Issuers of Ginnie Mae mortgage-backed securities pushed a record $435.80 billion of government-insured loans through the program during 2015, according to a new Inside FHA/VA Lending analysis and ranking. Last year’s total Ginnie MBS issuance topped the previous record of $429.50 billion issued during 2009. The $435.80 billion total for 2015 includes securitization of FHA home-equity conversion mortgages and other single-family loans guaranteed by FHA, the VA, and the Department of Agriculture rural housing program from Ginnie pool-level MBS data that are not truncated. Production in 2015 hit its high-water mark in the third quarter with $128.23 billion in issuance, and then fell 18.0 percent in the final three months of the year. Purchase mortgages continued to account for most Ginnie business in 2015, 58.0 percent of the agency’s forward-mortgage securitizations. But a huge factor in the ... [ Charts ]

The first rated securitization backed by nonperforming Home Equity Conversion Mortgage loans contains strong, credit-positive features that outweigh the credit risk associated with nonperforming loans, according to a Moody’s Investors Service analysis. The effect of some of these positive features on the performance of Nationstar HECM Loan Trust 2015-2, however, depends on whether Nationstar Mortgage remains as servicer for the transaction, said the rating agency. Nationstar has a servicer rating of B2/Stable from Moody’s and is also the transaction’s sponsor. Nationstar issued NHLT 2015-2 in November 2015 and by the end of December, the first remittance report showed strong initial performance. Credit enhancement to the Aaa (sf)-rated notes increased by 1.69 percent in the first month of operations, Moody’s noted. “As long as Nationstar continues to be the ...

Four nonprime MBS backed by newly-originated residential loans came to market during the last four months of 2015, but none of deals were rated, a situation that could change in the new year. In a recent interview with Inside MBS & ABS, John Hsu, head of capital markets for Angel Oak Capital, said his company hopes to get a rated deal done in 2016, believing such a milestone would help move the nascent market forward. “We need...

The prospects for consumer ABS in 2016 are a bit mixed. Auto ABS – especially subprime – appear susceptible to the Federal Reserve’s promised raising of interest rates this year and beyond, but credit card ABS are strong and performing well. “Rising interest rates could pressure U.S. auto ABS transactions, especially first on subprime deals,” analysts at Fitch Ratings said in a recent client note. While they expect last month’s initial rate increase by the Fed to have only a marginal near-term impact on borrowers, they said the plan to raise rates gradually over four years could increase the monthly debt burden on auto loan borrowers. “Although the rate increases are expected to affect the entire market, Fitch believes...

Investors should see a higher share of VA collateral in Ginnie Mae mortgage-backed securities pools due to increasing VA loan originations, according to Deutsche Bank analysts. Given their rising share of VA collateral, new Ginnie pools are likely to have worse convexity than most of those originated in 2015, analysts said. “VA loans tend to prepay faster than FHA loans when in the money as VA loans have larger loan sizes, higher FICO scores and a more efficient streamline refi program that requires a minimum three months seasoning,” they observed. In addition, analysts expect the population of younger veterans to surge approximately 36 percent over the next five years. “[As such], there will be a healthy supply of new VA originations eligible for pooling,” they said. As a result, the share of FHA relative to VA collateral in new Ginnie II pools will likely decrease, they said. Such a trend has manifested itself slowly as ...

FHA lenders funded $12.3 billion in new Home Equity Conversion Mortgage loans during the first nine months of 2015, up a hefty 22.2 percent from the same period in the prior year, according to Inside FHA/VA Lending’s analysis of agency data. Likewise, HECM endorsements increased 17.3 percent to $4.5 billion in the third quarter from $3.9 billion in the prior quarter. This was the highest HECM endorsements have been since the second quarter of 2013, when they totaled $4.1 billion. Purchase loans accounted for 85.8 percent of all HECM originations over the nine-month period. The majority of borrowers favored adjustable-rate HECMs over fixed-rate HECMs, which accounted for only 14.8 percent of HECM transactions. In addition, the initial principal amount at loan originations totaled $7.3 billion, up from $4.6 billion midway through 2015. The volume increase is attributable to program changes implemented ... [1 chart]

A total of $13.6 billion of rural home loans backed by the U.S. Department of Agriculture were securitized during the first nine months of 2015, according to an Inside FHA/VA Lending analysis of agency data.An estimated $5.1 billion of USDA home loans were delivered into Ginnie Mae pools in the third quarter, up 22.8 percent from the prior quarter. In contrast, the nine-month securitization volume fell 4.4 percent from the same period of the prior year. Nine of the top 10 USDA loan securitizers reported quarter-over-quarter increases. Top-ranked Chase Home Finance maintained its lead over other USDA loan securitizers with $4.2 billion in loans securitized during the nine-month period, down 4.8 percent from the previous year and up 32.8 percent on a quarterly basis. Chase’s nine-month USDA volume translated into a 31.0 percent market share. Second-place Wells Fargo funneled $1.7 billion in USDA loans into ... [ chart ]

A precedent-setting court case decided in May has disrupted the MBS and ABS markets, according to the Securities Industry and Financial Markets Association and the Structured Finance Industry Group. The trade groups filed an amicus brief to the Supreme Court of the United States late last week, calling for the court to hear an appeal of the ruling in Madden v. Midland Funding. In May, the U.S. Court of Appeals for the Second Circuit ruled that federal preemption under the National Bank Act doesn’t apply to nonbanks that purchase loans from banks. The Madden ruling subjects nonbank purchasers of loans originated by banks to state usury laws. If a bank’s preemption from such laws isn’t transferred when a nonbank acquires a loan originated by a bank, the loan can be...

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 ]