The second whole-loan securities risk-transfer transaction from Freddie Mac received a rating from Moody’s Investors Service. The rating service said the $634.64 million deal included a number of improvements compared with non-agency MBS, which have a similar structure. Much like non-agency MBS, the deal was backed by mortgages and included senior and subor-dinate tranches available for purchase by investors. The M1 tranche of FWLS 2015-SC02 ...

The inspector general of the Department of Housing and Urban Development refused to sign off on Ginnie Mae’s fiscal 2015 financial statement and its restated financial statement for FY 2014 due to lingering concerns about the accuracy of both statements. The IG said it was unable to obtain sufficient evidence to express an audit opinion on the fairness of the $5.4 billion in non-pooled, defaulted mortgage loans still held by Ginnie Mae. The agency also continued to use improper ...

Publicly traded real estate investment trusts that buy MBS continued to whittle down their positions in government and agency product during the third quarter, a trend that some fear may have no bottom. Market leader Annaly Capital Management trimmed its MBS holdings to $66.3 billion during the period, a 1.9 percent sequential decline, but an ugly 18.6 percent drop compared to the third quarter of last year. It is investing more of its cash in commercial product. Number two ranked American Capital Agency Corp. was...[Includes one data table]

The Structured Finance Industry Group put out the third edition of its RMBS 3.0 “Green Papers” initiative early this week, featuring dozens of model representations and warranties for new non-agency residential MBS, including a range of proposed standardized constructs. “This release substantially builds upon our growing series of Green Papers, which are aimed at restoring confidence to the ‘private label’ RMBS market,” the trade group said. The first and second editions were released in 2014. The 39 model reps and warrants included in the third edition complete...

Three separate issuers of jumbo MBS shopped deals in the past week, giving a jolt to a market that has been somewhat subdued since the end of the first quarter. Industry analysts suggest that while liquidity for new jumbo MBS remains limited, the deals can be a good investment. Redwood Trust is set to issue a somewhat unusual $337.08 million jumbo MBS, Credit Suisse is preparing a deal and Five Oaks Investment issued a $251.27 million security this week, according to rating reports and filings with the Securities and Exchange Commission. At the end of October, Two Harbors Investment issued...

A recent settlement between DBRS and the Securities and Exchange Commission suggests that in the years following the financial crisis, the rating service didn’t dedicate enough resources to reviewing ratings on outstanding non-agency MBS. The SEC found that between April 2009 and February 2011, DBRS employed only one analyst who was principally responsible for the majority of surveillance tasks for the firm’s outstanding ratings for non-agency MBS and real estate mortgage investment conduits. DBRS had more than 5,000 applicable ratings outstanding in that span. The SEC added...

The Federal Home Loan Banks appear to be eyeing a bigger share of the government-backed lending market with the announcement of a new servicing-release option for FHA, VA and rural housing loans sold into the Mortgage Partnership Finance program. The addition of a servicing-released option from Nationstar Mortgage, a top-10 mortgage servicer, to an already existing servicing-retained execution will give participating lenders greater flexibility in pricing and selling government-backed mortgages they have originated into the secondary market, said Matt Feldman, president of the Chicago FHLB. Previously, program participants were required...

The Structured Finance Industry Group released its latest “RMBS 3.0 Green Paper” this week as part of an effort to revive the non-agency mortgage-backed security market. The nearly 300-page paper focuses on model representations and warranties for non-agency MBS backed by new originations. SFIG detailed 39 model reps and warrants, adding to eight other model reps and warrants that were previously released by the trade group. About half of the latest model reps and warrants ...

Issuance of jumbo mortgage-backed securities started to pick up speed in November after a slow start to the fourth quarter of 2015. Redwood Trust plans to issue a $337.08 million jumbo MBS with a number of unique characteristics, according to presale reports. Sequoia Mortgage Trust 2015-4 will be backed by 15-year fixed-rate mortgages, 75.5 percent of which were originated by UBS Bank. Kroll Bond Rating Agency noted that this will be the first post-crisis deal to include ...

Facing the possibility of a potential False Claims Act lawsuit, PHH Corp. is reconsidering its participation in the FHA mortgage insurance program. Though PHH’s FHA segment represents only 3 percent of its mortgage volume over the past 12 months, the company will proceed cautiously as it evaluates the risk-adjusted return of FHA products and programs, said Glenn Messina, PHH president and chief executive.Ranked 50th among FHA lenders as of June 30, 2015, PHH expects more regulatory challenges in 2016 as well as rising compliance costs, said Messina during a third-quarter earnings call. In its latest quarterly filing, PHH disclosed receiving a subpoena from the inspector general of the Department of Housing and Urban Development for documents related to, among other things, FHA loan origination and underwriting practices. Like several other FHA lenders, PHH is ...