The average daily trading volume in agency MBS fell to $192.1 billion in December, the lowest reading of the year, according to the Securities Industry and Financial Markets Association. For the full year, however, average daily trading volume in agency product came to $206.6 billion, compared to $193.0 billion in 2015 and $178.0 billion in 2014. The last time trading volume was higher than in 2016 came three years earlier when $222.8 billion in agency product was traded on a daily basis. What the numbers actually mean is...

The residential MBS market is expected to be healthy this year, according to some ratings service analysts. But the new president is the big unknown, market participants say. According to analysts at Fitch Ratings, the rating outlook for U.S. RMBS they rate is auspicious, as they expect asset performance trends to stay positive thanks to support from solid, if somewhat uneven, gains in home prices. “Although a number of legacy transactions continue to face negative rating pressure due to declining loan counts and tail risk, rating upgrades outnumbered...

The jumbo mortgage-backed security Redwood Trust is set to issue on Jan. 20 received improved pricing compared with the company’s previous deal issued in October. The new MBS is fairly similar to the prior bond, indicating stronger demand from investors. The $343.28 million Sequoia Mortgage Trust 2017-1 priced last week. The super-senior tranche priced 1-20 back of Fannie 3.5s, which was four ticks tighter than Redwood’s previous offering, according to an analysis by Wells Fargo Securities ...

Large swaths of investors will continue to avoid buying non-agency mortgage-backed securities unless Congress passes investor-friendly reforms, according to Chris Katopis, executive director of the Association of Mortgage Investors. “Private capital has virtually left the U.S. mortgage market,” he said. “The future is likely to reflect a similar situation unless Congress helps establish the necessary systems, structures and standards for private capital to return.” In a recent study published by ...

The types of home loans included in prime non-agency mortgage-backed securities issued during the fourth quarter of 2016 varied somewhat compared with issuance from recent quarters, according to an analysis by Inside Nonconforming Markets. Some $907.8 million in prime non-agency MBS was issued during the fourth quarter. Collateral in the deals shifted more toward adjustable-rate mortgages, interest-only mortgages and refinances. ARMs ... [Includes one data chart]

The Department of Justice this week finalized previously announced settlements with Deutsche Bank and Credit Suisse regarding non-agency mortgage-backed security activities in the run-up to the financial crisis. The DOJ said the $7.20 billion settlement with Deutsche Bank was the single largest residential MBS resolution for the conduct of a single entity. The settlement with Credit Suisse was for $5.28 billion. Both of the settlements included civil penalties and ... [Includes two briefs]

In 2016, a mere $42.93 billion of non-agency MBS were issued, down 32.5 percent from the previous year, according to a new Inside MBS & ABS ranking and analysis. It was the second-lowest annual output since 2012. The picture would look a bit brighter if Fannie Mae and Freddie Mac credit-risk transfer deals were included, as well as single-family rental securitizations, which both compete for the investors that might be interested in non-agency MBS. But the government-sponsored enterprise CRT deals are debt issues and they couldn’t be any more “agency,” while the SFR securitizations look a lot more like commercial MBS than residential MBS. The prime jumbo market hit...[Includes three data tables]

Capital requirements regarding bank holdings of non-agency MBS increased significantly after federal regulators implemented Basel III reforms in 2014. And while banks have largely been reluctant to re-enter the market for non-agency MBS issuance, a recent report by the Government Accountability Office suggests that the impact of bank involvement in the non-agency MBS market is unclear. The GAO was asked to explain how capital requirements for a mortgage depend on how the loan is financed and how the requirements have changed since the financial crisis. The report was requested by Sen. Richard Shelby, R-AL, who until recently was the chairman of the Senate Committee on Banking, Housing and Urban Affairs. The GAO noted...

Another record year for Ginnie Mae MBS issuance plus strong volume in the Fannie Mae and Freddie Mac programs helped push total securitization of residential mortgages and non-mortgage ABS to a three-year high of $1.698 trillion in 2016. A new Inside MBS & ABS analysis shows that total MBS and ABS issuance – not including commercial MBS – was up 13.3 percent from 2015. Agency production of single-family MBS totaled $1.481 trillion in 2016, up 17.5 percent from the previous year. Over a third of that came from Ginnie, which set a new annual record with $507.5 billion in single-family MBS issuance. The non-agency MBS market was...[Includes three data tables]

With two of the nation’s largest originators of nonprime and non-qualified mortgages hoping for a record production year in 2017, the mostly anemic securitization market for these types of credits could receive a real boost. But the big question remains: how much will the two firms – Angel Oak Mortgage Solutions and Citadel Servicing Corp. – tap the MBS market? In 2016, the Irvine, CA-based Citadel funded...