Issuance volume and lending practices in the prime non-agency mortgage-backed security market in 2019 will be linked in several ways to the government-sponsored enterprises, according to industry analysts. Volume projections for prime non-agency MBS depend on pricing differences between non-agency execution and delivery of loans to Fannie Mae and Freddie Mac. Non-agency lenders are also expected to increasingly use tools developed by the GSEs. “We expect robust issuance from ...

As profit margins tighten in a softening origination market, more lenders are pondering a move into correspondent purchases, especially if the company is already table-funding mortgages in the wholesale channel.

Commercial banks and savings institutions added to their holdings of certain categories of non-mortgage ABS during the third quarter, but the industry’s total ABS portfolio was down slightly, according to a new Inside MBS & ABS analysis of call-report data. [Includes three data charts.]

The handling of a lawsuit relating to repurchase activity on pre-crisis non-agency MBS could have a wide-ranging impact on the industry, according to the Securities Industry and Financial Markets Association.

The strong demand for non-agency mortgage-backed securities this year looks to be tied to a number of factors, according to industry analysts. ICE Data Services, a firm that tracks non-agency MBS prices, noted that the sector has been helped by large settlements involving legacy non-agency MBS. And investors are more comfortable with the legal liability associated with non-qualified mortgages, prompting significant securitization of the loans. Issuers are also experimenting with ...

Residential MBS holdings of commercial banks and savings institutions declined 0.7 percent during the third quarter, according to a new Inside MBS & ABS analysis of call-report data. [Includes two data charts.]

This week, Ginnie Mae issued an all-participants memo dictating new standards for firms seeking to become issuers, including the stipulation that applicants submit to a corporate credit evaluation. Ginnie said the financial exercise will be “similar to those employed by credit rating agencies.” The evaluation will determine whether an applicant is qualified to be an issuer or whether additional criteria should be imposed even if the basic standards are met. Applicants that rely on a subservicer arrangement will be scrutinized even more. The bulletin also notes that, effective immediately, the agency is implementing new notification requirements for MBS issuers engaged in “certain subservicer advance or servicing income agreements, which do not require prior Ginnie Mae approval, but can impact an issuer’s ongoing liquidity position and financial obligations.” While Ginnie currently permits subservicers to advance ...

Increasingly worried about the financial condition of its largest nonbank issuers amid declining market conditions, Ginnie Mae in late October shot off a liquidity letter to 14 companies, asking them to develop contingency plans. The identity of the firms was not revealed to Inside FHA/VA Lending, but it’s no secret which companies rank among the top echelon of issuer/servicers. The five largest nonbank Ginnie MBS servicers as of Sept. 30 are PennyMac Financial Services, Lakeview Loan Servicing, Freedom Mortgage, Quicken Loans and Mr. Cooper. According to the letter, a copy of which was obtained by this publication, Ginnie wants the companies to develop strategies to right-size their operations. One of the agency’s goals is to lay the groundwork for financial stress tests that all issuer/servicers eventually must meet. Ginnie expects to sit down with the executive management teams of the ...

Real estate investment trusts boosted their holdings of residential MBS during the third quarter, a period when two firms were acquired by larger players. [Includes one data chart.]

Strong demand in the secondary market for jumbo mortgages lifted Redwood Trust’s mortgage banking income during the third quarter even though the volume of loans it acquired declined. Redwood had $11.24 million in non-interest income from mortgage banking activities in the third quarter, up 5.9 percent from the previous quarter. The metric tracks Redwood’s loan aggregation and sales. The real estate investment trust’s jumbo conduit acquired mortgages with an unpaid principal balance ...