Six months ago, AmeriHome Mortgage of California was a little known subsidiary of Impac Mortgage Holdings. But not anymore. Now controlled by Athene Holding Ltd., an insurance company owned by Wall Street veteran Leon Black, the nonbank lender is gearing up to make a splash in the jumbo and non-agency market as a correspondent buyer of mortgages. “They’re...

Major post-crisis changes in the mortgage market should boost new issuance of residential MBS and have a long-lasting, positive impact on credit, according to Moody’s Investors Service. The rating service cites three key developments that will continue to support a strong credit environment for new MBS issuance, starting with the final rule on ability to repay and qualified mortgages. Moody’s believes the rule will help MBS performance by improving the reliability and accuracy of data lenders use to underwrite loans. Under the ATR rules, lenders are required...

Waiting for a large merger or acquisition to happen in the mortgage market is a bit like waiting for Godot: there’s plenty of talk about his arrival, but he may never show. “Right now there’s a large discrepancy between what the buyer wants to pay and what the seller wants to sell at,” said Chuck Klein, managing partner in Mortgage Banking Solutions, Austin, TX. “Any company that’s making money will not sell at just book value.” One large company that likely will not be sold this year is...

The International Organization of Securities Commissions is working on a set of “good practices” to provide to the vast majority of the world’s securities regulators as part of an effort to prompt securities investors to reduce their reliance on credit ratings. While participants in the U.S. structured finance industry suggest that reliance on credit ratings diminished after the financial crisis, many funds continue to have guidelines that reference credit ratings. Some investors, for example, couldn’t buy into risk-sharing transactions from the government-sponsored enterprises unless the deals received investment-grade ratings. IOSCO recently issued...

The volume of outstanding commercial MBS continues to hit record highs and the number of active lenders is near levels seen before the financial crisis. While issuers suggest that the industry is much different than in 2007, there are concerns about looser underwriting. Some $86.48 billion in commercial MBS was issued in 2013, according to the Inside Mortgage Finance MBS Database. And while issuance in the first quarter of 2014 was lower than three of the four quarters in 2013, Standard & Poor’s projected this week that issuance of commercial MBS could hit $90.0 billion this year. The issuance has been prompted...

Real estate investment trusts that specialize in the MBS market held $261.0 billion of mortgage securities in their portfolios at the end of March, according to a new Inside MBS & ABS analysis. That was down 1.4 percent from the end of the fourth quarter. REITs have been de-leveraging and scaling back their MBS holdings since the third quarter of 2012, when the Federal Reserve began its massive spending spree in the agency MBS market. A few REITs began rebuilding...[Includes one data chart]

As safe as the qualified mortgage space might appear to be, there have been a number of challenges to address and overcome for smaller institutions originating QM loans intended for sale in the secondary market, according to a representative of one such lender at the American Bankers Association’s 2014 regulatory compliance conference in New Orleans this week. Bruce Schultz, senior vice president and head of secondary mortgage operations for SpiritBank, a family-owned community bank in Tulsa, OK, told attendees he’s heard from several industry peers who have expressed the view that the secondary market ‘would be a slam-dunk’ for his institution under the QM rule because “‘you’ve got automated underwriting.’” Maybe not...

Industry representatives and policy wonks diverge in their opinions about whether federal financial regulators will put out a final rule or another proposed final rule as the next step in the long-delayed risk-retention rule for asset securitizers. The qualified residential mortgage designation – which would exempt non-agency MBS from the five percent risk-retention requirement – has been one of the biggest controversies. According to Politico, the Securities and Exchange Commission continues to hold up a final deal because its staff thinks a minimum downpayment requirement for QRM would better protect investors. Under the latest version of the rule, the QRM definition would be synched...

Congressional legislative action – something likely out of reach for at least the next two years – is either a part of the problem or the only solution to unraveling the final fate of Fannie Mae and Freddie Mac, according to two distinctly different schools of thought being argued this week. The rhetorical boxing match pitted Urban Institute Fellow Jim Parrott’s thesis that only a legislative fix by Congress can free the two government-sponsored enterprises from the status quo against Jim Millstein, CEO of Millstein & Co., who contends that the GSEs should emerge recapitalized from conservatorship forthwith, a feat that can and should be executed via “administrative reform.” Parrott fired...

A New York federal judge was out of line and beyond his discretionary authority when he rejected the Securities and Exchange Commission’s proposed $285 million settlement with Citigroup in 2011 stemming from the bank’s alleged mishandling of MBS, an appeals court ruled this week. A three-judge panel of the U.S. Second Circuit Court of Appeals vacated the district court’s order, holding that Judge Jed Rakoff of the Southern District of New York abused his discretion by applying an incorrect legal standard to his review of the settlement. Rakoff refused to accept the deal between the SEC and Citi because it did not contain an admission or denial of guilt. The appeals court held...