A proposal issued by federal regulators last week to ease certain standards for capital and liquidity will likely prompt banks to reduce their holdings of MBS, according to industry analysts. The complex proposal could prompt a $65.0 billion reduction in bank holdings of MBS, according to estimates by the Federal Reserve and Wells Fargo Securities.

The Structured Finance Industry Group continues to wrestle with the demons of the past, the myriad issues that contributed to the downfall of the MBS and ABS markets a decade ago. Individuals working on various workstreams offered progress reports, stressing that the project is focused on best practices rather than rigid standards, at the group’s Residential Mortgage Finance Symposium in New York this week.

One large fixed income investor is working with clients now to make sure they’re prepared to invest in the new single security when it rolls out next summer. Western Asset Management is advising investors to consider aggregating their mortgage concentration and exposure limits for the uniform MBS that Fannie Mae and Freddie Mac will issue in the to-be-announced market.

An affiliate of Verus Mortgage Capital revised the structure of a planned non-agency mortgage-backed security, opting for a more traditional approach after initially planning to test a unique variation. The planned closing date for the $442.3 million issuance was also pushed back. When presale reports for Verus Securitization Trust 2018-3 were published in mid-October, the deal was structured with an initial pro rata structure that would shift to a sequential structure. The MBS ...

Ginnie Mae officials would welcome a return of commercial banks to the program, but they are not planning on it. Instead, the agency is looking the other way: at expanding financing options for nonbank portfolios of mortgage servicing rights. The current version of Ginnie’s acknowledgement agreement has been successful, enabling nonbank servicers to arrange MSR financing for virtually their entire portfolios, said Michael Drayne, a senior vice president at Ginnie, during the Residential Mortgage Finance Symposium sponsored by the Structured Finance Industry Group this week in New York. Although a number of banks are financing nonbank servicing portfolios, many are still not participating, he said. Karen Gelernt, a partner at Alston & Bird, noted that many banks continue to have anxiety about what will happen if a servicer defaults on its Ginnie requirements. Speaking as moderator on a panel with ...

Although prepayment speeds on Ginnie Mae MBS are now at the lowest level since 2014, agency Executive Vice President Maren Kasper expressed persistent concerns about the matter in remarks at the annual convention of the Mortgage Bankers Association this week.

Top-notch ratings assigned by three firms to a non-agency mortgage-backed security from Galton Funding prompted criticism from Fitch Ratings, which didn’t rate the issuance. The planned $452.7 million Galton Funding Mortgage Trust 2018-2 diverges from traditional non-agency MBS in its treatment of unpaid interest from delinquent mortgages. Fitch suggested that the change to the deal structure was so significant that it wouldn’t rate the transaction. Fitch noted that losses from unpaid ...

The average daily trading volume in agency MBS totaled $219.4 billion in September, a modest increase from the month prior, which marked a low point for the year, according to figures compiled by the Securities Industry and Financial Markets Association.

Issuance trends for non-agency mortgage-backed securities stocked with newly-originated mortgages were mixed in the third quarter, according to a new ranking and analysis by Inside Nonconforming Markets. Issuance of prime non-agency MBS declined significantly on a sequential basis in the third quarter. And for the first time, expanded-credit MBS issuance volume topped prime non-agency MBS activity. Some $3.58 billion of expanded-credit MBS was ... [Includes one data chart]

Ginnie Mae issuance of single-family mortgage-backed securities rode a homebuying wave during the third quarter of 2018, according to a new Inside FHA/VA Lending ranking and analysis. Ginnie issuers produced $105.63 billion of new MBS backed by forward mortgages during the July-September cycle, a 7.1 percent increase from the second quarter. That brought year-to-date production to $296.88 billion – down 11.3 percent from the first nine months of 2017. Purchase mortgages provided the boost for the Ginnie market. Some $75.69 billion of FHA and VA purchase mortgages were pooled in Ginnie MBS in the third quarter, a sturdy 13.1 percent increase from the previous period. Purchase loans accounted for 75.1 percent of FHA and VA loans securitized in the third quarter, compared to 64.7 percent for all of last year. Although production of these loans has gone up since the first quarter, year-to-date volume ... [Charts]