The Structured Finance Industry Group has proposed investor-friendly standards for non-agency mortgage-backed securities in an effort to increase activity in the sector. The first “green paper” on Project RMBS 3.0 focuses on representations and warranties, triggers for independent reviews and disclosure of underwriting guidelines. “The goal here is to produce a proposal for standards that we would hope the industry adopts,” said Richard Johns, SFIG’s executive director ...

Morgan Stanley was set to issue its first jumbo mortgage-backed security since the financial crisis this week. The $256.48 million deal differs from most jumbo MBS issued in recent years in that all the loans were sourced from one lender, and they’re all adjustable-rate mortgages, including a fair number of interest-only loans. Morgan Stanley Residential Mortgage Loan Trust 2014-1 was scheduled to close Aug. 15. Fitch Ratings and Standard & Poor’s gave the deal ...

Moody’s Investors Service this week announced a proposed update to its rating criteria for jumbo mortgage-backed securities. Under the proposed criteria, collateral modeling will be based on a new version of Moody’s Individual Loan Analysis tool as opposed to the portfolio analysis tool Moody’s has used since 2008. Navneet Agarwal, a managing director at Moody’s, said the proposed changes set “a new standard for transparency” ... [Includes six briefs]

Two industry trade groups expressed support for consolidating Ginnie Mae’s mortgage-backed securities program and creating a new MBS but they are at loggerheads on some of the details. Commenting on the Ginnie Mae proposal, the Securities Industry and Financial Markets Association (SIFMA) and the Mortgage Bankers Association (MBA) said the disagreements are mostly on how to resolve issues related to winding down the Ginnie Mae I MBS program and providing a conversion option for existing securities. “It is clear that further discussion is warranted, and direct engagement with key stakeholders should be beneficial,” the trade groups suggested. Ginnie Mae has received considerable support from a variety of industry players for its “straw man” proposal to shift to a single MBS program based on the existing Ginnie II. The program now accounts for more than 90 percent of all ...

A number of mortgage finance industry groups have expressed concern about how the CFPB’s ability-to-repay rule is interfering with the return of private investor capital back into the sector – mostly because of the rule’s assignee liability provisions. The industry comments came in response to a request from the Treasury Department in June for suggestions to encourage private capital to return to the non-agency mortgage-backed securities space. The Association of Institutional Investors said the ATR rule’s assignee liability provision “unfairly punishes investors who have nothing to do with the origination of loans and oftentimes have limited insight into the origination practices.” The assignee liability provision therefore introduces a risk that is almost impossible to price for those not directly involved in ...

The Structured Finance Industry Group this week proposed the first in a planned long line of standards aimed at increasing transparency for non-agency MBS investors and boosting new issuance. The first edition in the SFIG’s series of “green papers” covers certain representations and warranties, triggers for repurchase, due diligence and communication with investors. Richard Johns, SFIG’s executive director, said about 200 individuals from about 50 organizations involved in the non-agency MBS market have participated in Project RMBS 3.0. “The goal here is...

Fannie Mae, Freddie Mac and Ginnie Mae combined to produce $85.33 billion of single-family MBS in July, up 11.6 percent from the previous month, according to a new Inside MBS & ABS market analysis and ranking. July was the fourth straight monthly increase in agency MBS issuance after the market hit a 14-year low in March of this year. On a year-to-date basis, production was off 54.3 percent from the first seven months of 2013, and it will take a significant increase in issuance over the next five months for the market to hit the $1 trillion mark by the end of this year. All three agencies posted...[Includes two data charts]

Officials at Ocwen Financial announced late last week that the company plans to use its clean-up call option on loans backing vintage non-agency MBS that it services. Officials see strong profits in paying off non-agency MBS investors at par and then liquidating real estate owned properties whose loans were included in non-agency MBS. “The opportunity results from the arbitrage of the underlying loans in REO being worth more than the securities,” William Erbey, Ocwen’s executive chairman, said during the servicer’s earnings call for the second quarter of 2014. “In other words, the whole is worth less than the sum of the parts.” He said...

Mortgage trustees are still awaiting state court approval of a $4.5 billion settlement with JPMorgan Chase in relation to faulty residential MBS issued by the bank and the now-defunct Bear Stearns between 2005 and 2008. If approved by the New York State Supreme Court, the agreement would resolve representation and warranty claims as well as servicing claims related to loans in 330 mortgage securitization trusts, as well as claims over document delivery. In addition, the bank agreed to change its servicing procedures with respect to mortgage loans in the trusts. The proposed settlement does not resolve...

Intercontinental Exchange (ICE), a global network of exchanges and clearing houses and a top energy trader, is reportedly seeking to gain a foothold in the mortgage market via the Mortgage Electronic Registration System (MERS). ICE is negotiating a partnership agreement with MERSCorp Holdings, parent company of MERS, as part of its plan to add mortgages to its primary derivatives business, Bloomberg reported recently. Both ICE and MERS declined to comment on the story. According to the report, the Atlanta-based ICE has been studying...