One large fixed income investor is working with clients now to make sure they’re prepared to invest in the new single security when it rolls out next summer. Western Asset Management is advising investors to consider aggregating their mortgage concentration and exposure limits for the uniform MBS that Fannie Mae and Freddie Mac will issue in the to-be-announced market.

An affiliate of Verus Mortgage Capital revised the structure of a planned non-agency mortgage-backed security, opting for a more traditional approach after initially planning to test a unique variation. The planned closing date for the $442.3 million issuance was also pushed back. When presale reports for Verus Securitization Trust 2018-3 were published in mid-October, the deal was structured with an initial pro rata structure that would shift to a sequential structure. The MBS ...

Ginnie Mae officials would welcome a return of commercial banks to the program, but they are not planning on it. Instead, the agency is looking the other way: at expanding financing options for nonbank portfolios of mortgage servicing rights. The current version of Ginnie’s acknowledgement agreement has been successful, enabling nonbank servicers to arrange MSR financing for virtually their entire portfolios, said Michael Drayne, a senior vice president at Ginnie, during the Residential Mortgage Finance Symposium sponsored by the Structured Finance Industry Group this week in New York. Although a number of banks are financing nonbank servicing portfolios, many are still not participating, he said. Karen Gelernt, a partner at Alston & Bird, noted that many banks continue to have anxiety about what will happen if a servicer defaults on its Ginnie requirements. Speaking as moderator on a panel with ...

Certain potential changes could materially affect origination volume and determine the government-sponsored enterprises’ direction going forward, according to analysts. One of those changes could have a significant impact on the FHA market. Wells Fargo Securities analysts recently looked at three potential developments in the Fannie Mae/Freddie Mac sphere and evaluated their effects on the broader mortgage market. Two of those potential changes – loan limits and guarantee fees – are controlled directly by the Federal Housing Finance Agency, while the third relates to the temporary GSE qualified-mortgage exemption, or “QM patch,” which could affect the FHA market. All three factors loom over the mortgage landscape as the FHFA expects a new director in January 2019, who is likely to be more right leaning and could shift the focus back to shrinking the ...

Although legislative reform of Fannie Mae and Freddie Mac is dead for now, Ginnie Mae supporters continue to worry about what might happen to agency MBS spreads if the government-sponsored enterprises get an explicit guarantee on their MBS.

The bankruptcy filing by Sears will likely place additional stress on commercial MBS backed by the retailer, but the effect in most deals could be minimal and, in the long term, even positive for the commercial properties, said rating agencies.

Fitch Ratings issued a commentary this week criticizing other rating services for the preliminary ratings they made on a non-agency MBS from Galton Funding. The company also suggested that it will increase its output of unsolicited commentary due to “late-cycle credit behavior.”

Although prepayment speeds on Ginnie Mae MBS are now at the lowest level since 2014, agency Executive Vice President Maren Kasper expressed persistent concerns about the matter in remarks at the annual convention of the Mortgage Bankers Association this week.

The characteristics of MBS backed by reperforming and nonperforming loans are evolving as the housing recovery ripens. The supply of NPLs is declining while RPL MBS issuance looks to remain stable in the coming years, according to industry participants.

Top-notch ratings assigned by three firms to a non-agency mortgage-backed security from Galton Funding prompted criticism from Fitch Ratings, which didn’t rate the issuance. The planned $452.7 million Galton Funding Mortgage Trust 2018-2 diverges from traditional non-agency MBS in its treatment of unpaid interest from delinquent mortgages. Fitch suggested that the change to the deal structure was so significant that it wouldn’t rate the transaction. Fitch noted that losses from unpaid ...