Declining refinance volume contributed to a marked decline in the GSEs’ overall business at the end of 2013 as Fannie Mae and Freddie Mac posted big declines in business on a quarterly and total 12-month basis, according to a new Inside The GSEs analysis. Fannie and Freddie issued $182.2 billion in new single-family mortgage-backed securities during the three-month period ending Dec. 31, 2013, a two-year low.

A commercial MBS issued in late December that received AAA ratings from Fitch Ratings and Standard & Poor’s wouldn’t have been rated higher than A1 by Moody’s Investors Service. Moody’s said the $375 million RBS Commercial Funding Inc. 2013-GSP Trust lacked structural support to obtain the highest ratings. The deal was a single-asset transaction without subordinate classes to absorb expenses that the trust can’t pass along to the borrower. “In cases where a subordinate class is not present to protect highly rated senior investors, some other feature, such as a reserve fund, has been employed to mitigate the risk,” according to Daniel Rubock, a senior vice president at Moody’s. “The GSP Trust lacks any such structural mitigant.” Fitch said...

Nationally-recognized credit-rating agencies continue to show improvements in certain problem areas despite new concerns raised by federal examiners in their latest review, according to a Securities and Exchange Commission staff report. The SEC’s 2013 credit-rating agency examinations found deficiencies in eight key areas, particularly in the credit-rating agencies’ internal controls. Examiners stopped short of branding their “essential findings” as “material regulatory deficiencies,” although the SEC may do so in the future and require stronger corrective action, the report noted. Based on the latest exams, the SEC’s Office of Credit Ratings found...

Underwriting standards for loans in commercial MBS are loosening due to competition among issuers for volume, according to industry analysts. Issuers have also removed loans from two recent commercial MBS transactions due to pressure to come to the market quickly. “Increasing competition among commercial MBS loan originators raises the risk that they will further lower underwriting standards from the more stringent practices used in early second-generation commercial MBS 2.0 deals,” said Tad Philipp, director of commercial real estate research at Moody’s Investors Service. Analysts at Fitch Ratings said...

Ginnie Mae is taking a “go slow” approach to merging its Ginnie I and Ginnie II MBS programs, noting in a new “stakeholder letter” that players in the market have “voiced concerns about the logistics of how we get there, and in particular, what will become of the legacy Ginnie Mae I security.” Ginnie officials declined to provide an update on the process this week. A spokeswoman issued a statement saying the agency “is still studying the issue,” adding that, “We are currently evaluating what market participants want.” Since 2010, Ginnie Mae II issuance has been increasingly outpacing...

Citigroup Global Markets Realty last week issued the first jumbo mortgage-backed security in more than a month and Redwood Trust is preparing a deal for next week. However, industry participants suggest that jumbo MBS issuance will remain limited through at least early 2014 due to a lack of demand from investors and strong portfolio appetite jumbos among from big banks. Citi’s $209.95 million jumbo MBS, its first in the new era of the non-agency market, wasn’t met with strong demand, according to ...

The mix of single-family mortgages securitized by Fannie Mae and Freddie Mac during the third quarter of 2013 continued to shift toward purchase mortgages, according to a new Inside Mortgage Trends analysis of the government-sponsored enterprise market. Purchase mortgages accounted for 36.7 percent of Fannie/Freddie business during the third quarter, up from 23.9 percent during the previous period. It was the highest purchase-mortgage share of GSE business since the market collapse ... [Includes two data charts]

Fannie Mae and Freddie Mac may have to dial back the multifamily spigot if they’re going to meet the targets their regulator wants them to as it seeks to shrink the GSEs’ presence in the space. It looks like it might require a bigger turn of the dial for Freddie than for Fannie. As part of the Federal Housing Finance Agency’s 2013 Conservatorship Scorecard, FHFA Acting Director Edward DeMarco has called for a 10 percent reduction target in GSE multifamily business volume this year compared to 2012.

HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

Small lenders have accounted for a growing share of contributions to non-agency jumbo mortgage-backed securities. Some deals have included more than 70 lenders, with most of the lenders contributing less than 5 percent of the volume of mortgages included in a security. While the lenders’ individual contributions to a particular jumbo MBS are small, they add up to significant market share, particularly when issuers don’t identify the lenders in prospectus documents filed with the Securities ... [Includes two data charts]