New production of single-family agency MBS in January 2014 fell to its lowest monthly volume in five years, according to a new market analysis and ranking by Inside MBS & ABS. Fannie Mae, Freddie Mac and Ginnie Mae generated a total of $67.82 billion in single-family MBS last month, a 10.4 percent drop from December 2013. It was the weakest monthly issuance since January 2009, when $64.39 billion of new agency MBS were produced as world financial markets tried to recover from collapse. Market conditions – if you don’t consider the weather outside – were...[Includes one data chart]

Nonbank mortgage servicers continued to grow their portfolios during the fourth quarter of 2013, as market stalwarts pulled aside and gave them room to accelerate, according to a new market analysis and ranking by Inside Mortgage Finance. Nine nonbank companies ranked in the top 30 mortgage servicers as of the end of last year, and they held an estimated $1.69 trillion in mortgage servicing. Several of the top nonbank lenders have not yet reported fourth-quarter earnings, and the group’s total servicing could be higher as more data come to light. Moreover, most of the nonbanks have pipelines of pending bulk and flow acquisitions, meaning they will continue...[Includes one data chart]

Over the past two years, roughly a dozen investment vehicles have raised at least $500 million each to buy mortgage servicing rights, fueling a red-hot market that for now shows no sign of slowing. Some of these “funds” are headed by mortgage banking veterans such as Emanuel Friedman – the former co-CEO of Friedman, Billings, Ramsey Group – and Michael Lau, a former top deal maker at Phoenix Capital, one of the largest servicing brokerage firms in the nation. According to interviews conducted by Inside Mortgage Finance, Lau’s company, Pingora Loan Servicing, has amassed...

The Treasury Department’s surprise move in the summer of 2012 to rewrite the Senior Preferred Stock Purchase Agreements it had with Fannie Mae and Freddie Mac was an “unlawful” action that could have a far-reaching impact well beyond the shareholders of the two government-sponsored enterprises, according to an attorney representing shareholders. Speaking Wednesday at a forum sponsored by Ralph Nader’s Shareholder Rights advocacy group, attorney Ted Olson of Gibson Dunn & Crutcher said Treasury’s Third Amendment to the PSPA was a calculated effort by the Obama administration to ensure that GSE stockholders got nothing, according to internal Treasury documents they obtained. The amendment replaced the quarterly GSE dividend payment with a net-worth sweep of all company profits. Perry Capital, represented by Olson, is...

Graham Williams, CEO of Mortgage Resolution Partners, a firm that has achieved notoriety in the mortgage industry for trying to use eminent domain to seize underwater loans, is moving on. But that doesn’t mean the concept of municipalities using the legal strategy is going away. “I’m transitioning out of the CEO job,” Williams told Inside Mortgage Finance. “The company will continue on.” Asked whether a CEO search is underway, he said he didn’t know. As Inside Mortgage Finance went to press this week, there were...

The Federal Reserve’s move to reduce its purchases of agency mortgage-backed securities may eventually change the relative costs and benefits of financing new production through Fannie Mae, Freddie Mac and Ginnie Mae. “We’re in an environment where I think banks are going to get interested in at least the more attractive credit risks and holding those in portfolio,” said Mark Calabria, director of financial regulation studies at the libertarian Cato Institute in Washington, DC. “So, to me, the most important question going forward over the next two years for the MBS market is how much of this [new production] is going to make its way into MBS and how much will be held on balance sheets as whole loans.” Calabria predicted...

The Federal Reserve’s Open Market Committee fulfilled investor expectations this week by voting to reduce its support of the financial markets by another $10 billion overall, starting next month. That will reduce its targeted monthly increase in its agency MBS portfolio from $35 billion to “just” $30 billion. With new production of agency MBS falling more quickly than the central bank’s targeted purchases, the Fed may actually be taking a larger chunk of the market. When the Fed announced a $5 billion per month reduction in its MBS growth target in November, actual agency MBS issuance declined by more than twice as much, $11.3 billion, from the previous month. The FOMC said...[Includes one data chart]

Investors in non-agency MBS continue to push for increased transparency on both vintage securities and new issuance. Issuers suggest that they want to provide additional information to investors but costs and regulatory issues have prevented adequate communication. A significant number of investors attending the ABS Vegas conference last week said bondholder communication on non-agency MBS is rarely adequate. The conference was sponsored by the Structured Finance Industry Group and Information Management Network. Bill Moliski, a managing director at SG Capital, an investment management firm, has...

A number of structured-finance products outside of new non-agency MBS rebounded from the financial crisis, offering stronger returns than new non-agency MBS, and often with less risk. Among the myriad of products investors at the ABS Vegas conference last week said they prefer to new non-agency MBS were collateralized-debt obligations backed by trust-preferred securities, collateralized-loan obligations, commercial MBS, rail car ABS and container ABS. “There’s...

A Manhattan federal bankruptcy court this week approved Lehman Brother’s proposed $2 billion-plus settlement that would end an $18.9 billion claim filed against the defunct investment bank by Fannie Mae over soured mortgage securities. Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York, signed off on the settlement agreement between Lehman Brothers Holdings Inc. and the government-sponsored enterprise, as well as Lehman’s wholly owned subsidiaries Aurora Commercial Group and Aurora Loan Services. ALS was a large Alt A lender/servicer. The deal grants...