Fannie Mae and Freddie Mac continued to whittle away at their retained mortgage portfolios during the second quarter, keeping up a focus on shedding less-liquid assets. The two government-sponsored enterprises held a combined $637.0 billion of mortgage loans and mortgage securities at June 30, down 17.6 percent from a year ago. Under the current terms of their conservatorship, Fannie and Freddie are required to reduce their mortgage portfolios by at least 15.0 percent a year. By the beginning of 2018, each GSE portfolio is expected...[Includes one data table]

Fannie Mae’s new securitization program for modified single-family mortgages could generate as much as $24 billion in issuance, according to an analysis by Bank of America Merrill Lynch. The program will create “an asset class meriting investor focus,” BAML noted. Fannie recently released...

Federal banking regulators should make a number of adjustments to proposed net stable funding ratio requirements, according to the Structured Finance Industry Group and other industry participants. The Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency issued the NSFR proposed rule in April, following standards set by the Basel Committee on Banking Supervision. Comments on the proposed rule were due late last week. The NSFR addresses...

Two Harbors Investment and other nonbank conduits exited the jumbo market just before pricing for new jumbo mortgage-backed securities improved, according to industry participants. “The difference between a bulk sale execution and a Sequoia execution right now is only an eighth of a point,” Marty Hughes, CEO of Redwood Trust, said this week during the real estate investment trust’s earnings call. “That’s the tightest it’s probably been in a year and a half.” Christopher Abate, Redwood’s ...

S&P Global Ratings upgraded servicer ratings for Ocwen Loan Servicing to average from below average this week. Ocwen’s stock price increased significantly after the upgrade because of ratings clauses in Ocwen’s subservicing agreements with New Residential Investment. S&P downgraded Ocwen’s servicer ratings in June 2015 and if the ratings weren’t raised by April 2017, New Residential could transfer the subservicing to a different company. As of the end of ...

Lenders originated home loans that included primary mortgage insurance at a hectic pace during the second quarter of 2016, according to a new Inside Mortgage Finance ranking and analysis. A whopping $196.23 billion of new mortgage originations carried private MI during the second quarter, including significant increases in both private MI and government-insured mortgage insurance. That was up 34.1 percent from the first three months of 2016, and represented the biggest quarterly total on record. Private MI posted...[Includes three data tables]

The agency single-family MBS market gained speed for the sixth consecutive month in July and appeared on track to top last year’s annual total by the time 2016 is over. According to a new Inside MBS & ABS analysis and ranking, Fannie Mae, Freddie Mac and Ginnie Mae produced a hefty $129.30 billion of new single-family MBS in July. That was up 7.7 percent from June and represented the biggest month in new issuance since August 2013. While the year-to-date totals were still slightly below the volume produced in the first seven months of 2015, this year’s market probably hasn’t...[Includes two data tables]

MBS investments by most of the nation’s publicly traded mortgage real estate investment trusts continue to be in a holding pattern these days as they figure out what to do in an environment of declining interest rates and accelerating prepayment speeds. Market leader Annaly Capital Management held $64.9 billion of agency MBS at midyear, down ever so slightly from the prior quarter. Compared to June 2015, Annaly’s MBS portfolio was off 4.1 percent. American Capital Agency Corp., Annaly’s closest competitor in terms of REIT MBS investing, saw...

Bank of America, Morgan Stanley and Wells Fargo are preparing to issue the first commercial MBS that will comply with risk-retention requirements, according to presale reports published this week. While industry participants continue to debate which type of risk-retention will be more commonly used, the pending $870.56 million MBS will include vertical retention. Wells Fargo Commercial Mortgage Trust 2016-BNK1 received provisional AAA ratings from Fitch Ratings, Kroll Bond Rating Agency and Standard & Poor’s. Fitch said the three originators contributing to the MBS will retain credit risk representing 5.0 percent of pool balance via the vertical retention option. Risk-retention requirements for commercial MBS take effect...

Freddie Mac will publish a new set of disclosures to help the market track the exchange of its legacy MBS with a 45-day payment delay to a 55-day cycle under the new Single Security, according to a new update from the government-sponsored enterprise. A key disclosure involves the creation of “mirror securities” that help investors track how much of an existing MBS has been exchanged for the new securities. Mirror securities will be created for Freddie’s current participation certificates as well as second-level Giants that are comprised of PCs. Before new Single Securities are created, Freddie will create...