Allegations in an impending government MBS fraud case against Moody’s Corp. will likely mirror allegations of fraud and misrepresentation in a 2013 civil suit against Standard & Poor’s, according to industry observers. Moody’s disclosed the expected case in a recent filing of third-quarter earnings results with the Securities and Exchange Commission. According to the credit rating agency, lawsuits are likely pending from both the Department of Justice and state attorneys general over ratings of MBS in the years leading up to the financial crisis. In a letter dated Sept. 29, 2016, the DOJ informed...

Bayview Financial is set to issue the first re-securitization backed by subordinate tranches from risk-sharing deals issued by Fannie Mae and Freddie Mac. Fitch Ratings placed an A-minus rating on the planned $159.60 million Bayview Opportunity Master Fund IVb Trust 2016-CRT1. The transaction is backed by 12 securities from Fannie’s Connecticut Avenue Securities transactions and Freddie’s Structured Agency Credit Risk transactions issued in 2014 and 2015. The securities in the re-securitization are CAS M2 and STACR M3 tranches. All but one of the underlying securities rely...

The latest jumbo mortgage-backed security from Redwood Trust includes some differences compared with the two jumbo MBS the firm issued earlier this year. The $343.16 million deal includes loans from many lenders and contributions from a Federal Home Loan Bank program. Sequoia Mortgage Trust 2016-3 received preliminary AAA ratings from Kroll Bond Rating Agency and Moody’s Investors Service. The MBS will include...

Nonbanks crossed a threshold in the third quarter of 2016, posting a hefty 6.3 percent increase in their combined Ginnie Mae servicing portfolio, according to a new Inside FHA/VA Lending analysis. Nonbanks serviced $826.6 billion of Ginnie single-family mortgage-backed securities as of the end of September. That represented 51.3 percent of the total Ginnie market. The nonbank servicing total includes a small amount of Ginnie servicing held by state housing finance agencies, roughly 1.0 percent of the entire market. But it doesn’t include the significant amount of Ginnie servicing that nonbanks do as subservicers for both depository and nonbank clients. Interestingly, the biggest gain for nonbanks in percentage terms came in servicing VA loans, which rose 8.1 percent from the second quarter to $252.1 billion, or 51.0 percent of the market. The VA sector is one business from ... [4 charts ]

Ginnie Mae rode a surging purchase-mortgage market and heavy refinance activity to new production records during the third quarter of 2016. The agency issued a whopping $145.14 billion of single-family mortgage-backed securities during the third quarter, according to an Inside FHA/VA Lending analysis of MBS disclosures. That figure is based on pool-level disclosures that reveal exact principal balance amounts and it includes securities backed by FHA home-equity conversion mortgages. The data in the table below are based on truncated loan-level disclosures and do not include HECM activity. New Ginnie MBS issuance in the third quarter was up 15.7 percent from the previous quarter. Ginnie MBS production set three consecutive monthly records during the third quarter, culminating in a huge $52.46 billion month in September. Purchase-mortgage activity was the key driver, but the ... [ 4 charts ]

Requiring an undercapitalized issuer to repurchase uninsured performing mortgages out of a mortgage-backed securities pool could increase risk to the federal government, warned Ginnie Mae. Responding to an adverse audit report from the Department of Housing and Urban Development’s Office of the Inspector General, Ginnie said that while it generally accepts the IG’s recommendations, forcing an undercapitalized issuer to buy out performing loans and either hold them in portfolio or sell them at a substantial loss would put the government at greater risk. “This is something we need to be alert to in certain cases,” the agency said. According to the report, Ginnie improperly allowed more than $49 million of single-family mortgages with terminated insurance to remain in its MBS pools for more than one year without obtaining FHA coverage. The IG warned Ginnie could be on the ...

Ginnie Mae FY 2016 Highlights. “So far, we’ve pretty much broken every record,” said a Ginnie Mae spokesperson. Total mortgage-backed securities issuance for FY 2016 was $490.3 billion, “an all-time high by a pretty wide margin,” according to the spokesperson. September MBS issuance was also at an all-time high: $54.8 billion. Ginnie Mae commitment authority for the fiscal year was $430.2 billion. Approximately 2.3 million mortgage loans worth $462 billion underlay Ginnie’s single-family MBS pools in FY 2016. Of this total, $278 billion (1.4 million loans) were purchase mortgages, and $184 billion (0.9 million loans) were refinances or modified loans. Of the purchase dollar volume, first-time homebuyers accounted for $200 billion (1.1 million loans). Of the $462 billion single-family MBS pools, FHA accounted for 57.1 percent ($264 billion), VA, 38.8 percent ($179 billion), and rural housing loans, 3.9 percent ($18 billion). New California Law Protects Spouses of HECM Borrowers from ‘Widow Foreclosure.’ On Sept. 29, 2016, California Gov. Jerry Brown, D, signed Senate Bill 1150 into law to protect widows, widowers and other heirs of mortgage borrowers from unnecessary foreclosures.

Fitch Ratings was the most active rating service in the sluggish non-agency MBS market through the first half of 2016, according to a new Inside MBS & ABS ranking. Standard & Poor’s was the top rating agency in the more active non-mortgage ABS market. Fitch rated just seven non-agency MBS issued during the first six months of the year, which totaled $4.74 billion in volume. While that equaled 30.9 percent of total non-agency MBS issuance for the period, many deals were private placements without ratings. Fitch’s share of rated issuance was 55.4 percent. DBRS ranked...[Includes two data tables]

In a somewhat uncommon occurrence, four law firms published a position paper late last week aimed at helping industry participants comply with pending risk-retention requirements for new commercial MBS. The paper was written by attorneys at Cadwalader, Wickersham & Taft; Dechert; Orrick, Herrington & Sutcliffe; and Sidley Austin. “The paper was authored...

Credit Suisse sold two warehouse facility-backed securities this week totaling $800.0 million, according to Moody’s Investors Service. The rating service placed A2 ratings on the Mortgage Repurchase Agreement Financing Trust Series 2016-1 and Series 2016-2 transactions. Much like a warehouse facility security issued by Jefferies in May, Moody’s said the MRAFT securities are structured with two legs of “back to back” repurchase agreements. The first leg consists...