General Electric’s announcement that it will exit most of its financial services businesses is just over two weeks old, but already there are signs that one casualty could be the ABS market. According to reports from Barclays and others, GE’s decision to unload its commercial lending and leasing operation could result in lower issuance volume because GE Capital traditionally has funded these portfolios – estimated to be $74 billion in size – through ABS shelves. “As such, GE’s decision to sell the portfolio is...

Two new reports from Fitch Ratings, taken together, indicate a modest weakening in the collateral backing U.S. auto ABS deals is continuing, with perhaps a temporary reprieve thanks to short-term cash flow positives for consumers, mostly tax refunds and lower gasoline prices. Still, the overall outlook is positive. U.S. prime auto ABS collateral has been marginally weakening in the last few years, most recently because of amped-up competition among auto finance companies, Fitch said in a report out this week, based on transactions issued between 2007 and fourth-quarter 2014. “The quality of prime auto loan securitized pools was...

The Federal Housing Finance Agency late last week directed Fannie Mae and Freddie Mac to stop charging the 25 basis point “adverse market” fee assessed on all loans since the financial crises, but most lower-risk loans won’t get any reduction in loan-level pricing adjustments. As expected, the FHFA did not make any changes to the “base” guaranty fees charged by the two government-sponsored enterprises. Current fees, on average, are at an “appropriate” level. “We are going to monitor this on an ongoing or quarterly basis and we’ll adjust based on market conditions,” said Sandra Thompson, FHFA’s deputy director. The regulator instructed...

The agency mortgage servicing market grew modestly during the first quarter of 2015, thanks to Ginnie Mae and Freddie Mac, according to a new Inside Mortgage Finance analysis of agency mortgage-backed securities disclosures. Lenders serviced a total of $5.287 trillion of single-family mortgages pooled in outstanding agency MBS as of the end of March, up 0.1 percent from the fourth quarter of 2014. The figures do not include unsecuritized loans guaranteed by the two government-sponsored enterprises or, in the case of Ginnie, FHA-insured reverse mortgages. And the numbers don’t perfectly synch up with aggregated reports by the agencies of their guaranteed mortgage debt outstanding. All three of the top agency MBS servicers had...[Includes two data charts]

An anonymous group of veteran players in the mini-correspondent channel is pushing the Consumer Financial Protection Bureau to update the guidance it issued for the sector last year. The investor group, which purchased more than $8 billion in loans from mini-correspondents in 2014, offered alternative criteria it recommends the CFPB use instead when trying to determine if an entity has in fact made the transition from mortgage broker to correspondent lender. The CFPB issued...

Overall non-agency MBS issuance dipped slightly in the first quarter of 2015, but the jumbo mortgage sector hit its biggest production volume since the financial crisis in late 2008, according to a new Inside MBS & ABS analysis and ranking. A total of $21.94 billion of non-agency MBS were issued during the first three months of this year, down 0.2 percent from the fourth quarter. The lion’s share of these deals were backed by seasoned loans, either ... [Includes two data charts]

In an effort to convince large investors to buy AAA tranches of non-agency MBS, the benchmark transaction under development with help from the Treasury Department will include a deal agent or transaction manager. “Part of the centerpiece [of the non-agency MBS benchmark transaction] is around the role of a new player in these transactions, an independent deal agent that represents the interests of the investors,” said Michael Stegman, counselor to the Treasury ...

The market impact of high prepayment speeds in recent months has been muted due to the Federal Reserve’s large holdings of agency MBS serviced by nonbanks, according to industry analysts. However, the increased presence of nonbank servicers in agency MBS has prompted adjustments by investors. Loans in agency MBS serviced by Quicken Loans and Provident Financial, among other nonbank servicers, have recently been prepaying at ...

High guarantee fees and loan-level pricing adjustments charged by Fannie Mae and Freddie Mac are not enough to counteract lingering MBS investor mistrust and draw private players back into the housing finance market, according to a top industry official. “The Federal Housing Finance Agency seems to believe that by raising costs for loans purchased or guaranteed by the government-sponsored enterprises, they can lure private sector capital back to the mortgage market ...

Vintage prime adjustable-rate mortgages went delinquent at a rate 30 percent higher when they were securitized privately, according to an economist with the Federal Reserve System. The study was based on mortgages originated in 2005 and 2006, at the height of the aggressive underwriting in the non-agency mortgage market. “We find that private-securitized loans perform worse than observably similar, non-securitized loans, which provides evidence for adverse selection ...