Making the Department of Veterans Affairs adjustable-rate mortgage programs permanent would cost $144 million in new direct taxpayer subsidies over the next 10 years, according to Congressional Budget Office estimates. Based on the number of ARM and hybrid ARM loans the VA has guaranteed in recent years, CBO estimates that the VA would guarantee approximately $1.3 billion worth of additional loans annually over the next 10 years. Consequently, additional subsidy costs for those loans would increase direct spending by $52 million over 2012-2017 and $144 million over 2012-2022, the CBO said. Subsidy costs of those additional loan guarantees would be paid from a ...
Home Loan Servicing Solutions, recently launched as an independent acquirer of high quality mortgage servicing assets from Ocwen Financial Corp., is off to a good start as analysts gave it a thumbs up after a promising first-quarter debut. Analysts with Keefe, Bruyette & Woods gave the new company an Outperform rating and projected upward-trending dividend yields of 8.2 percent in 2012 and 9.9 percent in 2013-14. On May 8, the company declared a 10-cent monthly dividend, and the 30-cent quarterly dividend is slightly below KBWs estimate of quarterly earnings-per-share of 32 cents...
The Securities and Exchange Commissions no-action letter that cleared the way for the Royal Bank of Scotland to register public offerings of covered bonds is likely to fuel demand for U.S. dollar-denominated covered bonds, according to Fitch Ratings. The SEC letter paves the way for issuers to offer covered bonds to a wider range of investors than previous bonds issued under the restrictive Rule 144A of the Securities Act of 1993, said Fitch analyst Vanessa Purwin. The rule provides a safe harbor from registration requirements for certain securities that are resold privately to qualified large...
More companies are seeking ratings for their warehouse lending facilities, but these programs require special consideration, according to a new report from DBRS. In the past, securitization warehouse facilities were mostly un-rated because they were completely executed and funded by banks or their conduits. But industry participants are now more keenly interested in assessing the relative risk of these entities, DBRS said. For instance, warehouse ABS may have a change in collateral composition thanks to a revolving period in warehouse facilities. To make up for this dynamism, other...
With banks under increased pressure to manage their exposure to risks related to mortgage-backed securities and whole loans, Moodys Analytics has updated its risk and capital allocation tool so clients can run their mortgage portfolio under various stressed scenarios and get a better handle on potential losses. The latest iteration of the Mortgage Portfolio Analyzer features an enhanced framework for modeling stressed macroeconomic scenarios, defaults, prepayments and severities. The tool that the firm has put together can simultaneously benefit institutions that have portfolios of not...
This week, Fitch Ratings downgraded Washington Mutuals covered bonds to AA- from AA and placed them on rating watch negative, after last weeks downgrade of the issuer default rating of the program sponsor, JPMorgan Chase Bank. That rating action followed JPMorgan Chases disclosure last week of a $2 billion trading loss on its synthetic credit positions in its chief investment office. The positions were intended to hedge JPM's overall credit exposure, particularly during periods of credit stress. That loss estimate has since grown to $3 billion, it was reported this week. The JPMorgan...
Part of the cost to issue non-agency MBS under the new rules of the road is a stronger commitment to due diligence reviews of the collateral backing the transaction, and experts note that the process is more complex than just hiring one of the handful of companies that provide these services. There are three basic constituencies you need to satisfy during third-party reviews, said Eric Kaplan, managing director of mortgage finance at Shellpoint Partners during a session at the Mortgage Bankers Association National Secondary Market Conference. Theres the law, the ratings agencies and investors...
Fitch Ratings has combined its criteria for rating residential mortgage originators and third-party due diligence involved in non-agency MBS issuance. The company said the move does not involve any material changes to its rating methodology. All originators contributing loans to non-agency MBS rated by Fitch are subject to periodic reviews by the rating service that can lead to adjustments in loss estimates for the deals or even cause the company not to rate a transaction at all. The rating service will look at the performance history of the loan originator, including repurchase requests...
Fitch Ratings has placed 157 residential MBS classes serviced by Residential Capital on Rating Watch Negative as the ailing subsidiary of Ally Financial slid closer to bankruptcy. The rating action came on the heels of a Fitch downgrade of ResCaps issuer default rating to C from CCC on April 18. In addition, Fitch placed GMAC Mortgages servicer rating on Rating Watch shortly before the adverse rating action against ResCap. Fitch said the coordinated rating actions reflect the current uncertainty for the servicing portfolio due to the growing possibility of a bankruptcy or debt restructuring for...
Moodys Investors Service has not rated a non-agency MBS since the end of 2010, but the company has made up for it by taking a lead role in the non-mortgage ABS market, according to a new ranking and analysis by Inside MBS & ABS. Moodys rated 37 non-mortgage ABS issued during the first quarter of 2012, a total of $33.85 billion in new issuance. That represented 84.5 percent of the market by dollar volume, an increase from the 70.4 percent market share the company garnered for all of 2011. Its deepest penetration was in the business loan category, which includes dealer...(Includes one data chart)