Bank holding companies reported a big increase in agency MBS held in trading accounts during the third quarter. The industry also boosted its commercial MBS and ABS holdings. (Includes two data tables.)

Capitol Federal Savings Bank took a loss of about $200 million on the sale of $1.3 billion of securities (largely MBS) with low interest rates. The bank reinvested the proceeds in higher-yielding assets and paid off some debts. Pacific Premier Bank made a similar move this week.

GSE pass-through holdings took a big hit in the third quarter, accounting for most of the top banks' decline in MBS investment. But bank trading accounts saw a sizable increase. (Includes two data tables.)

Mortgage industry trade groups continue to pressure the Biden administration to intervene in the MBS market to help struggling homebuyers overcome high interest rates and low supply.

HUD IG launches inquiry into Ginnie’s handling of Reverse Mortgage Funding’s bankruptcy; DBRS revises rating criteria for commercial MBS; WeWork exposure in commercial MBS; another record profit for Farmer Mac; ETF targets newer agency MBS.

Spreads on agency MBS widened during the third quarter, leading to a decline in values for agency MBS holdings. Still, investors stress that agency MBS is an attractive investment option.

Attendance at the ABS East conference hit a record this week even as industry participants are anticipating a recession. Parts of the ABS market are offering investors better returns than corporate debt.

Bank demand for agency MBS is weak, leading to wider spreads and losses on MBS holdings for some. Banks are also reducing their lending activity, providing an opening for nonbanks.

Dimensional Fund researchers argue that MBS pricing is the sum of expected returns and the option-adjusted spread.

The Climate Impact Suite will allow whole-loan investors to assess expected losses due to climate risk.