Fannie Mae and Freddie Mac continued to tap investor interest in credit-risk transfer transactions over the last week or so, with each company announcing another deal involving more support from various elements in the insurance and reinsurance sectors. Last week, Fannie announced it has completed its latest Credit Insurance Risk Transfer transaction, which shifts credit risk on a pool of loans to a panel of reinsurers. In CIRT-2015-3 which became effective Aug. 1, 2015, Fannie retained...[Includes one data table]

The much-anticipated $150 million nonprime MBS deal from Angel Oak Mortgage Solutions appears to have hit a brick wall with concerns arising over representations and warranties on the transaction, according to one high-level source who claims to have knowledge of the deal. Both Angel Oak and the underwriter, Nomura Securities, this week once again did not return several media inquiries on what might have gone wrong. Originally, the bond – a privately issued transaction – was slated for sale to investors sometime in September but never came off. The source, who spoke to Inside MBS & ABS under the condition his name not be used, said...

A memo issued by the Internal Revenue Service this year regarding the tax treatment for certain real estate mortgage investment conduits has been a boon for investors in nonperforming loans, according to William Cejudo, a partner at the law firm of Clifford Chance. At the recent ABS East conference sponsored by Information Management Network in Miami, Cejudo provided some background on Technical Advice Memorandum 2015-17007, which was issued by the IRS in May. The memo covered a life insurance company’s formation of a REMIC that held impaired non-agency MBS. “It’s...

The recent ABS East conference prompted another round of introspection among participants in the non-agency mortgage-backed security market. While efforts to address concerns raised by potential investors are progressing, a multitude of issues continues to hamper non-agency MBS issuance. Issuers continue to focus on finding investors willing to buy AAA tranches of non-agency MBS. “Some of the AAA investors will come back when the pricing gets a little more ...

The inclusion of a deal agent or transaction manager in new non-agency mortgage-backed securities would significantly increase investors’ confidence in the sector, according to industry participants. Alessandro Pagani, a portfolio manager and head of securitized assets at Loomis Sayles, said a large number of institutional investors have pushed for a deal agent and the hope is that if non-agency MBS includes the feature, investors will buy into the deals ...

Riding a wave of heavy purchase-mortgage activity, Ginnie Mae issuers produced a record $128.23 billion of single-family mortgage-backed securities during the third quarter of 2015, according to a new Inside FHA/VA Lending ranking and analysis. The third-quarter figure, which includes FHA home-equity conversion mortgage MBS, was up 6.5 percent from the second quarter of this year. The previous record was $125.68 billion, set back in the third quarter of 2009. Loan-level MBS data, which do not include HECMs and have truncated loan amounts, show hefty gains in purchase-mortgage activity that more than offset sharp declines in refinance business. The flow of FHA purchase mortgages jumped 37.7 percent from the second to the third quarter, and VA purchase mortgages were up 37.9 percent over the same period. Meanwhile, refinance volume fell ... [ 2 charts ]

Ginnie Mae has announced revised rules for issuers seeking approval of changes in their business status due to an adversarial relationship with agencies, mergers, asset transfers or a change in ownership or control. The agency has been receiving many issuer requests and they are getting complicated, according to Ted Tozer, Ginnie Mae president. Issuers must comply with the updated guidance in order to remain an eligible participant in the Ginnie Mae mortgage-backed securities program. The guidance took effect immediately. Previously, issuers were required to notify Ginnie Mae in writing within five days of any material adverse change in their business relationships with Fannie Mae, Freddie Mac, FHA, VA, Rural Development, the Department of Housing and Urban Development’s Office of Public and Indian Housing or any other regulatory agency. Under the revised guidance, the ...

The supply of residential MBS in the market grew tepidly in the second quarter of 2015, but not enough to increase the overall securitization rate for home mortgages. A total of $6.335 trillion of single-family MBS were outstanding at the end of June, a slim 0.1 percent increase from the previous quarter. The supply of MBS has been bouncing slightly higher and lower over the past six quarters, without gaining much traction. With total home mortgage debt outstanding climbing by 0.4 percent during the second quarter, the share of securitized loans fell...[Includes two data tables]

Investors at the ABS East conference sponsored by Information Management Network last week in Miami largely agreed that many MBS and ABS sectors are stronger than they were before the crisis in terms of issuance and certainly in terms of performance. While the investor base for securities has declined from the boom times of 10 years ago, there are also fewer distressed sellers. “You tend to see that bonds are held in strong hands, which makes for a strong underpinning,” said Alessandro Pagani, a portfolio manager and head of securitized assets at Loomis Sayles. “It makes for a pretty good balance between supply and demand.” John Vibert, a managing director at Prudential Fixed Income, said...

The pricing disclosures mandated by the Financial Industry Regulatory Authority for ABS have had a mixed impact on the market, according to industry participants, with many claiming that the transparency has reduced liquidity. In June, FINRA started reporting post-trade price information for ABS via the Trade Reporting and Compliance Engine, better known as TRACE. The disclosures include the CUSIP, price and volume, all disclosed within 45 minutes after a trade is made. Actual volume is disclosed for trades below $10 million while trades above that amount are noted as “$10+ million.” The disclosures apply to publically-registered ABS along with deals in the private-placement 144A market. At the ABS East conference held by Information Management Network last week in Miami, Rishi Kapur, a managing director at Babson Capital, said...