Ginnie Mae this week provided new details to the long-anticipated plan for increased issuer net worth and liquidity and a new performance scoring method for issuer activity – changes that could adversely affect small issuers and portfolio servicers. In remarks at the Mortgage Bankers Association’s annual convention in Las Vegas, Ginnie Mae President Ted Tozer said the changes are part of a larger effort to ensure the continuing flexibility and availability of the agency’s mortgage-backed securities program to as many entities as possible. New types of issuers and counterparties have entered the agency-backed MBS market in the wake of the financial crisis, which called for adjustments and tailored approaches to the evolving housing finance market, Tozer noted. Tozer said both policy changes and staff expertise will ensure the success of ...

While the FHA’s share of the primary insurance market has dropped significantly since premiums were hiked in early 2013, the VA program and the rural housing loan program run by the Department of Agriculture are going strong, according to agency officials. During a panel discussion at the Mortgage Bankers Association annual convention this week, VA and Rural Development executives said that both agencies have been quietly building mortgage market share. Jeffrey London, deputy director of the VA’s loan guaranty service, reported that purchase-mortgage VA loan originations were up 11 percent in fiscal 2014, with 40 percent of the business being first-time homebuyers. Of that group, 80 percent took no-downpayment VA loans, the biggest selling point in the program, along with its relatively low costs. In earlier remarks, Housing and Urban Development Secretary Julian Castro revealed that ...

Even though the origination volume of non-agency, non-jumbo mortgages is relatively small, private equity firms increasingly are eyeing the space, believing that within two years – or maybe sooner – the business could be producing robust profits. In short, investors want to enter non-agency lending before anyone else does – and at “ground level” prices. According to non-prime executives and investment advisors, private-equity funds of varying sizes want...

Investors have bid up the value of MBS the past two weeks, with agency product hitting new 52-week highs. This development benefits investors as long as interest rates don’t fall dramatically enough to spark prepayment concerns. In particular, analysts are paying close attention to publicly traded mortgage real estate investment trusts that hold agency MBS. According to figures compiled by Inside MBS & ABS, REITs held $286.3 billion of MBS at the end of June after increasing their holdings by 9.7 percent during the second quarter. Now, those bets are paying off...

The disclosure rule recently issued by the Securities and Exchange Commission aims to reduce reliance on credit ratings in the structured finance market, an issue that federal regulators have long grappled with. The SEC’s Regulation AB took effect in 2006, and it included a requirement that publicly offered securities have an investment-grade rating. The so-called Reg AB2 finalized by the SEC in August eliminates the rating requirement and instead sets a number of new requirements for publicly issued deals. Beginning in November 2015, the CEO of the depositor of publicly issued...

A number of participants in the non-agency market are working to address the risks posed by second liens taken out by borrowers after the origination of the first mortgage. Some potential investors in non-agency mortgage-backed securities have balked at buying into new issuance due to concerns about borrower leverage and equity positions. “That’s a big problem for insurance companies and institutional investors, that debt can morph over time,” Fred Matera, a managing director at Redwood Trust ...

Issuers of non-agency mortgage-backed securities appear likely to continue working in the private 144A market as opposed to issuing deals in the public market, according to industry participants. Redwood Trust was issuing jumbo MBS in the public market, but it switched to the 144A market even before new requirements from the Securities and Exchange Commission made private issuance more attractive. Most other jumbo MBS issuers in recent years have also stuck with offering their deals in ...

Ginnie Mae issuance for the first nine months of 2014 totaled $207.5 billion as government-backed purchase-mortgage activity picked up in the third quarter, according to an analysis of agency data. New issuances rose 19.8 percent from the second quarter. FHA loans accounted for $116.9 billion of new Ginnie Mae issuances while VA and the Rural Housing Development funneled $75.9 billion and $14.2 billion, respectively, of new loans into Ginnie Mae pools. Mortgage securities backed by home-equity conversion mortgages are not included. Purchase mortgages totaling $140.6 billion comprised the bulk of new issuances over the nine-month period while the share of refinances totaled $49.8 billion. Modified loans accounted for $17.1 billion. Most of the FHA and VA loans originated during the first nine months came through the ... [ 2 charts ]

MountainView, a firm known mostly for the market it makes in mortgage servicing rights, is branching out into non-QM lending, but company officials cautioned that its effort will start small. Moreover, a spokesman for the firm clarified that loans acquired through its new “Peak Program” will meet the ability-to-repay rule requirements, including the non-QM loans. “We expect...

The market for non-agency MBS backed by nonperforming and re-performing home loans has grown exponentially in recent years. However, the sector remains relatively small and regulatory concerns persist regarding servicing practices. At the ABS East conference produced by Information Management Network last week in Miami Beach, Susan Valenti, a director at Wells Fargo Securities, said $1.0 billion of non-agency MBS backed by nonperforming loans and re-performing loans was issued in 2011, followed by $2.0 billion of such issuance in 2012, $5.7 billion in issuance in 2013 and $5.2 billion in issuance thus far in 2014. Most of the deals aren’t...