New issuance of non-mortgage ABS increased by 15.8 percent from 2010 to 2011, according to a new Inside MBS & ABS ranking and analysis. But it was a rebound from a record low level, and the market is less than half the amount typically produced before the financial market collapse in 2008. A total of $126.8 billion of non-mortgage ABS were issued in the U.S. last year, and over half of that amount was in the auto ABS sector. Securities backed by loans and leases to vehicle users rose 22.4 percent from 2010 levels, although the sector was down slightly in the fourth quarter. Overall...(Includes two data charts)

With a price tag of $100 billion required to forgive the principal of underwater Fannie Mae and Freddie Mac mortgages, the best bet for the government-sponsored enterprises and for taxpayers is for the GSEs to pursue a policy of principal forbearance, the Federal Housing Finance Agency said. This week, the FHFA released its analysis conducted in 2010 following numerous requests and an eventual threat of subpoena by House Democrats. The agency’s number crunchers found that “principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure.” As of June 30, 2011, Fannie and Freddie...

Redwood Trust is set to issue a $415.73 million non-agency jumbo mortgage-backed security by the end of this month, continuing its run as the only issuer of new non-agency MBS. Unlike its three previous securities issued in 2010 and 2011, the real estate investment trust has faced little criticism from rating services regarding the characteristics of the new MBS. Fitch Ratings and, in a first, Kroll Bond Rating Agency are set to place AAA ratings on Sequoia Mortgage Trust 2012-1, which includes a pool of 30-year fixed-rate mortgages, ARMs and 15-year fixed-rate mortgages, 446 loans in all. Standard & Poor’s and Moody’s Investors Service were critical of Redwood’s previous deals and will not place ratings on the new issuance ...

Redwood Trust is getting ready to issue its first jumbo MBS of 2012 backed by a more diverse pool of prime mortgages than the company’s previous transaction. Fitch Ratings said it plans to give AAAsf ratings to the senior bonds in Sequoia Mortgage Trust 2012-1, which will enjoy 8.25 percent credit enhancement from subordinate classes. That’s a stiffer credit enhancement level than on Redwood’s two jumbo deals from last year, which had 7.40 percent and 7.50 percent support levels at issuance. Two factors appeared to play the biggest part in the higher credit support levels: more diverse collateral and more...

The aging of the subprime and prime mortgages that back the shrinking universe of non-agency MBS is gradually changing the performance trends of these loans, according to analysts speaking at a Fitch Ratings conference in New York this week. Selection bias – changes in the composition of the remaining subprime and prime mortgage pools as borrowers default or refinance – will mean different things for different asset classes, but differences between the two will likely become less pronounced over the next year, analysts said. Grant Bailey, a managing director at Fitch, explained that in many ways...

Despite lower mortgage rates, MBS prepayment speeds slowed across the board in December, particularly for the recent low coupons, while speeds for higher coupons were up slightly, according to securitization analysts. Researchers varied slightly in their estimates, saying speeds for 30-year Fannie Mae securities slowed 2-6 conditional prepayment rate for the recent low coupons (3.5-4.5 percent from 2011 and 2010). Barclays Capital analysts attributed the slowdown to reduced refinancing activity during the December holiday season. The weighted average CPR for all Fannie Mae MBS declined to...

The Federal Home Loan Banks continue to show an investment preference for Fannie Mae and Freddie Mac mortgage-backed securities during the third quarter of 2011, posting a modest increase from the previous quarter, according to a new analysis by Inside The GSEs based on data from the Federal Housing Finance Agency.Ginnie Mae securities, meanwhile, remained popular within the FHLBank system during the three-month period ending Sept. 30, 2011.GSE MBS accounted for 68.9 percent of combined FHLBank MBS portfolios, up 1.7 percent from the second quarter of 2011. The Finance Agency’s data do not separately break out Fannie and Freddie volume or share.

Gibbs & Brun, the Houston-based law firm that spearheaded a massive investor lawsuit against Bank of America, has drawn a bead on Wells Fargo. The company announced this week that its non-agency MBS investor clients have asked two trustees – U.S. Bank and HSBC – to investigate whether ineligible mortgages were pooled in some $19 billion of Alt A and jumbo MBS issued by Wells Fargo between 2005 and 2007. Some 48 securitization trusts are covered by the action, and Gibbs & Brun said it represented investors who collectively held over a quarter of the voting rights in those trusts. “Clients...

MBS issued or guaranteed by the U.S. government will continue to maintain a zero-risk weighting under the Federal Reserve’s proposed supervisory rules for large bank holding companies, but that won’t necessarily include Fannie Mae or Freddie Mac MBS. The Fed proposal includes a wide range of issues such as capital, liquidity, credit exposure, stress testing, risk management and early remediation. It applies to bank holding companies with assets of $50 billion or more and non-bank institutions that could pose systemic risk to the financial system. The proposal reflects substantially all of the...

Business was booming at Fannie Mae and Freddie Mac during the just-completed fourth quarter of 2011, with total single-family mortgage securitization jumping 47.4 percent from the previous period, according to a new analysis and ranking by Inside Mortgage Finance. The two government-sponsored enterprises pumped out a combined $261.2 billion in single-family mortgage-backed securities during the final three months of the year. That was the highest quarterly production level of the year, but it still came up 21.2 percent short of the volume generated....(Includes three data charts)