The market for securities backed by proceeds from single-family rental properties is set to grow from deals backed by a single firm to pools with multiple sponsors, according to industry analysts. The sector has produced more volume than the jumbo MBS market in recent months and investor demand for single-family rental securities remains strong. Rating services are projecting that single-family rental securities soon will come to market with multiple sponsors or borrowers in a single security. Kroll Bond Rating Agency released...

All the major mortgage product categories saw declines in new originations during the first quarter, but the jumbo and home-equity sectors held up slightly better, according to a new ranking and analysis by Inside Mortgage Finance. The conventional-conforming sector took the biggest hit, as new production dropped 25.9 percent from the fourth quarter of 2013 to an estimated $123 billion in the first three months of this year. The vast majority of these loans still end up being financed by Fannie Mae and Freddie Mac, and the two government-sponsored enterprises continue to draw a lot of their business from the ebbing refinance market. Fannie and Freddie securitized...[Includes two data charts]

New margin rules for broker-dealers may trip up mortgage bankers using mortgage-backed securities to hedge their businesses, according to experts discussing various liquidity issues during last week’s Secondary Market Conference sponsored by the Mortgage Bankers Association. Fannie Mae has traditionally reserved the right to invoke margin calls if the government-sponsored enterprise needed to, even before the Treasury Practices Market Group issued new best practices on the subject, said Renee Schultz, a Fannie vice president, but this right was rarely used. When the TPMG recommendation came out, it appeared to be aimed at systemic risk. But since it was addressed to all broker-dealers, Fannie adopted it. Fannie has implemented...

Although the long-term prospects for the agency MBS market are highly uncertain, the near-term future is wherever Fannie Mae, Freddie Mac and Ginnie Mae take it – and the highly anticipated shift in investor demand as the Federal Reserve eases out of the market. The development of a common securitization platform for Fannie and Freddie will take several years, even after the Federal Housing Finance Agency narrowed the project, said Bob Ryan, a special advisor to the FHFA, during a panel session at this week’s Secondary Market Conference sponsored by the Mortgage Bankers Association. The 2014 plan for the government-sponsored enterprises includes clarifying the scope of the CSP project, which has been in the works for over a year. “We’re not talking...

The advance policies of nonbank servicers have led to disruptions in payments to investors in non-agency MBS following servicing transfers from banks, according to Fitch Ratings. The differences are particularly pronounced on jumbo and Alt A deals, with advance disruptions recently concentrated on MBS previously serviced by Bank of America. “Bank and nonbank servicers for residential MBS transactions typically follow the same general advancing guidelines,” Fitch noted. “However, nonbank servicers generally make the determination to stop advancing earlier than bank servicers.” On average, for jumbo MBS and Alt A MBS, nonbanks advance missed...

Ford Credit priced a $1.08 billion deal earlier this month backed by prime auto-loan receivables that included a noteworthy twist, according to John McElravey, director of consumer ABS research at Wells Fargo Securities. The deal will revolve for five years before paying principal with a soft-bullet maturity. “In our opinion, this deal adds an interesting new dimension to prime auto-loan ABS,” McElravey said in a recent report. “We would not be surprised if other prime lenders eventually adopted similar structures based on market pricing and the pace of investor acceptance. Upon reflection, it is somewhat surprising that more prime auto-loan ABS have not been structured in this way.” Moody’s Investors Service explained...

ResCap Liquidating Trust filed lawsuits last week against a number of Residential Funding’s correspondent lenders regarding alleged breaches of representations and warranties on mortgages included in non-agency MBS. The lawsuits relate to business completed before RFC’s parent company Residential Capital entered bankruptcy. RLT, which was established to liquidate and distribute the assets of the debtors in the ResCap bankruptcy case, filed 12 similar lawsuits last week seeking buybacks from Bank of America and First Republic Bank (as successors of Old First Republic), PHH Mortgage, RBC Mortgage and a number of smaller lenders. The correspondent lenders sold more than $1.52 billion in mortgages to RFC, according to the lawsuits. RLT claims...

Fannie Mae this week priced its second credit risk-sharing deal of 2014. The $1.6 billion note is the government-sponsored enterprise’s third and largest transaction under its Connecticut Avenue Securities series since the Federal Housing Finance Agency ordered both Fannie and Freddie Mac to shrink the GSEs’ role in the U.S. housing market last year. In its latest offering – Series 2014-C02 – Fannie said it included reference loans with original loan-to-value ratios of up to 97 percent. Previous C-deal offerings included reference loans with up to 80 percent original LTV ratios. “As the market moves from a refinance market to a purchase-money market, it is...

A New York state appeals court last week shut down Morgan Stanley’s attempt to undo a lower court finding that Allstate Insurance Co.’s lawsuit over $100 million in allegedly overrated MBS had been timely filed. A five-judge panel of the New York Supreme Court Appellate Division, First Department, was not swayed by Morgan Stanley’s argument that the trial judge had erred in holding that Allstate must have had actual notice of its claims of misrepresentation by the investment bank in order for the suit to be time-barred. Allstate sued...

Rating services and due-diligence firms have plenty of time to analyze originators of jumbo mortgages headed to the securitization market, according to industry experts speaking this week at the Mortgage Bankers Association’s annual Secondary Market Conference in New York. All the rating services are putting greater emphasis on understanding originator business practices as part of evaluating jumbo mortgage-backed securities deals, said Sharif Mahdavian, an analyst at Standard & Poor’s ...