Will the banks that bought “junior” preferred stock in Fannie Mae and Freddie Mac prior to the housing bust ever be made whole? Will investors that purchased the preferred after that time eventually be rewarded for the gamble they took on such a highly speculative investment? Those two questions look a lot more interesting these days thanks to continued strong earnings from the two government-sponsored enterprises. According to filings with the Securities and Exchange Commission, Fannie and Freddie say...

Investors and analysts are starting to wonder if Nationstar Mortgage bit off more than it could chew with its multi-billion dollar servicing purchases of the past two years. Sources say the company recently hired PricewaterhouseCoopers as a consultant to look at its quickly growing $375 billion servicing portfolio. A spokesman for the company dismissed...

After a relatively strong first eight months of the year, no jumbo MBS were issued in September or October. Although investor interest seems tepid, the market is showing signs of life as Citigroup issued its first post-crisis jumbo MBS this week, and Redwood Trust offered its first jumbo deal since August. The activity comes just weeks after Shellpoint Partners tried twice to sell a jumbo MBS, eventually pulling the deal and opting for a whole-loan sale. Pricing for jumbo MBS has improved enough for Citi and Redwood to test the market, and investors have also shown strong interest in other recent non-agency offerings. The $209.95 million Citigroup Mortgage Loan Trust 2013-J1 received...

Further declines in refinance activity and some softening in home-purchase lending pushed agency single-family MBS production down to just $93.57 billion in October, according to a new ranking and analysis by Inside MBS & ABS. October was the first month since September 2011 that agency MBS issuance fell below the $100 billion mark. Production last month was down 12.3 percent from September, and it represented the sixth consecutive monthly decline. There was...[Includes two data charts]

The non-agency mortgage market is expected to take the brunt of the changes prompted by the Consumer Financial Protection Bureau’s new ability-to-repay rule and requirements for qualified mortgages. However, two months before the rule takes effect, the rating services haven’t released guidelines for how non-QMs will be rated, prompting issuers to be cautious with plans for non-QMs. Kroll Bond Rating Agency was the only rating service to offer details to Inside MBS & ABS in response to questions about ratings for non-agency MBS once the QM requirements take effect. Glenn Costello, a senior managing director at KBRA, said the securitization of non-QM loans will require additional credit enhancement relative to QMs. DBRS and Standard & Poor’s declined...

The Federal Housing Finance Agency spent the last two weeks racking up several legal settlements in its massive litigation action against some of the nation’s financial institutions. Look for more to come predict industry analysts. On Oct. 25, JPMorgan Chase agreed to pay $4.0 billon to settle claims on $33.8 billion of non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac issued $67.7 billion in single-family mortgage-backed securities during the month of October, a 13.8 percent decline from September but a 4.6 percent rise for the first 10 months of 2013, according to a new Inside The GSEs analysis. October’s decline was less steep than September’s 20.0 percent month-to-month fall off in MBS.Top-ranked Wells Fargo’s Fannie and Freddie securitization at $11.6 billion fell both on monthly and year-to-date bases by 27.0 percent and 23.3 percent respectively. [Includes one data chart.]

A few weeks back, many servicing brokers were predicting a land rush to close deals by year-end, but there’s a new school of thought that predicts sellers might wait until early 2014 to unload some of their deals. “While we don’t expect the [mortgage servicing rights] deal flow to turn off completely for 2013 just yet, we have noticed quite a slowdown in the marketplace as compared to the summer and early fall,” said George Christo, executive vice president of The Prestwick Group. “Many of our conversations with buyers and sellers have pivoted to setting the table for the first quarter of 2014 settlements.” Moreover, the frothy prices being offered for MSRs are...

It was pretty much stimulus as usual at the Federal Open Market Committee this week, as the Fed showed not the slightest indication of when it would begin winding down the third phase of its quantitative easing program, known informally as QE3 when it was first unveiled, but increasingly referred to as QE Infinity by those who emphasize its long, drawn-out nature. The status quo results mean the Fed will continue adding to its agency MBS portfolio at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month, and keep plowing its principal payments from its agency debt and MBS holdings back into agency MBS and rolling over maturing Treasury securities at auction. Among those voting in favor of keeping the Fed’s pedal to the metal were...

The jumbo MBS market is frozen because investors in the AAA tranches are scarce and still lack confidence in the product following the housing bust and the ensuing tidal wave of litigation swamping issuers and underwriters. According to MBS pioneer Lewis Ranieri, there’s only one to fix the problem: give investors more information on the deals. At a speech this week during the annual convention of the Mortgage Bankers Association, Ranieri, the chairman and CEO of Shellpoint Partners, noted...