To attract large investors, the Treasury Department suggests that non-agency MBS include a deal agent with a fiduciary duty. “Under corporate law, directors must discharge two primary fiduciary duties: duty of care and duty of loyalty,” said Michael Stegman, counselor to the Treasury on housing finance policy, in a speech late last week. “In the context of private-label securitizations, these duties seemed sensible and logical to us.” He used...

New lenders that specialize in loans that don’t meet the government’s qualified-mortgage standards continue to draw up blueprints and raise capital – or at least try to – but very few of them are banking on securitization as a take-out strategy. However, all that may change with the launch of LendSure Financial Services, a San Diego startup headed by a handful of veterans from the subprime industry of yesteryear, including Jim Konrath, Stu Marvin and Joe Lydon. According to one non-agency investor briefed on LendSure’s plans, securitization is...

While jumbo MBS issued in recent years have performed exceptionally well, some senior-support bonds on new jumbo MBS have credit risks similar to what was experienced during the financial crisis, according to analysts at Andrew Davidson & Co. In a recent analysis, Richard Ellson and Allison Ying raised concerns about the super-senior structures that have become common on jumbo MBS in recent years. They noted that when Redwood Trust started working to revive jumbo MBS issuance in 2010, the issuer used a much simpler structure. However, in the past few years, Redwood and many other issuers have increasingly used...

The Treasury Department is making progress corralling various participants in the non-agency mortgage-backed security market, slowly prompting changes aimed at attracting large investors. The effort started nearly a year ago, when Michael Stegman, counselor to the Treasury on housing finance policy, first proposed the issuance of a benchmark transaction in November. “The benchmark transaction process has reset relationships among transaction parties and is ...

Funds managed by Blackstone Tactical Opportunities issued the first multi-borrower single family rental security this week and the market appears to be set to grow throughout the year, according to industry analysts. The $229.53 million B2R Mortgage Trust 2015-1 was issued this week with AAA ratings from Fitch Ratings. “We think...

The judicial process for Bank of America’s long-pending $8.5 billion settlement involving non-agency MBS issued by Countrywide Financial is near its conclusion and investors could see payouts as soon as August, according to analysts at Barclays Capital. The settlement was announced in 2011, and after years of legal maneuvering, approved by the Appellate Division of the New York Supreme Court in March. Bank of New York Mellon is the trustee on the 530 non-agency MBS covered by the settlement. “The trustee’s approval application to the New York Supreme Court suggests...

An anonymous group of veteran players in the mini-correspondent channel is pushing the Consumer Financial Protection Bureau to update the guidance it issued for the sector last year. The investor group, which purchased more than $8 billion in loans from mini-correspondents in 2014, offered alternative criteria it recommends the CFPB use instead when trying to determine if an entity has in fact made the transition from mortgage broker to correspondent lender. The CFPB issued...

In an effort to convince large investors to buy AAA tranches of non-agency MBS, the benchmark transaction under development with help from the Treasury Department will include a deal agent or transaction manager. “Part of the centerpiece [of the non-agency MBS benchmark transaction] is around the role of a new player in these transactions, an independent deal agent that represents the interests of the investors,” said Michael Stegman, counselor to the Treasury ...

The market impact of high prepayment speeds in recent months has been muted due to the Federal Reserve’s large holdings of agency MBS serviced by nonbanks, according to industry analysts. However, the increased presence of nonbank servicers in agency MBS has prompted adjustments by investors. Loans in agency MBS serviced by Quicken Loans and Provident Financial, among other nonbank servicers, have recently been prepaying at ...

Use of a deal agent in new non-agency mortgage-backed securities will help convince large investors to return to the market, according to industry participants. The benchmark non-agency MBS in the works with help from the Treasury Department will include a deal agent, according to Michael Stegman, counselor to the Treasury on housing finance policy. At a talk this week hosted by the Financial Services Roundtable and CoreLogic, Stegman noted that Treasury continues to ...