Ginnie Mae securitization of rural home loans declined in 2015 as securitization volume in the segment fell in the fourth quarter, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. A total of $18.1 billion in USDA loans were securitized in 2015, with the top five issuers accounting for $10.2 billion delivered into Ginnie (based on numbers below) MBS pools. Some $4.5 billion of MBS backed by rural home loans with the U.S. Department of Agriculture guarantee were issued in the fourth quarter, down 12.5 percent from the previous quarter. USDA MBS issuance also dropped 9.0 percent in 2015 from 2014 volume levels, with all of the top five issuers losing ground year-over-year as well as in the fourth quarter. Chase Home Finance remained the top issuer of securitized rural home loans, accounting for $5.6 billion in Ginnie MBS issuances last year. Second-place Wells Fargo, ... [ 1 chart ]

A working group led by potential investors in new non-agency MBS detailed principles for the role of a deal agent this week, signifying some progress in reform efforts. However, a revival of the non-agency MBS market looks a ways off as other industry participants consider how a deal agent will actually function. “We are now at a transition point for non-agency MBS reform efforts, where some market participants can start moving from a principles-level discussion to contractual negotiations,” Monique Rollins, deputy assistant secretary at the Treasury Department, said at the ABS Vegas conference produced by Information Management Network and the Structured Finance Industry Group. The Treasury helped facilitate...

Years of warnings from securities issuers and investors about regulatory uncertainty appear to have shifted to actual consequences as liquidity in the MBS and ABS markets has declined significantly in recent months. Almost every panel session at the ABS Vegas conference produced by Information Management Network and the Structured Finance Industry Group this week included comments regarding liquidity and regulation. Daniel McGarvey, the head of U.S. asset-backed products origination at Societe Generale, noted that in recent months spreads on MBS and ABS have increased due to illiquidity. “Credit risk is not currently a driver of credit spreads,” he said. “This should be a concern for all of us in the securitization market.” Delinquencies and losses, traditional factors in liquidity, remain...

The great irony of the mortgage market can be found in the MBS holdings of depositories: Even though banks are ceding origination market share to nondepositories, they continue to gobble up bonds backed by home mortgages. As Inside MBS & ABS noted last month, bank holdings of residential MBS hit a record $1.643 trillion at yearend 2015, a 2.2 percent sequential gain. Of course, a large chunk of that gain can be explained by Bank of America increasing its MBS holdings by a hefty $36.7 billion during the fourth quarter. The big question for banks – as well as real estate investment trusts – is...

Analysts at Morningstar Credit Ratings have begun to see non-agency single-property investor loans materialize with a new twist: less dependence on the borrower’s ability to repay and more reliance on the cash flow stream of rental income. “The majority of loans made to landlords backed by single properties are underwritten as consumer loans, not business-purpose loans. The lender will scrutinize the borrower’s credit, income and assets,” RMBS analysts Brian Grow, Becky Cao and Olgay Cangur said in a new report. Also, rental income is included as part of the borrower’s overall income when calculating the borrower’s personal debt/income ratio and, thus, the probability of default. “Recently, Morningstar has been presented...

The California Supreme Court late last week issued a ruling in a case where a borrower challenged the foreclosure of a loan that was included in a non-agency MBS issued in 2007. The court allowed the borrower’s claims to proceed, which could prompt a significant increase in foreclosure-related litigation for California mortgages in non-agency MBS. An opinion authored by Kathryn Werdegar, an associate justice of the California Supreme Court, stresses that the court’s ruling in Yvanova v. New Century Mortgage is narrow. “We hold only that a borrower who has suffered a non-judicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment,” Werdegar said. The ruling left...

Mortgage originators selling loans into MBS last week likely were hit with “pair-off” fees from secondary-market investors who were expecting delivery of higher-yielding mortgages, a proposition complicated by the sudden downdraft in rates. As one secondary market executive noted: “A forward sale into an MBS is not a perfect hedge. Then again, nothing is a perfect hedge.” Originators that fund billions of dollars each quarter use...

Issuers and investors involved in the securitization market are pushing the Basel Committee on Banking Supervision to revise its proposed capital standards for “simple, transparent and comparable” securitization. The BCBS issued a proposal in November and the comment period closed this month. The Structured Finance Industry Group reiterated concerns about international regulatory efforts that will create a “patchwork” of standards and limit securitization, while others pushed back on the exclusion of synthetic transactions from the proposed criteria for STC transactions. “We continue...

The Bank of New York Mellon, acting as trustee, has petitioned the New York State Supreme Court for instructions for paying out Bank of America’s $8.5 billion cash settlement with Countrywide MBS investors, which could potentially alter the order of payment, according to an analysis by Moody’s Investors Service. The governing MBS documents and the settlement agreement are complicated, nuanced and ambiguous, the rating service noted. Without guidance from the state court, BNYM, as trustee for 530 RMBS trusts, could decide on a payout that could favor certain bondholders unexpectedly. The massive payout has been delayed...

The first-time homebuyer share of home purchases increased for the second consecutive month in January, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The increase is part of a seasonal trend where first-time homebuyers take market share from current homeowners as part of the spring homebuying season, though there could be some constraints on first-time homebuyer activity this year. First-time buyers accounted for 35.9 percent of home purchases in January, based on a three-month moving average. Their share increased from a trough of 35.1 percent in November. The current homeowner share of home purchases in that time declined from 49.2 percent to 47.8 percent, with investors also gaining some share from current homeowners. Tom Popik, research director for Campbell Surveys, noted...