Lloyds Banking Group was able to sell a sizable portfolio of vintage non-agency MBS this week at attractive prices. Additional sales of vintage non-agency MBS are expected as a strong housing market and demand from investors has pushed prices above the marks some institutions had placed on their holdings. Last week, Lloyds offered a bid list of $8.7 billion in non-agency MBS, largely non-investment grade, on an all-or-nothing basis. The British financial institution said the sale will close this week for a cash consideration of $5.05 billion, 22.3 percent higher than the book value that Lloyds had assigned the assets. “While Lloyds’ book value may not be...

At first, residential origination volumes were slow at Citadel Loan Servicing Corp., a new player in a lonely market: nonprime production. But that was two months ago, when the Irvine, CA-based company first opened its doors. “People are finally calling us,” said Dan Perl, CEO of the privately held nonbank. By the time June ends, the company will have funded almost $6 million for the month, maybe as much as $8 million. The origination numbers, of course, are miniscule compared to monthly conventional volume, but in the “new” nonprime space Citadel is probably doing more business than the two-dozen or so nonprime or hard money lenders that are quietly toiling away in selected markets. For the industry to revive...

Sallie Mae’s recently announced plan to split into two publicly traded companies isn’t leaving analysts at ratings services or Wall Street firms with much to cheer about on multiple fronts. In late May, the Sallie Mae board of directors authorized newly appointed CEO John Remondi to press ahead with plans to split the company’s existing businesses into two publicly traded entities – a new education loan management firm, known as NewCo, and a consumer banking company, to be known as Sallie Mae Bank. The board’s stated intention with the move, talked about since at least as early as 2010, is...

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the first quarter of 2013, with a negligible decrease from the previous quarter, while a number of FHLBanks indicated no plans to sell the riskier non-agency MBS in their portfolios. A new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency found overall MBS investments for the dozen FHLBanks declined 1.0 percent to $137.14 billion between the fourth and first quarters. However, non-agency MBS, which made up 18 percent of the total FHLBank system’s share of MBS during the first three months of this year, fell to $24.69 billion as of March 31, 2013. This was down 2.9 percent from the fourth quarter of 2012 and down 13.5 percent from $28.52 billion from the same period a year ago.

A few weeks back, Flagstar Bank sold roughly $12 billion in mortgage servicing rights in a private transaction for an undisclosed sum. To date, the sale has not been disclosed but that isn’t stopping players in the MSR market from talking about the transaction as well as rumors that Flagstar, at one time, was contemplating selling upwards of $70 billion of MSR. A source close to the deal said that Flagstar was definitely contemplating a large MSR transaction late last year “but tabled it.” A spokeswoman for the bank declined to comment. If Flagstar had unloaded...

JPMorgan Chase is set to issue a unique jumbo MBS, its second of the year, that will include originations from 20 different lenders that far outweigh the company’s contributions to the deal. Another bank, EverBank, this week took steps to issue its second jumbo deal of 2013 as well. Since 2008, big banks have largely held their non-agency jumbo originations in portfolio, seeing better execution than non-agency MBS issuance. However, strong demand from non-agency MBS investors and a desire to shrink mortgage exposure has prompted Chase to resume issuing jumbo MBS. Chase declined...

Bank and thrift holdings of non-mortgage ABS declined slightly in the first quarter of 2013, but remained well above a year ago, according to a new Inside MBS & ABS ranking and analysis. Banks and thrifts held $163.7 billion of ABS in portfolio as of the end of March, off 0.5 percent from the previous quarter. But early 2013 holdings were up 9.0 percent from the first quarter of last year, including increases in most ABS categories. The call-report ABS data include...[Includes one data chart]

The amount of non-agency MBS held by the 12 Federal Home Loan Banks continued its steady decline during the first quarter of 2013. Non-agency MBS investments by the FHLBanks came to $24.69 billion as of March 31, 2013, down 2.9 percent from the fourth quarter of 2012 and off 13.5 percent from $28.52 billion in the same period a year ago. Non-agency MBS made up...[Includes one data chart]

The new non-agency jumbo mortgage-backed security from JPMorgan Chase has been described as both encouraging and puzzling by non-agency participants. The $442.54 million non-agency MBS shows that Chase thinks the non-agency securities market – largely the domain of nonbanks since 2010 – is strong enough for the bank to issue its second jumbo security this year. Non-agency MBS participants have welcomed the competition, noting that activity from a big bank such as Chase could prompt greater ...

Two years after being announced, a judge is set to rule on Bank of America’s proposed $8.5 billion settlement involving non-agency mortgage-backed securities. The ruling will set a precedent for other non-agency MBS issuers facing repurchase requests, according to industry analysts. “Either the deal goes through and becomes a template for how to extract oneself from this mess, or it gets rejected and signals that far more pain is coming down the pike,” said Isaac Gradman ...