disclosures include...

New production of agency single-family MBS increased by 6.6 percent from July to August as the midyear home-buying season continued to generate a healthy supply of new primary market originations, according to a new Inside MBS & ABS analysis. Mortgage lenders last month pushed a total of $90.95 billion of single-family MBS through the securitization programs of Fannie Mae, Freddie Mac and Ginnie Mae. It was the biggest monthly volume since September 2013, but August issuance was boosted by an unusually large volume of seasoned loans that also helped tilt the competitive landscape. Freddie saw...[Includes two data charts]

The rating services are set for increased oversight after the Securities and Exchange Commission approved a final rule addressing internal controls, conflicts of interest and procedures in an attempt to protect the integrity of rating methods. The SEC approved the final rule on a 3-2 vote last week, with the two Republican commissioners voicing strong opposition to provisions required by the Dodd-Frank Act. Among other issues, the final rule aims at preventing sales and marketing considerations from influencing the issuance of credit ratings on structured finance products. Under the rule, rating services are prohibited from issuing or maintaining a credit rating when a person within the rating service that participates in determining or monitoring the rating also participates in sales or marketing of a product or service of the rating service or an affiliate. The rule also targets...