A long-expected correction in MBS prices was put on hold this week as interest rates took another dive and concerns continued to mount about China’s stagnant economy and weakening oil prices. As Inside MBS & ABS went to press late this week, the yield on the benchmark 10-year Treasury was at 1.61 percent, the lowest it’s been in roughly four years. The volatility in the market was sparking...

Investors in the secondary market are continuing to shy away from mortgages with so-called TRID errors – even minor ones – taking the advice of legal counsel and due diligence providers who are telling them to stay clear because of assignee liability issues. Late last week, senior executives from the Structured Finance Industry Group traveled to Washington to meet CFPB Director Richard Cordray, but one official familiar with the get-together said the regulator conveyed a message of “Thanks for coming in, but we don’t think there’s a problem.” For now, most of the concern about a stalled secondary market has focused...

Non-agency mortgage-backed security issuers and investors continue to work to make adjustments that will help increase activity in the market. Among the issues under discussion are representations and warranties and the use of a deal agent or transaction manager. “Industry participants are now focusing on clearly identifying which parties to a transaction are covered by the current rep-and-warrant framework, and to which activities it is applicable,” according to a recent report ...

The outlook for publicly traded real estate investment trusts that invest in agency MBS and related products is starting to improve, in part, because competing investments are looking ugly. That might seem like a small consolation prize for REITs, but several are posting decent earnings, even though the book value of their common stock is relatively weak. Meanwhile, while certain investors shun their stocks, many companies have engaged...

Securitizations backed by proceeds from franchises such as Domino’s Pizza and Dunkin Brands hit a record in terms of issuance volume in 2015. Industry participants suggest the market for such deals, known as whole-business securitizations, is set to expand due to growing interest from investors. There was more than $7.0 billion in WBS issuance in 2015, exceeding the issuance of the three prior years combined, according to Cory Wishengrad, a senior managing director and head of structured products origination at Guggenheim Securities. Wishengrad and others involved with structuring franchise/royalty securitizations spoke at a recent roundtable hosted by Standard & Poor’s. “The WBS sector has made...

Securities backed by nonperforming mortgages, one of the biggest sources of volume currently in the non-agency MBS market, are expected to continue to look good for investors and issuers, even as the housing market recovers. This week, analysts at Bank of America Merrill Lynch recommended investing in senior tranches of non-agency MBS backed by nonperforming loans. “As things get bad for risk assets and we recommend positioning for further widening in risk premium, NPL senior tranches stand out...

Clean-up calls were recently completed on three jumbo MBS issued by Redwood Trust in 2010 and 2011, marking the first such actions on post-crisis jumbo MBS. While MBS investors can take some losses when clean-up calls are completed, analysts suggest that’s not currently much of a concern for post-crisis jumbo MBS. Holders of clean-up call rights, typically servicers, have an option to purchase the remaining loans in an MBS when the outstanding balance of the deal falls below a certain threshold. Redwood completed...

For full-year 2015, the average daily trading volume for agency MBS improved by 9.2 percent from the year prior to $194.4 billion, according to figures compiled by the Securities Industry and Financial Markets Association. Although that might seem like something to crow about, there’s some bad news in the numbers: December marked the worst reading of the year with an average daily trading volume of just $149.2 billion. No other month comes close, not even November at $180.2 billion. Over the past 10 years, 2015 will go down...

The volume of non-agency mortgage-backed securities held by banks and thrifts has declined much more quickly than the amount of total non-agency MBS outstanding. Banks and thrifts held a total of $96.76 billion in non-agency MBS as of the end of the third quarter of 2015, down 28.4 percent compared with the end of the third quarter of 2014, according to a new analysis and ranking from the Inside Mortgage Finance Bank Mortgage Database. In that span ... [Includes one data chart]

A&D Mortgage recently started offering non-qualified mortgages on a wholesale basis via mortgage brokers. The lender, whose originations are focused in southern Florida, noted that its underwriting for the loans includes “limited income and asset documentation” including options for stated income and stated assets. A&D offers non-QMs aimed at investors and foreign nationals. The lender said the loans are typically for non-owner-occupied ... [Includes four briefs]