The federal government's gradual pullback as an investor in the MBS market is beginning to open more space for commercial banks and other private investors. Commercial banks increased their investment in residential MBS by a solid 6.5 percent during the first quarter, pushing their combined holdings to a record $1.311 trillion. That represented about 20.0 percent of an overall MBS market that has been shrinking since the third quarter of 2009. Bank holdings of residential MBS were up 14.2 percent from the first quarter of last year. Through the U.S. Treasury, the Federal Reserve and the retained holdings of Fannie Mae and Freddie Mac, the federal government held... [Includes two data charts]

U.S. banks are generally more liquid than Basel III liquidity standards would suggest thanks in large part to the treatment of banks' large portfolios of GSE-related securities, according to Fitch Ratings.

The so-called RMBS 2.0 features squeaky-clean collateral and high-definition transparency, but industry experts say, more importantly, that after years of mostly talk there is now some momentum in the market. Adam Yarnold, a managing director at Barclays Capital, said there are half a dozen residential mortgage conduits – including his firm – that are buying loans. During a panel session at the secondary market conference sponsored by the Mortgage Bankers Association, he noted that more broker/dealers are in the wings. Barclays is buying high-quality loans with loan-to-value ratios below 70 percent and debt-to-income ratios that come close to the standards proposed by federal regulators for qualified residential mortgages, Yarnold said. The company hosts a web-based portal through which it locks loans and...

A handful of high-profile developments on the representations and warranties front over the last few months is prompting non-agency investors to contemplate whether they should start pricing in the benefits associated from repurchases. A few weeks ago, Bank of America and mortgage insurer Assured Guaranty reached a...

The Treasury Market Practices Group wants to improve efficiency in the agency MBS market by imposing charges for failure to complete transactions. “The TMPG is proposing fails charges in the agency debt and agency MBS markets in order to reduce the incidence of delivery failures in the market,” said Tom Wipf, chair of...

Some investors are ready to resume participation in the non-agency market while most others will take a wait-and-see approach, based on comments made at the secondary market conference sponsored by the Mortgage Bankers Association this week in New York City. Steve O’Connor, senior vice president of public policy and...

“The [jumbo] market is much bigger than the banks’ balance sheets,” according to Randy Robertson, a managing director and co-head of securitized products at BlackRock. The firm’s jumbo mortgage real-estate investment trust has been operating for four months and aims to help re-establish the...

While working to establish a jumbo whole loan conduit, PennyMac Mortgage Investment Trust has been able to turn profits by investing in distressed mortgages. The real-estate investment trust avoided purchases of mortgage-backed securities during the first quarter of 2011 and increased its profits due to...

A provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act allowing federal agencies that insure mortgage loans to develop rules defining “qualified mortgages” (QM) for their loans may not be ideal for investors, according to industry attorneys. In addition to a recent Federal Reserve proposed rule on ability to repay ...

The current method of paying servicers could stand to be improved, but regulators and secondary market investors need to bear in mind that change would have ripple effects throughout the industry, according to a new analysis by Mortgage Industry Advisory Corp., a consulting firm based in New York. “Changing the servicing fee from its current form may...