Fannie Mae and Freddie Mac reduced their combined mortgage investment portfolio by 13.7 percent last year by focusing on less-liquid assets. The two government-sponsored enterprises still had $821.7 billion of mortgages and MBS on their books at the end of the year. Freddie reported that it sold $16.5 billion of less-liquid assets such as unsecuritized mortgages, multifamily assets and non-agency MBS. At the end of the year, some 59 percent of its portfolio was designated as less liquid, down from 62 percent at the end of 2013. The Federal Housing Finance Agency in 2013 directed...[Includes one data chart]

A handful of nonbank mortgage companies reporting substantial losses during the fourth quarter weighed down industry-wide mortgage banking income, according to a new Inside Mortgage Trends analysis of earnings reports. A diverse group of 31 mortgage lenders that includes the biggest players in the market earned a combined $3.227 billion on their mortgage banking operations during the fourth quarter. That was down 8.2 percent from the group’s $3.516 billion during the third quarter. The fourth quarter was...[Includes one data chart]

Ocwen Financial – once deemed the fastest-growing residential servicer in the nation – is now facing huge shrinkage and is undergoing what some analysts and investment bankers are now calling a managed or “controlled” liquidation. The questions facing investors and business partners of the company is how fast can Ocwen shrink and what will be left for shareholders other than a pile of cash. “This could be...

CashCall recently started offering loans that do not meet qualified mortgage standards. The lender’s “NQM” program targets borrowers who cannot qualify for agency financing. The minimum credit score is 680 and CashCall is flexible in determining ability to repay, including the use of cash flow from investment accounts. Home Loan Servicing Solutions announced this week that no non-agency mortgage-backed security investors have ... [Includes two briefs]

Cherry Hill Mortgage Investment Corp., which has 76 percent of its assets invested in MBS, plans to whittle that down a bit and make a major push into mortgage servicing rights. The question is: will other real estate investment trusts follow suit? One REIT executive, who spoke under the condition his name not be used, said...

Credit enhancement levels for commercial MBS increased in the last quarter of 2014, which could lead to higher credit-support requirements for 2015 CMBS deals, according to Fitch Ratings. “The rating agencies are increasing credit enhancements on each tier of the CMBS bonds being offered because the underwriting has become more aggressive or the collateral is weak,” said Stephen Renna, president and CEO of the CRE Financial Council (CREFC), an industry trade group. The requirement for more credit support on the conduit deals shows...

Separate efforts by the Treasury Department and the Structured Finance Industry Group aimed at attracting investors to new non-agency mortgage-backed securities continue to progress, according to industry analysts. The Treasury is working to facilitate a benchmark non-agency MBS while SFIG continues to develop standards as part of Project RMBS 3.0. Eric Kaplan, a managing director at Shellpoint Partners and leader of Project RMBS 3.0, said ...

Potential investors in jumbo mortgage-backed securities continue to push issuers to make significant changes to the way the market operates. “How is this ever going to be a $300 billion market if everybody has to look at reps and warrants on a deal-by-deal basis?” said Allan Berliant, a portfolio manager at Grantham Mayo Van Otterloo. “There needs to be a streamlined industry standard.” Berliant and many others called for changes at the ABS Vegas conference ...

Legal settlements that involve loss mitigation are one of many factors keeping investors away from new jumbo mortgage-backed securities. “Until that stops, it’s going to be hard to rebuild trust,” said James Grady, a managing director and head of the structured finance sector team at Deutsche Asset Management, at the recent ABS Vegas conference. A number of settlements between banks and the Residential MBS Working Group have mandated ...

The FHA has delayed the effective date of new guidance that will require reverse mortgage lenders to perform a financial assessment of applicants for a Home Equity Conversion Mortgage. The FHA indicated that the change was necessary to allow vendors and the Department of Housing and Urban Development to align their respective software before the new system can be operational. Those familiar with the technology said delivering the required system enhancements should not take long. The FHA said a new effective date should be expected within 30 to 60 days of the original March 2 effective date. It will be announced in a new mortgagee letter, the agency added. The new guidance requires lenders to evaluate HECM borrowers’ willingness and capacity to meet their obligations and to comply with program requirements. “Financial assessment” means doing a much more ...