Several $1 billion-plus mortgage servicing packages have reached the auction market the past few weeks as sellers try to complete deals before yearend. But one potential obstacle could gum up the works: a continuing decline in interest rates. With the yield on the benchmark 10-year Treasury hovering just above the 2.0 percent mark, mortgage rates are now at their lowest levels since the spring. And as any servicing investor knows: A declining interest rate environment is never a good thing to sell into. In early September, U.S. Trading LLC, Cherry Hill, NJ, hit...

The non-agency MBS market sputtered to its weakest new issuance volume in a year during the third quarter of 2015, according to a new market analysis and ranking by Inside MBS & ABS. A total of $9.43 billion of non-agency MBS were issued during the third quarter, down 39.7 percent from the second quarter. Thanks to a strong start in the first half of 2015 – and weak new issuance during the same time last year – year-to-date production was up 47.5 percent from the first nine months of 2014. The two mainstays that have been propping up non-agency MBS issuance have been...[Includes two data tables]

The Collingwood Group, a Washington-based consultancy that built its practice on Ginnie Mae work and issues tied to the government-sponsored enterprises, has received approval from the Financial Industry Regulatory Authority to open a broker/dealer unit. The new division is called Collingwood Capital Advisors and will be headed by Mark DeGennaro, who joined TCG as a managing director in February 2011 to head what was then a new effort to build the consultancy’s hedge fund/private equity group. Although Collingwood Capital is now a registered broker/dealer, it will not be involved...

Returns on non-agency structured finance products declined in the third quarter of 2015 compared with the previous quarter, according to industry analysts. The shift appears to be due to macro issues as opposed to declining underwriting or performance. “The third quarter wasn’t a particularly happy quarter for non-agencies, with brakes on issuance and pullback in returns,” analysts at Bank of America Merrill Lynch said in a new report. “The latter half of the third quarter was characterized...

Did anyone expect the yield on the benchmark 10-year Treasury to be hovering at just over 2.0 percent as November approached? Not really, but the recent downdraft in rates has once again caused bond prices – MBS in particular – to increase, a development warming the hearts of investors. Then again, MBS investors hedging their positions might be...

In an about face, the Basel Committee on Banking Supervision is preparing to allow for the use of credit ratings as a gauge for credit risk when setting bank capital requirements. If the move isn’t adopted by U.S. regulators, industry participants suggest that domestic banks could be at a disadvantage. In a speech late last week, Stefan Ingves, chairman of the BCBS, acknowledged that the Basel committee’s December 2014 proposal to revise the standardized approach for credit risk wasn’t well received. “The response was both vigorous and clear: not many of you liked the proposals,” he said. Ingves said...

The Inspector General of the Department of Housing and Urban Development has warned users not to rely on Ginnie Mae’s fiscal years 2011-2014 financial statements after expressing displeasure over the agency’s inadequate explanation of material misstatements identified during a 2014 audit. The warning came in a memorandum the HUD IG issued in response to Ginnie’s restatement notification on Sept. 16, 2015, commenting on the fiscal 2014 audit report. The audit left certain issues unresolved due to its limited scope, causing the IG to issue a disclaimer of opinion on the FY 2014 financial statements. Specifically, the uncertainty focused...

Fitch Ratings placed a negative outlook on a number of servicer ratings for Caliber Home Loans this week. The rating service said the revision from a stable outlook was due to “rapid growth and heightened regulatory scrutiny.” Caliber was the 19th-ranked servicer as of the end of the second quarter of 2015, according to affiliated publication Inside Mortgage Finance. The nonbank handled a $75.23 billion portfolio, which increased by 27.1 percent compared with ...

With action from Congress to reform the government-sponsored enterprises not expected in the next year and a half, the GSEs’ risk-sharing activities have been seen by some as a de facto housing finance reform program. Industry participants and members of Congress suggest that the risk-sharing initiatives aren’t a replacement for GSE reform, even while calling for adjustments to the programs. Kevin Chavers, a managing director at BlackRock, said the back-end ...

The IRS approved Bank of America’s $8.5 billion settlement involving vintage non-agency mortgage-backed securities this week. The approval paves the way for investors to receive funds from a settlement that was announced in 2011. Mortgages play a role in a dispute between a former internal auditor at BofI Holding and the bank. Matt Erhart, the former auditor, filed a federal lawsuit this week with a wide range of allegations, including that BofI ... [Includes two briefs]