Over the past year, small and medium-sized lenders have dominated the activity in the merger and acquisitions market, but all that could be changing as consolidation fever begins to gather steam and larger, struggling players consider a take-out strategy. Also, the recent announcement that the Blackstone Group would buy a majority stake in Stearns Lending – the nation’s 12th largest originator – has sparked hopes among investment bankers that potential sellers are finally lowering their expectations when it comes to price. An offering book on Stearns had been circulating for at least a year. Meanwhile, analysts who follow Stonegate Mortgage, which ranks 25th among originators, this week suggested...

Commercial banks and savings institutions continued to grow their investments in agency MBS during the second quarter of 2015, according to a new Inside MBS & ABS ranking and analysis. Banks and thrifts held $1.583 trillion of agency and non-agency MBS on their balance sheets at the end of June. That was up just 0.3 percent from the first quarter, but it was the highest level since the first nine months of 2012, when bank and thrift MBS holdings topped $1.60 trillion. All the gain came...[Includes two data tables]

Two more long-running legacy MBS lawsuits were resolved last week after defendants Goldman Sachs and Deutsche Bank separately agreed to settle with plaintiffs. The NECA-IBEW Health & Welfare Fund, a union pension fund in Decatur, IL, is seeking preliminary court approval of a $272 million settlement with Goldman Sachs on behalf of entities that purchased MBS issued by defendant GS Mortgage Securities and which Goldman underwrote. If approved, the settlement would put...

Investors have a lot more to worry about these days than the collateral damage stemming from problems in Greece and China and a bumpy U.S. stock market. Ratings analysts indicate some new energy-related risks – most notably earthquakes near “fracking” sites and a plunge in the price of oil – have emerged as potentially significant challenges to investors in real estate and to mortgage lenders. Analysts at Standard & Poor’s said in a recent client note that earthquakes in proximity to fracking sites introduce a unique risk factor into the investment equation for those with a stake in real estate located in affected regions. “In particular, determining whether or not earthquake coverage is...

Issuance of jumbo mortgage-backed securities has slowed somewhat this summer, with a lack of consensus from industry participants on whether it’s worth participating in the market. Barclays Capital, which helps fund jumbo MBS activity, said the deals offer about 50 basis points of option-adjusted spread compared with agency MBS. Analysts at Barclays said newly-issued jumbo MBS are attractive for investors less concerned about liquidity. Officials at Anworth Mortgage Asset Corp ...

The monitor of a $2.0 billion settlement involving Ocwen Financial revealed last week that the nonbank was found to have failed another metric under the settlement. However, the monitor noted that Ocwen has worked to address many of the issues that have dogged the company over the past year. The monitor re-tested Ocwen on a number of metrics under the settlement due to concerns that were raised about the integrity of the servicer’s internal review group ...

Real estate investment trusts that focus on the MBS market saw the value of their holdings slump again during the volatile second quarter of 2015. Top mortgage REITs reported a fair market value of $249.10 billion for their single-family MBS holdings as of the end of June. That was down 5.6 percent from the previous quarter, and it was the group’s lowest MBS portfolio valuation since the fourth quarter of 2011. The decline came...[Includes one data table]

The application of capital requirements to MBS and other structured finance products in the coming years will likely trump any typical collateral analysis investors currently consider, according to analysts at Standard & Poor’s. In a report published late last week, the analysts said global capital requirements have the potential to become impediments to providing financing via securitized products. “Of particular investor focus recently are...

The trajectory of delinquencies for U.S. timeshare ABS is continuing its downward trend, and issuance is expected to be near or perhaps even exceed last year’s level, with solid prospects for continued stable growth throughout the rest of the year, according to a consensus of industry analysts. U.S. timeshare ABS delinquencies fell again in the second quarter of 2015 to their lowest level in eight years, the latest index results from Fitch Ratings show. Total delinquencies for the second quarter were 2.66 percent, down from 2.79 percent in the first quarter and 2.92 percent a year ago. The ratings service has seen...

loanDepot, LLC, made a big splash in the market this week, becoming the first nonbank lender to begin making ‘A’ paper second liens since the housing bust. The Irvine, CA-based lender fully expects it may soon have competition, but believes by being the first in, it will have a leg up on whichever players enter the fold. However, a quick call to a handful of nonbanks turned up...