Citigroup Global Markets Realty is preparing to issue a non-agency jumbo mortgage-backed security next week, according to a preliminary term sheet provided to Inside Nonconforming Markets. The issuance would come just two weeks after Shellpoint Partners scrapped a planned jumbo MBS because of tepid investor demand. Blackstone is also offering the first securitization backed by rental proceeds from real estate owned properties and Freddie Mac is preparing its second non-agency risk-sharing transaction ...

JPMorgan Chase’s settlement with the Federal Housing Finance Agency regarding representation and warranty claims on non-agency mortgage-backed securities could prompt large settlements by other banks, according to industry analysts. Chase agreed last week to pay $4.0 billion to settle claims on $33.8 billion of non-agency MBS purchased by Fannie Mae and Freddie Mac. The securities were issued between 2004 and 2007 by Chase, Bear Stearns and Washington Mutual. The settlement sets a “relatively high bar” for ...

FY 2013 Actuarial Report to Congress on the State of the MMIF Delayed. Release of the FY 2013 actuarial audit of the FHA Mutual Mortgage Insurance Fund will be delayed because of the recent government shutdown, according to a government source. No other details were provided. The FHA recently notified Congress that it would seek a mandatory appropriation of approximately $1.7 billion to bolster its capital reserves for expected future losses. FHA officials said the draw does not suggest anything dire but is simply a matter of ...

Shellpoint Partners this week pulled the plug on its second jumbo non-agency MBS issuance of the year and will instead sell the mortgages as whole loans. Shellpoint Asset Funding Trust 2013-2 was initially offered as a $308.64 million deal in September. The company then reduced the offering to a $250.85 million securitization with a number of tweaks aimed at attracting investors. In the end, the company couldn’t structure...

The securitization of income-property mortgages in 2013 remains on track to be the best year since the financial market meltdown, but new issuance dropped sharply during the third quarter. A total of $33.16 billion of commercial MBS – including agency MBS backed by multifamily mortgages – were issued during the third quarter of 2013, a new Inside MBS & ABS analysis reveals. That was down 24.5 percent from the second quarter, but it brought year-to-date issuance to $123.89 billion, just shy of the total securitized in all of 2012. Commercial mortgage securitization through the first nine months of 2013 was...[Includes one data chart]

Building on both GSEs’ recent risk-sharing transactions to achieve the Federal Housing Finance Agency’s $30 billion 2013 Conservatorship Scorecard target, the head of the FHFA said this week to expect more of the same as well as additional risk-sharing innovations. In a speech at the Bipartisan Policy Center, FHFA Acting Director Edward DeMarco said that Fannie Mae and Freddie Mac, in concert with the Finance Agency, are “planning for the scope and depth of risk-sharing transactions to continue and expand.”

Lenders continue to originate non-agency jumbo mortgages, but few are likely to be securitized in the coming months due to more favorable economics for banks retaining the loans in portfolio. Longer term, many investors suggest they won’t return to the non-agency mortgage-backed security market until issuers standardize their offerings. The ABS East conference sponsored by Information Management Network last week in Miami presented a tale of two markets: jumbo MBS and everything else ...

Fannie Mae priced its first capital markets risk-sharing transaction this week, attracting even more investors than those that initially bought into a similar transaction from Freddie Mac. While non-agency mortgage-backed security investors haven’t shown significant interest in jumbo MBS recently, many are looking toward the government-sponsored enterprises’ risk-sharing deals. “There is voracious investor demand for risk-sharing,” said Randal Johnson, a director in the structured credit group at Deutsche Bank ...

The Department of Housing and Urban Development’s proposed “qualified mortgage” rule attaches certain conditions to QM treatment that may complicate matters for participating lenders, said attorneys with K&L Gates in Washington, DC. On Sept. 30, the Department of Housing and Urban Development published its own proposed QM rule for FHA loans. The CFPB rule takes effect on Jan. 14, 2014, and will apply to FHA loans until HUD issues a final rule. Under the CFPB rule, many FHA loans would not qualify for the rule’s safe harbor because the higher mortgage insurance premiums would make them “higher priced mortgage loans.” Thus, in order to ...

The U.S. Court of Appeals for the First Circuit has affirmed a district court’s dismissal of a putative class action alleging that a lender improperly required FHA borrowers to buy and maintain higher flood insurance coverage than that indicated in their mortgage contracts. According to an analysis by the Washington law firm BuckleySandler, the ruling from an equally divided en banc court allows mortgage lenders to require borrowers to maintain flood insurance equal to the replacement value of their homes. In Kolbe v. BAC Home Loans Servicing, LP, No. 11-2030, 2013 WL 5394192 (1st Cir. Sept. 27, 2013), plaintiff Stanley Kolbe contends ...