Fannie Mae and Freddie Mac securitized $135.69 billion of single-family purchase mortgages during the third quarter, according to a new Inside Mortgage Finance analysis of mortgage-backed securities disclosures by the two government-sponsored enterprises. That was up a hefty 26.2 percent from the previous quarter, and it represented the biggest quarterly flow of purchase mortgages to the GSEs since the housing market collapse. Although the loans were pooled in MBS issued during the third quarter, a significant number of them were actually originated during the April-June cycle. The third quarter typically has...[Includes three data tables]

Continued increases to home prices along with low interest rates have prompted a number of borrowers to take cash out when completing a refinance. Some 41.0 percent of refinances completed in the second quarter of 2016 resulted in a loan amount at least 5.0 percent higher than the unpaid principal balance of the original loan, according to Freddie Mac. In the second quarter of 2015, the share was 33.0 percent and between 2010 and 2013 it typically ranged from 15.0 percent to 20.0 percent, according to Freddie. The total amount of home equity cashed out has also increased...

A boom in ABS backed by unsecured consumer loans requires closer scrutiny, according to analysts at Fitch Ratings. Marketplace lenders have boosted the issuance of such ABS in recent years, though the rating service warned that deal performance is difficult to predict. “Many firms in this space have legitimate value propositions and apparent technological advantages,” Fitch said. “However, they have yet to prove their underwriting merit.” Since September 2013, at least 31 ABS totaling $4.60 billion backed by consumer loans from marketplace lenders have been issued...

The effort by some non-agency MBS investors to create an entity to protect investors took a step forward as a sample deal-agent agreement was circulated late last week in advance of the ABS East conference in Miami. A deal agent would be tasked with protecting the interests of investors in non-agency MBS, including duties of care and loyalty. The leaders of the effort, James Callahan, a principal at Pentalpha Global and Alessandro Pagani, head of securitized assets at Loomis Sayles & Company, said the market should adopt the agreement as the template for new non-agency MBS. However, the sample agreement leaves...

The Department of Veterans Affairs is working on a change to its existing streamline refinancing policy to address a problem that is giving VA and Ginnie Mae the fits. Under the VA’s qualified-mortgage rule, a VA borrower must wait six months and show six months’ worth of mortgage payments before they can refinance into an IRRRL (Interest Rate Reduction Refinance Loan) and take advantage of the lower rate. However, it seems not all VA lenders are adhering to the rule and that a good number are refinancing veterans into IRRRLs even before the mandatory seasoning period ends for fear interest rates might rise and the borrower might not benefit from the lower rate. “I’ve redone the numbers in 20 different directions on how much a borrower would save if they had to wait two more months and the rate went up a quarter of a point because they lost those two months ...

Ginnie Mae continues to wrestle with issuers lacking liquidity and net worth although the number of such cases has gone down significantly, thanks to tight oversight, according to the agency’s top counterparty risk officer. Briefing participants at this year’s Ginnie Mae summit in Washington, DC, Zack Skochko, director of counterparty risk, reported that some issuers are still struggling to comply with Ginnie Mae’s liquidity and net worth requirements.A number of small issuers failed their liquidity and net worth audits this year by not maintaining the minimum $1 million cash or 10 basis points of outstanding Ginnie securities required to participate in the agency’s mortgage-backed securities program. Ginnie Mae also requires issuers to meet a minimum net worth of $2.5 million plus 35 bps of the issuer’s total effective single-family obligations The requirements were designed to ensure that the ...

Investors in auto loan ABS may need to buckle up. Both prime and subprime auto loan ABS have weakened month-over-month and year-over-year, according to S&P Global Ratings. “Collateral performance in the U.S. prime auto loan ABS sector was weaker in July, with net losses and 60-plus-day delinquencies increasing month-over-month, while recovery rates decreased,” the S&P analysts said. “Collateral performance for the subprime sector deteriorated...

Originations of mortgages to first-time homebuyers in recent years have performed better than other purchase mortgages securitized by the government-sponsored enterprises, according to an analysis by Moody’s Investors Service. The stronger performance of first-time homebuyers occurred even as purchase mortgages for repeat buyers tend to have stronger borrower characteristics. The rating service suggested that tighter underwriting coupled with borrower education and counseling have improved the performance of GSE first-time homebuyer mortgages. Moody’s said...

Although single-women borrowers are more likely to pay their mortgages on time than single-male borrowers, they tend to pay higher mortgage rates and are more often denied credit. Those findings come from a new Urban Institute study that merged Home Mortgage Disclosure Act data for 2004-2014 with CoreLogic data on loan performance. A combination of a male and female borrower (usually in that order) accounted...

The first rated post-crisis non-agency MBS backed by a significant share of nonperforming mortgages paid off recently, offering insights into how the deal performed and how investors fared. The $372.80 million Mortgage Fund IVc Trust 2015-RN1 was issued by Bayview Asset Management in October 2015. It received “A” ratings from Fitch Ratings and Morningstar. Fitch said it capped its rating “due to the idiosyncratic and adverse-selection risks associated with NPL collateral.” At issuance, 34.9 percent of the loans were nonperforming and 78.0 percent had been modified. The rating services said...