Redwood Trust issued a $320.34 million non-agency jumbo MBS this week, its fifth of the year. The security looks a lot like other recent MBS from Redwood and officials at the real estate investment trust are optimistic about future non-agency MBS issuance. Sequoia Mortgage Trust 2012-5 received AAA ratings with credit enhancement of 7.30 percent on the highest rated tranche. Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service all placed ratings on Redwood’s latest MBS issuance. The main concerns from the rating services regarding Redwood’s latest MBS have been raised...

Optimism in the non-agency MBS market’s recent extraordinary performance continues as investors look beyond legacy MBS to new transactions, such as Redwood Trust’s Sequoia jumbo securitizations, according to analysts. A recent analysis by Bank of America Merrill Lynch expects lower-yielding asset classes to push investors toward the non-agency MBS sector, where volumes are expected to remain at healthy levels for the rest of 2012. Analysts, however, noted...

Just two institutions – Fannie Mae and Freddie Mac – end up securitizing the vast majority of conventional home loans, but a large universe of lenders deliver a significantly diverse supply of loans to the government-sponsored enterprises. A new Inside Mortgage Finance special report based on loan-level securities disclosures reveals that 1,848 different institutions delivered single-family mortgages to the two GSEs during the third quarter. They ranged in size from Wells Fargo, which delivered nearly a quarter of mortgages securitized by Fannie and Freddie during the period, to Wisconsin-based Universal Mortgage Corp., which sold one small $39,000 loan to Fannie during the period. The report, GSE Seller Profile: 3Q12, shows...

PNC Bank has sued Republic Mortgage Insurance Co. for refusing to pay claims and attempting to rescind coverage on thousands of legacy mortgage loans that came with the bank’s acquisition of National City Corp. in 2008. In a complaint filed in federal district court in Pittsburgh last week, PNC Bank alleged that the North Carolina mortgage insurer refused to honor coverage it sold to National City under a “flow” policy and “pooling” policy between 1989 and 2005 by increasing its rescissions and cancellations. The flow policy provided...

Unanticipated complications with the Dodd-Frank Act appear to have caused Fannie Mae and Freddie Mac to miss a Sept. 30 deadline set by the Federal Housing Finance Agency to initiate risk-sharing transactions with non-agency investors. However, FHFA officials said they continue to work with the government-sponsored enterprises on the issue. “Risk sharing is a complex process that requires time to assess market opportunities, structural considerations, make operational changes, and develop proper risk metrics and controls,” an FHFA spokesman said. “We are moving forward steadily and expect to continue making progress in the coming months.” FHFA officials would not comment...

New issuance of single-family MBS by Fannie Mae, Freddie Mac and Ginnie Mae jumped by 16.9 percent from the second quarter of 2012 to the third quarter, according to a new market analysis and ranking by Inside MBS & ABS. The three agencies issued a total of $436.0 billion of single-family MBS during the third quarter, raising year-to-date issuance to $1.194 trillion. That was up 45.6 percent from the first nine months of 2011. Over half (50.3 percent) of the agency production in 2012 has come...[Includes one data chart]

Some of the major players in what is likely to develop as the real estate owned rental securitization market are still unsure about how exactly the market will develop. However, investor interest in the REO rental sector is strong, even if securitizations will not receive AAA ratings. At a seminar this week hosted by the American Securitization Forum, Suzanne Mistretta, a senior director at Fitch Ratings, confirmed that the rating service will not give initial REO rental securitizations anything higher than a single-A rating. Fitch and others have been approached...

Federal banking regulators, striving to keep their bank oversight current with international regulators through the adoption of the Basel III capitalization standards, are facing growing domestic resistance, including that of some of their state-based counterparts, who are concerned about the impact on mortgage assets. Greg Gonzales, chairman of the Conference of State Bank Supervisors, said last week that the organization strongly supports federal banking agencies’ efforts to improve capital standards internationally and for systemic institutions, but is opposed to their proposed approach to implement the Basel III capital accord and to incorporate a standardized approach for risk-weighted assets. “As bank supervisors, we believe...

A National Association of Insurance Commissioners proposal for more conservative ratings of insurer holdings of residential and commercial MBS could result in higher risk-based capital requirements on some of these securities, warned analysts. As the proposal currently stands, the changes involve increasing the probability weights assigned to more pessimistic economic scenarios. However, the method by which the economic scenarios are created will not change, according to Barclays Capital analysts monitoring the work of NAIC’s Valuations of Securities Task Force, which was assigned to develop the risk-based capital proposal for insurers’ CMBS and RMBS holdings. The proposed peak-to-trough economic scenarios for RMBS and CMBS consist...

Current efforts by numerous firms to establish a non-agency market for real estate owned rental securitizations are worthwhile, based on investor interest in the emerging sector. Investors are skeptical of REO rental assets but also willing to participate in the market, even without AAA ratings. “We look forward to being part of the discussions with issuers, investors and operators,” Youriy Koudinov, a director at TIAA-CREF, said this week during a seminar hosted by the American Securitization Forum. “As prudent ...