The supply of outstanding residential MBS grew by 0.3 percent during the third quarter, hitting $6.383 trillion, according to a new Inside MBS & ABS analysis. The Federal Reserve gobbled up most of the increase. Ginnie Mae remained the fastest-growing MBS product. Its $1.377 trillion in outstanding single-family MBS was up 2.6 percent from the second quarter, and it expanded by 8.1 percent from September 30, 2012. Fannie Mae posted a more modest 0.8 percent increase in single-family MBS outstanding, while the Freddie Mac supply shrank slightly. The non-agency MBS market continued...[Includes two data charts]

Non-agency MBS investors showed strong appetite for $5.1 billion in vintage securities that were auctioned last week as part of the Dutch government’s efforts to unwind a bailout of ING. Industry analysts said the successful sale shows that demand for high-yielding, low-priced bonds remains strong. The MBS sold by the Dutch State Treasury Agency were largely backed by option adjustable-rate mortgages, according to Interactive Data, a firm that tracks fixed-income products. ING and the DSTA didn’t provide pricing information on the sale. According to talk among traders before the auction, Interactive Data said...

The Aug. 28, 2013, release of the re-proposed credit risk-retention rule by federal banking and housing regulators was eagerly awaited by investors and the mortgage industry. But it’s also raised some new questions for securitizers and investors, according to a new white paper from CoreLogic. The proposed rule sets out the risk-retention provisions for securitizers that underwrite ABS, but it also exempts from those provisions all securities issued by the housing agencies, which is to say, MBS generated by Fannie Mae, Freddie Mac and Ginnie Mae. “Given that exemption, what are the incentives for private securitization where there is capital relief in the alternative?” the white paper asked. CoreLogic notes...

Concerns about red tape from lenders have prompted an increasing share of homebuyers to use all cash to purchase a home, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Some 29.3 percent of home purchases completed in November relied solely on cash, based on a three-month moving average. That was the third monthly increase in the share of cash transactions. Tom Popik, research director of Campbell Surveys, said...

Real estate investment trusts that focus on investing in MBS held a combined $306.3 billion of mortgage securities in portfolio at the end of the third quarter, according to a new Inside MBS & ABS analysis. That total was down 6.4 percent from the end of June, as the industry has lost nearly all of the huge volume of MBS that were acquired in early 2012. At the end of 2011, REITs held $297.5 billion of MBS and over the next six months grew their combined portfolio by $76.7 billion, reaching a record $375.2 billion at the midway point in 2012. It’s been...[Includes one data chart]

The American Civil Liberties Union and the Center for Popular Democracy have filed a lawsuit under the Freedom of Information Act to compel the Federal Housing Finance Agency to provide details about its efforts to block municipalities from using eminent domain to prevent foreclosures. Filed in the U.S. District Court for the Northern District of California, the lawsuit seeks information regarding the FHFA’s relationship with big banks and MBS investors and whether such interests influenced the agency’s opposition. The suit was filed on behalf of community housing advocates in California, New Jersey and New York. Certain municipalities with large African-American and Latino populations, including Richmond, CA, and Irvington, NJ, are considering...

Severe decreases in the FHA loan limits in numerous counties across the country have spurred industry demand for the Department of Housing and Urban Development to disclose the methodology and process it used to determine the new loan limits. Although HUD’s announcement of lower FHA loan limits for 2014 had been long expected, mortgage industry participants were caught off guard by the substantial reductions in FHA loan limits caused by the statutory change in how the limits are calculated and by revised median house prices. For 2014, HUD announced that the national ceiling limit for single-family mortgages in high-cost areas would decline to ... [1 chart]

The Financial Accounting Standards Board has begun meeting with various industry groups to get a clearer sense of where it needs to go to develop the most appropriate accounting treatment for to-be-announced transactions. Last Friday, FASB met with both the Mortgage Bankers Association and the Securities Industry and Financial Markets Association to vet some of the board’s tentative decisions on its project for accounting for repos, dollar rolls and TBA transactions, and the likely effect those decisions could have. Meetings with other groups have taken place...

A Manhattan federal court this week approved a proposed settlement between Residential Capital and the Federal Housing Finance Agency that both clears the way for the former conduit to exit bankruptcy and brings the FHFA one step closer to completing its massive legal action against some of the nation’s top financial institutions.Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved the agreement, which is tied to a settlement the FHFA reached with Ally Financial, ResCap’s former parent, in late October.

Due diligence can be a more significant factor in the rating of a jumbo mortgage-backed security than the representations and warranties on the deal, according to Kroll Bond Rating Agency. However, major investors in non-agency MBS have expressed concerns about due diligence on new deals along with the adequacy of disclosures. At a structured-finance investor conference hosted by KBRA this month, the rating service noted that it doesn’t adjust expected losses or credit enhancement for variations in ...