Ginnie Mae this week warned that VA refinance loans, particularly Interest Rate Reduction Refinance Loans, may not be included in any new pool or loan package if they do not comply with the newly enacted law protecting VA borrowers from predatory lending. The agency announced new pooling guidance pursuant to the loan-seasoning provision in the Economic Growth, Regulatory Relief, and Consumer Protection Act, which President Trump signed into law last week (See details of the new law below ). The changes affect issuances of Ginnie mortgage-backed securities on or after June 1, 2018, but do not affect MBS issued before that date, according to the guidance. However, lenders seeking a guarantee after June 1 may have to recalibrate their loan-origination platforms to exclude refis that do not meet the new law’s seasoning requirements, said the Structured Finance Industry Group. The ...

California continued to lead all states in FHA and VA mortgage securitization in the first three months of 2018. The Golden State accounted for 15.3 percent of the $50.6 billion of FHA loans delivered into Ginnie Mae mortgage-backed securities in the first quarter. FHA loans comprised 18.2 percent of loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae, and 34.6 percent of agency-securitized loans with primary mortgage insurance. About 66.6 percent of FHA loans securitized during the period were for purchase mortgages while refinance loans accounted for 27.5 percent. The average loan-to-value ratio of FHA loans in Ginnie pools was 93.0 percent. The average credit score of 668.2 reflected FHA’s traditional base of lower-income and first-time homebuyers, with an average debt-to-income ratio of 42.4 percent. The other states among the top five in terms of FHA deliveries into Ginnie pools were ... [Chart]

President Trump this week announced Michael Bright as his choice to lead Ginnie Mae, an agency under the Department of Housing and Urban Development, even as Senate Democrats continued to delay vote on his nominee for FHA commissioner. Bright is currently Ginnie Mae’s executive vice president and chief operating officer, though he has been serving as acting president since Theodore Tozer stepped down on Jan. 20, 2017. Tozer served as Ginnie president under the Obama administration for nearly seven years. Bright joined Ginnie on July 11, 2017. Previously, he served as director for financial markets at the Milken Institute and as senior vice president of BlackRock/PennyMac. During his time with Milken, Bright co-authored a paper with Ed DeMarco, former acting director of the Federal Housing Finance Agency and currently president of the Financial Services Roundtable, which proposed to ...

After an extended period of steady growth in its investment in the residential MBS market, the banking industry changed course in early 2018 and reduced its participation in the market, according to a new Inside MBS & ABS ranking and analysis. [Includes two data charts.]

The volume of prime non-agency MBS issuance is on the rise as investor demand for the product increases. Pricing in the non-agency MBS market for jumbos is rivaling execution levels for holding the loans in portfolio, and some issuers are seeing better returns by placing loans in non-agency MBS instead of delivering them to the government-sponsored enterprises.

The average daily trading volume in agency MBS inched up to $220.7 billion in April, a stable but weak reading compared to the earliest months of the year, according to figures compiled by the Securities Industry and Financial Markets Association.

Redwood Trust boosted its net income in the first quarter of 2018 and continued to increase its originations of expanded-credit mortgages. The real estate investment trust is seeing strong demand for the loans in the secondary market and Redwood is set to issue its largest expanded-credit mortgage-backed security to date. Redwood had $46.9 million in net income in the quarter, up 51.4 percent from the fourth quarter of 2017 and up 26.7 percent from a year ago. The company sold ...

Most real estate investment trusts that specialize in the agency MBS market allowed their portfolios to decline slightly in the first quarter of 2018, according to a new Inside MBS & ABS analysis. [Includes one data chart.]

Fannie Mae and Freddie Mac continued to whittle away at their retained mortgage portfolios during the first quarter, though the pair still had $469.3 billion of MBS and whole loans on their books at the end of March. [Includes one data chart.]

Spreads on mortgage-backed securities with non-qualified mortgages have tightened in recent years, according to S&P Global Ratings. “Since non-QM deals first appeared in 2014, their AAA spreads have tightened, suggesting that the market may be growing more comfortable with this asset class,” the rating service said. The spread measures the price of MBS tranches compared with a benchmark international swap rate. Tighter spreads indicate greater demand from investors ...