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 ...

The Department of Veterans Affairs expects to have a finalized Qualified Mortgage (QM) rule by May to help clear up some issues that have arisen since the agency issued an interim final rule last spring. The VA issued the interim QM rule for comment on May 9, 2014, to define which VA loans will have QM status under the ability-to-repay (ATR) rule. Issued by the Consumer Financial Protection Bureau, the ATR rule provided temporary QM status to loans eligible for FHA insurance and guaranties by the VA and the Department of Agriculture’s Rural Housing Service. Eligible government-backed loans must be 30-year fixed-rate with no interest-only, negative amortization or balloon features. Total points and fees must not exceed 3 percent of the total loan amount for loans of $100,000 or more. Loans that meet the definition of a temporary VA-eligible QM are considered as in compliance with the ATR rule. They are designated as “safe harbor QMs,” provided they are not ...

Interest in the structured-finance market remains strong, but issuers continue to struggle with regulations and sometimes limited demand for their offerings. Just over 6,000 people registered for the ABS Vegas conference this week sponsored by the Structured Finance Industry Group and Information Management Network, up from more than 5,300 registrants in 2014. Jade Friedensohn, a senior vice president at IMN, said the conference set an attendance record for the structured-finance industry. A poll of attendees by the conference organizers suggested...

Institutional investors that loaded up on mortgage stocks the past two years have been battered by huge losses thanks to a 34 percent plunge in originations and negative publicity generated by industry bellwether Ocwen Financial and some of its peers. But with some mortgage stocks – such as Owen – trading at 80 percent discounts to their 52-week highs, now may be the time to “re-enter” the volatile world of mortgage equities. At least, that’s how some hedge funds and private-equity firms view the matter. According to Henry Coffey, a vice president and senior analyst at Sterne Agee, there are...

BlackRock Financial Management plans to issue a unique ABS backed by peer-to-peer consumer loans originated via the platform established by Prosper Marketplace. Moody’s Investors Service assigned ratings to Consumer Credit Origination Loan Trust 2015-1 last week, noting a number of issues for investors to consider. The ABS is expected to have a balance of $344.85 million. The loan pool Moody’s examined had a balance of $306.71 billion as of the end of December. Approximately 14 percent of the total assets are expected to be added after closing. The deal doesn’t have a projected closing date yet, according to Moody’s. The rating service assigned...