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...

Both of the government-sponsored enterprises are on track to meet the 2015 risk-sharing goals established by the Federal Housing Finance Agency with a quarter of the year to spare. Officials at Fannie Mae, Freddie Mac and the FHFA said the GSEs will continue to work to expand the risk-sharing efforts, which are popular among many investors in the secondary market. At the ABS East conference produced by Information Management Network last week in Miami, Scott Smith, an associate director of capital policy at the FHFA, said he would like to see continued efforts to broaden the investor base for risk-sharing transactions. More than 160 investors have bought...

The nation’s subservicing specialists increased their contracts by a modest 4.4 percent on a sequential basis in the second quarter of 2015, a sign that many originators would rather outsource the nitty-gritty chore of loan processing to others instead of doing it in house. Compared to the same period a year earlier, subservicing grew a more impressive 20.5 percent to $1.410 trillion, according to exclusive survey figures compiled by Inside Mortgage Finance. The increasing complexity and compliance cost of servicing make...[Includes one data table]

“It’s amazing that we’re talking about this seven years after the financial crisis,” said Bob Behal, a principal and co-head of ABS/commercial MBS Investments at Vanguard Group, during this week’s ABS East conference in Miami. He was referring to the practice of rating shopping, which is a current practice, particularly in the commercial MBS market, according to a number of industry participants. A panel regarding reforms for the rating services and due diligence providers attracted a standing-room audience at the conference produced by Information Management Network. The conference was...