Streamline refinancing helped boost FHA origination volume as lenders reported substantial increases on monthly and year-over-year bases, according to Inside FHA Lending’s latest analysis of FHA data. Despite increases in mortgage insurance premium and other policy changes aimed at reducing FHA market share and strengthening the Mutual Mortgage Insurance Fund, FHA endorsements were up 18.7 percent in January 2013 from December 2012, and a hefty 38.7 percent from January last year. However, FHA refis accounted for 54.3 percent of total production while purchase mortgages made up ... [1 chart]

Banks with major Ginnie Mae portfolios – and even smaller firms – increased their purchases of delinquent mortgages out of MBS pools in the fourth quarter compared to the third as a way to save money and refinance troubled loans. According to an analysis by Inside FHA Lending, the top 50 Ginnie Mae issuers bought $12.65 billion of problem loans out trusts in fourth quarter compared to $11.17 billion in the third, an increase of 13 percent. “Once you buy the loan it goes into your portfolio,” said Tim Rood, a partner in The Collingwood Group, a Washington-based advisory firm. “You can try to re-perform it and then re-securitize it,” he said. Wells Fargo, the largest Ginnie Mae servicer in the nation with a portfolio of $412 billion, purchased ... [1 chart]

A modest decline in FHA endorsements of jumbo loans in the fourth quarter of 2012 could presage further declines this year, following the Department of Housing and Urban Development’s recent proposal to raise the downpayment requirement to 5 percent, from 3.5 percent, for loans above $625,500. The FHA already has raised its jumbo mortgage insurance premiums to 1.55 percent annually and increased the monthly premiums on new, non-jumbo FHA mortgages by 10 basis points. The agency retained the 3.5 percent downpayment for new forward mortgages below $625,500. The increased premiums are ... [2 charts]

A major surge in the securitization of student loans helped push overall non-mortgage ABS issuance up 65.9 percent during the fourth quarter of 2012, according to a new Inside MBS & ABS ranking and analysis. Total non-mortgage ABS issuance climbed to $147.0 billion in 2012, up 15.9 percent from the previous year. It was the strongest market for ABS securitization since 2009, but still trailed the levels reached prior to the financial market collapse in 2008. ABS backed by retail vehicle financing were...[Includes two data charts]

The federal judge in charge of overseeing the multiple lawsuits filed by the Federal Housing Finance Agency against non-agency mortgage-backed securities issuers for allegedly misrepresenting deals that were sold to Fannie Mae and Freddie Mac rebuffed yet another motion by one of the banks to shut down the legal action. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of Manhattan rejected a motion to reconsider her December decision allowing the FHFA to proceed on behalf of the GSEs with most of its fraud claims against Ally Financial. On Dec. 19, the judge denied most of Ally’s motion to dismiss, including the defendant’s request that the court strike the demand for punitive damages, finding there were sufficient factual allegations in the FHFA’s complaint to move forward with its fraud complaint.

Analysts expect the U.S. economic recovery to continue on a slow, weak path into 2013 with the potential for a new recession that could weaken the residential MBS market. At Standard & Poor’s, analysts predict a “slow and uneven” economic recovery with a 15 percent to 20 percent chance of another recession that would be less severe than the 2008-2009 financial crisis but potent enough to sap the MBS market. S&P assumes a reversal in home prices and unemployment rising to near 9 percent in 2013, which could hamper borrower capacity to make their mortgage payments. Overall, S&P’s outlook for the single-family MBS market is...

Ginnie Mae is increasing its scrutiny of issuers and tightening the screening of new issuer applicants to ensure that all participants in its mortgage-backed securities program fulfill their obligations. The agency is concerned about issuers coming in with little understanding of how the program works and what their responsibilities are, and putting Ginnie Mae at risk, said Michael Drayne, senior vice president at Ginnie Mae’s Office of Issuer and Portfolio Management, during a recent webinar hosted by Inside Mortgage Finance. Drayne noted Ginnie Mae’s success, saying that the only way it would not be profitable is ...

Mortgage-backed securities production by the top Ginnie Mae issuers in the third quarter of 2012 slipped but not by enough to offset the 32.1 percent gain on a year-over-year basis, according to an Inside FHA Lending analysis of Ginnie Mae data. Ginnie Mae MBS issuance fell by a mere 0.1 percent from the second quarter, a hiccup that would have been easily cured had any of the top five issuers posted even a modest gain. All five issuers saw their issuances fall during the quarter. The top issuers reported a total of $100.57 billion in MBS sold to investors at the end of the third quarter, down from $100.62 billion the previous quarter. The slip disrupted an ...

Participants in collateralized loan obligation deals remain optimistic about the future of the market although they caution that macroeconomic issues might still derail the product’s slow return. In a panel discussion hosted by Standard & Poor’s last week, CLO market executives maintained a positive outlook for CLO performance as the market experienced a resurgence early this year. The market collapsed after the financial crisis but has apparently been resuscitated by investors hungry for high-risk, high-return securities. CLOs acquire...

Delinquencies on non-agency MBS will likely increase temporarily due to Hurricane Sandy, according to industry analysts, but long-term losses due to the storm are expected to be minimal. Insurance will play a key factor in overall losses, and estimates vary significantly on the extent of coverage in the affected areas. Moody’s Investors Service projected this week that non-agency MBS are unlikely to suffer material losses due to Sandy even though the affiliated Moody’s Analytics estimated the damage to residential housing from the storm will hit $10.5 billion. “Even if damages exceed...