Commercial banks and thrifts boosted their combined holdings of residential MBS to a new record, $1.661 trillion, during the first quarter of 2016, according to a new Inside MBS & ABS analysis. The data include held-to-maturity and available-for-sale accounts, but not trading assets, which included another $45.99 billion of residential MBS as of the end of March. The banking industry’s MBS holdings in HTM/AFS portfolios rose 1.0 percent from the end of 2015, and they were up a substantial 5.2 percent from a year ago. It’s worth noting that total assets in the banking industry actually rose a bit faster, by 2.1 percent, dropping the MBS share of total assets down slightly to 10.2 percent. Unlike some quarters, when activity by one or two dominant banks accounts for most of the industry’s change, the first-quarter increase was...[Includes two data tables]

After nearly five years of legal entanglements, investors will soon receive their share of the $8.5 billion Bank of America agreed to pay in June 2011 to resolve legacy mortgage-repurchase and servicing claims associated with Countrywide Financial Corp. The payouts were delayed by legal wrangling over whether trustee Bank of New York Mellon had the authority to settle. Last year, the New York Supreme Court ruled in the trustee’s favor, and a state court judge recently approved the severance order and partial final judgment, which cleared the way for BNYM to begin distributing the settlement proceeds from 512 of the 530 trusts in the case. Twenty-two investors that suffered significant losses for their failed investment in MBS sold by Countrywide prior to the collapse of the housing market are...

Over the past two weeks, MBS prices have been on a downward trajectory, leading some market watchers to ponder whether the long-awaited correction in values is finally upon the industry. But no one is quite ready to wave the white flag. Moreover, there’s a school of thought that says any rise in the yield on the 10-year Treasury bond could be short lived and, at some time over the next six to 12 months, rates might head south again, igniting yet another small refi rally. Some also believe the chance of a recession is in the cards. Barry Habib, who runs MBS Highway, a rate-locking advisory service, thinks...

The proposed standards drafted by the Structured Finance Industry Group regarding mortgage disclosure rules will help address issues in the non-agency market, according to investors and rating services. Moody’s Investors Service hosted a meeting last week with a group of investors, issuers and others involved in non-agency MBS. Among other issues, the group discussed the Consumer Financial Protection Bureau’s combined Truth in Lending Act and the ...

Clayton Holdings was rated as a deal agent for non-agency mortgage-backed securities last week. The rating by Morningstar Credit Ratings was the first formal assessment of a deal agent, a role aimed at improving protections for investors in new non-agency MBS. Morningstar also assessed Clayton as a representation-and-warranty reviewer, assigning ratings of MOR RV2 for both functions. The firm’s rating scale ranges from RV1 to RV4 and Morningstar said it is the only ...

For the issuance of mortgage-backed securities with non-qualified mortgages to take off, industry analysts suggest that banks need to play a larger role. To this point, nonbanks have been the only issuers of non-QM MBS. Ron D’Vari and Timothy Bernstein, analysts at New Oak, authored an overview of non-QM MBS issued in the latest issue of The Journal of Structured Finance, which was published this month. The analysts said real estate investment trusts and hedge funds ...

A group of investors pushed back against suggestions that so-called private capital won’t return to the market for new non-agency mortgage-backed securities. The Association of Mortgage Investors took exception to recent comments by Timothy Mayopoulos, president and CEO of Fannie Mae. He predicted that the non-agency MBS market won’t come back due to significant losses suffered during the financial crisis. However, the AMI said the government-sponsored enterprises are ...

Despite low inventory and financing conditions that can favor other types of homebuyers, first-timers are increasing their market share, according to the latest Campbell/Inside Mortgage FinanceHousingPulse Tracking Survey. First-time homebuyers accounted for 38.9 percent of home purchases in April, based on a three-month moving average. That was up from a 38.1 percent share the previous month and a 37.2 percent share in April 2015. “Demand from first-time homebuyers is...

Analysts at Moody’s Investors Service believe that the Structured Finance Industry Group’s draft proposal on the CFPB’s integrated disclosure rule, otherwise known as TRID, generally is up to the task of addressing the relevant risks for U.S. residential mortgage-backed securities (RMBS), notwithstanding the uncertainty associated with the pending clarifying rulemaking from the bureau. The rule merges the mortgage disclosures mandated by the Truth in Lending Act and the Real Estate Settlement Procedures Act. “SFIG’s draft proposal to standardize the framework for reviewing and grading loans for TILA-RESPA Integrated Disclosure (TRID) rule compliance is adequate to identify those compliance risks that are likely to cause losses to RMBS trusts, aside from one grading provision with which we disagree,” said Moody’s Credit ...

Real estate investment trusts that specialize in the residential MBS market held $232.44 billion of agency and non-agency MBS at the end of March, according to a new Inside MBS & ABS analysis. The MBS holdings of 16 top mortgage REITs were down 0.3 percent from the fourth quarter and off 11.9 percent from March 2015. However, several REITs boosted their positions during early 2016 and the industry is slated to see a major merger of two firms ... [Includes one data chart]