Fannie Mae and Freddie Mac sold $12.58 billion of credit risk through their popular back-end risk-transfer deals during 2015, according to a new Inside MBS & ABS tally of new issuance in the Connecticut Avenue Securities and Structured Agency Credit Risk platforms. While that was up 16.8 percent from the total for 2014, observers continue to call for more diversification in the government-sponsored enterprises’ risk-transfer activities, and greater transparency. The Federal Housing Finance Agency “should require...[Includes one data table]

Industry analysts are generally optimistic that most of the large consumer ABS sectors will probably see a stable, positive year in 2016. However, they’re not very gung-ho about what kind of a year the government-backed student loan space is going to have. Analysts at Wells Fargo Securities think that consumer ABS should offer good relative value next year, based on solid credit fundamentals and robust structural protections. “We expect spreads to tighten in 2016 as the primary market recovers and the yield curve flattens along with Federal Reserve tightening,” they said in a recent outlook. “Spreads are likely to stay volatile and event-driven.” Further, “Weak demand and poor liquidity have been...

An estimated $117.1 billion in VA-guaranteed home loans went into Ginnie Mae mortgage-backed security pools during the first nine months of 2015, according to an Inside FHA/VA Lending analysis of agency data. The totals for securitized VA purchase and refinance loans in Ginnie pools were almost even - $57.8 billion and $57.6 billion, respectively. Modified VA loans were also included in the total. The volume of VA-backed Ginnie securitization during the first nine months of 2015 far exceeded the $109.5 billion reported for all of 2014. Lenders attributed the production spike to a growing population of active-duty military personnel and veterans returning from foreign deployment and to better outreach efforts. VA originations accounted for 12.1 percent of loans underlying Fannie Mae, Freddie Mac and Ginnie Mae MBS and 25.2 percent of insured loans in those pools. The securitized VA loans showed an ... [ 1 chart ]

Approximately $191.8 billion in FHA-insured mortgage loans were securitized during the first nine months of 2015, surpassing the $158.1 billion of FHA loans that were placed in Ginnie Mae pools last year, agency loan-level data show. Securitized FHA purchase loans accounted for $111.7 billion of Ginnie Mae mortgage-backed securities issued over the same period. FHA refinance securitization totaled $66.8 billion. Modified FHA loans were also included in Ginnie MBS totals. The FHA loans in Ginnie MBS had an average loan-to-value ratio of 92.9 percent and an average FICO score of 677.5 percent, reflecting the single-family program’s traditional borrower base. The loans had an average debt-to-income ratio of 39.8 percent. FHA loans accounted for 19.8 percent of loans that underlie Fannie Mae, Freddie Mac and Ginnie Mae MBS. On the other hand, the same loans accounted for 41.2 percent of insured loans in ... [ 1 chart ]

First-time homebuyers are reportedly sitting on the sidelines and have dropped to their lowest levels in three decades, according to the National Association of Realtors. In its latest annual survey of buyers and sellers, NAR noted that the share of first-time buyers declined to 32 percent, from 33 percent a year ago and the lowest since first-time buyers spiraled down to 30 percent in 1987. But not so fast, says Edward Pinto, former chief credit officer of Fannie Mae and co-director and chief risk officer of the International Center on Housing Risk at the American Enterprise Institute, who disputes NAR’s data and describes the first-time buyer market as “booming.” “The buyers are...

Commercial banks and savings institutions continued to pull back from the non-mortgage ABS market during the third quarter of 2015, according to a new Inside MBS & ABS analysis of call-report data. Banks and thrifts reported a combined $140.93 billion of non-mortgage ABS on their books at the end of September, down 5.3 percent from midyear. The decline marked the seventh consecutive decline in bank ABS holdings since they peaked at $175.54 billion at the end of 2013. Bank ABS investment tumbled 15.0 percent in the year since September 2014, hitting its lowest level since the end of 2011. The industry’s holdings were down in all ABS categories. In percentage terms, the sharpest downturn was in home-equity ABS, although this ...

Two former officials at Standard & Poor’s called on the Securities and Exchange Commission to look for violations of new rules involving rating shopping. The SEC published a final rule with new requirements for rating services in August 2014. In a recent paper, Mark Adelson and David Jacob pushed the SEC to use the new rule to go after rating services that make adjustments to rating criteria in an effort to gain business, with a focus on the structured-finance market. Adelson and Jacob said such rating shopping by issuers has been “widespread” since the mid-1990s. Adelson was S&P’s chief credit officer from May 2008 until December 2011. He is currently the chief strategy officer of The BondFactor Company, which focuses ...

Acting on a new policy that increases the focus on prosecuting individuals for corporate wrong-doing, the Department of Justice is reportedly planning to file criminal charges against executives at JPMorgan Chase and the Royal Bank of Scotland for the alleged pre-crisis sale of non-agency MBS to unsuspecting investors, the Wall Street Journal has reported. According to the report, the DOJ investigations were based on documents that allegedly suggested that shortly before the mortgage meltdown, executives at the two financial institutions securitized mortgages and sold them to investors knowing that the underlying loans were defective. The JPMorgan probe began after prosecutors uncovered crucial evidence from a related civil investigation in 2007: a memo from a bank employee cautioning senior executives about ...

Borrowers are increasingly changing the terms for loans backing recently issued commercial MBS shortly after the deal closes, said Fitch Ratings. The rating service said it has received about 15 requests this year for rating confirmations pertaining to loans from 2014 or 2015 vintage deals. While the majority of requests have been loan assumptions by new borrowing entities or ownership structures, a handful have contemplated more fundamental changes to other loan terms. But Fitch said the problem arises when some of the proposed changes would have required that the loan be modeled differently or more conservatively, had it known about the changes prior to issuance. The rating agency is especially concerned about borrowers trying to add more debt. “Additional debt, ...

Menendez Introduces HAWK Amendment in T-HUD Appropriations Bill. The National Association of Realtors recently sent a thank-you note to Sen. Robert Menendez, D-NJ, for introducing an amendment to H.R. 2577, the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act of 2016, to restore HUD’s authority to offer the Homeowners Armed with Knowledge (HAWK) program. Lawmakers who were concerned about the financial condition of the FHA Mutual Mortgage Insurance Fund denied funding for the HAWK program last year in a continuing spending bill, effectively stalling the program for a year. The HAWK program is a key component of the FHA’s Blueprint for Access, which was designed to open up the credit box for underserved borrowers. Specifically, program participants will benefit from reductions in FHA premiums once they complete ...