Fannie Mae and Freddie Mac have been content to let their significant holdings of non-agency mortgage-backed securities run off in recent years as opposed to selling the investments at a loss. However, the government-sponsored enterprises will likely have to sell some of their vintage non-agency MBS due to a mandate from the Federal Housing Finance Agency. A set of goals for the GSEs in 2013 released this week by the FHFA includes reducing the GSEs’ retained portfolio balances by selling 5 percent of the assets ...

Banks with major Ginnie Mae portfolios – and even smaller firms – increased their purchases of delinquent mortgages out of MBS pools in the fourth quarter compared to the third as a way to save money and refinance troubled loans. According to an analysis by Inside FHA Lending, the top 50 Ginnie Mae issuers bought $12.65 billion of problem loans out trusts in fourth quarter compared to $11.17 billion in the third, an increase of 13 percent. “Once you buy the loan it goes into your portfolio,” said Tim Rood, a partner in The Collingwood Group, a Washington-based advisory firm. “You can try to re-perform it and then re-securitize it,” he said. Wells Fargo, the largest Ginnie Mae servicer in the nation with a portfolio of $412 billion, purchased ... [1 chart]

Billions of dollars in mortgage servicing rights have changed hands over the past two years – and the selling is far from over. The question now is how much more will be sold by the end of 2013. According to analysts who cover nonbank buyers of MSRs – and other sources – $1 trillion to $1.5 trillion in rights could transfer over the coming 18 to 24 months, though some of that is in the form of subservicing contracts. “Over the next year the figure could be...

An investor in Alt A MBS originally issued by Residential Capital Corp. filed suit this week to block Nationstar Mortgage from auctioning nonperforming loans from the MBS pools. Nationstar in mid February began auctioning NPLs on auction.com, according to the complaint filed in the Supreme Court of New York State this week. There are currently two additional auctions totaling some $750 million of NPLs listed on the internet auction site, both believed to be related to Nationstar. The company is...

A federal appeals court last week revived a previously dismissed class-action lawsuit against four financial institutions brought by investors that purchased a $1.32 billion offering of MBS that later turned sour. The U.S. Court of Appeals for the Second Circuit vacated and reversed a lower court’s decision to dismiss the case two years ago against the Royal Bank of Scotland Group, Deutsche Bank AG, Wells Fargo Advisors and NovaStar Mortgage. The New Jersey Carpenters Health Fund was lead plaintiff. In 2007, the New Jersey fund sued...

With the Federal Reserve’s MBS portfolio quietly passing the $1 trillion mark in mid-February for the first time since late 2010, Fed Chairman Ben Bernanke this week continued to toe the party line on the historic level of support the central bank has provided to the MBS and Treasury markets. But there is more skepticism from Republicans on Capitol Hill and some Fed board members, and industry analysts are trying to dope out when the Fed buying spree will wind down. “After quadrupling its balance sheet engaging in unprecedented MBS asset purchases and creating an extended negative real interest rate environment, there is...

Sallie Mae is set to issue the first ABS of the year backed by private student loans, a market that is expected to reach 2012 levels although student loans are drawing more scrutiny from the Consumer Financial Protection Bureau. Sallie’s SLM Private Education Loan Trust 2013-A will have an initial pool balance of $1.31 billion and it’s expected to receive a AAA rating, based on a presale report from Standard & Poor’s. Some $27.1 billion in federally-backed and private student loan ABS was issued...

Commercial banks and savings institutions boosted their holdings of non-mortgage ABS to a record $164.5 billion as of the end of 2012, according to a new Inside MBS & ABS ranking and analysis based on call report data. That was up 3.1 percent in just three months and represented a 19.1 percent jump from the fourth quarter of 2011 – although some of that year-long gain reflected the fact that thrifts did not begin filling out call reports until last year. It’s still a significant increase...[Includes one data chart]

Commercial banks and savings institutions reported a modest decline in their aggregate investment in residential MBS during the fourth quarter of 2012, according to a new Inside MBS & ABS analysis of call report data. Banks and thrifts held $1.579 trillion of residential MBS at the end of last year, down 2.4 percent from the close of the third quarter. It was the industry’s lowest aggregate position since the end of 2011, but banks still held an historically high 25.0 percent of total MBS outstanding. Compared to the end of 2011, bank MBS holdings were...[Includes two data charts]

Potential issuers of new non-agency MBS are looking to establish representations and warranties that provide less protection for MBS investors, according to Fitch Ratings. The rating service said it will take a negative view on deals with reps and warrants that vary from the rating service’s standards, which largely mirror guidelines established by the American Securitization Forum. In a report released this week, Fitch said firms looking to issue non-agency MBS have been shopping deals with reps and warrants weaker than the new framework established by the Federal Housing Finance Authority for repurchase requests from the government-sponsored enterprises. The FHFA’s framework, which went into effect in January, includes a sunset for underwriting reps and most fraud reps if a borrower makes 36 consecutive timely payments, which Fitch said would not necessarily unduly expose MBS investors to greater losses. Rui Pereira, a managing director and head of U.S. residential MBS ratings at Fitch, said...