The sputtering non-agency MBS market generated just $2.59 billion in new issuance during the first three months of 2014, one of the lowest quarterly marks since the market imploded in late 2007. New issuance in the first quarter was down 44.1 percent from the already-weak level in the fourth quarter of 2013, and it was off 65.6 percent from the same period a year ago. There was...[Includes two data charts]

Credit officers over the past three months reported an increased demand for non-agency MBS, suggesting that private capital could be flowing more freely through the U.S. housing market, according to a Federal Reserve survey released last week. The Fed’s Senior Credit Officer Opinion Survey on Dealer Financing Terms for March 2014 found little change in the credit terms among the 22 participating institutions, with the exception of securities financing, where nearly one-half of dealers reported a hike in demand for funding non-agency residential MBS. “Dealers assessed...

Variations on the treatment of extraordinary expenses in jumbo mortgage-backed securities have prompted the rating services to alert investors. A warning on this issue last week by Fitch Ratings follows similar concerns raised by other rating services. Extraordinary expenses in non-agency MBS can be caused by legal claims against the trust, costs associated with a third-party reviews to identify representation-and-warranty breaches, and costs related arbitration, among other issues ...

CORRECTION: A March 14, 2014, story in Inside Nonconforming Markets with the headline “Credit Suisse Taps New Penn for Another Jumbo MBS” stated that according to Standard & Poor’s, due-diligence firms found that New Penn Financial allowed exceptions to its underwriting guidelines for some mortgages included in CSMC Trust 2014-SAF1. In fact, the underwriting exceptions were allowed by Credit Suisse on mortgages from lenders not identified by S&P ... [Includes three briefs]

The price of agency MBS has been rising since early April, which can only mean good things for publicly-traded real estate investment trusts that own the asset class. However, REIT share prices haven’t improved much of late, with some companies such as Annaly Capital Management continuing to trade closer to their 52-week lows than their highs. Late this week, for instance, Annaly – one of the largest MBS investing REITs – was trading at $11.30 compared to a 52-week high of $15.98 and a low of $9.66. But better days may be...

Loss-mitigation activity by major bank servicers has decreased significantly in the past year, coinciding with servicers’ completion of loss-mitigation requirements under the $25 billion national servicing settlement. Eight major banks and thrifts completed 72,466 loan modifications in the fourth quarter of 2013, a 49.5 percent decline from the fourth quarter of 2012, according to a new report from the Office of the Comptroller of the Currency. The servicers completed 60,765 foreclosures in the fourth quarter, down 42.6 percent from the fourth quarter of 2012. The declines in loan mods and foreclosures by banks have outpaced...

New residential MBS issuance in the first three months of 2014 sank to the lowest quarterly volume since late in 2000, according to a new Inside MBS & ABS analysis. A total of $191.7 billion of residential MBS were issued in the first quarter of this year, down 25.5 percent from the fourth quarter of 2013. Compared to first quarter of 2013, new MBS issuance was down 59.2 percent. MBS production has been falling...[Includes two data charts]

At least 46 vintage non-agency MBS took principal forbearance-related losses in March, according to industry analysts. The losses are a concern for investors because they were taken without warning, based on forbearance that happened well before March. Most of the deals taking retroactive forbearance losses in March were issued by Bear Stearns from 2005 through 2007 and were largely serviced by JPMorgan Chase, according to analysts at Bank of America Merrill Lynch and Barclays Capital. Write-downs on the deals were as high as 6.8 percent for a single month. “When a servicer recognizes losses on loans previously modified with forbearance, it could significantly impact...

The Securities and Exchange Commission late last week gave the securities industry another month to file comments on a proposed rule that most participants already know they don’t like. Comments were originally due March 28 on the SEC’s latest proposal to require asset-backed securities issuers to make loan-level details about pending issues available to investors on their own websites, rather than the agency’s Electronic Data-Gathering, Analysis and Retrieval system. On the day the comment period ended, the SEC extended it to April 28. Many issuers and large banks think...

Lowering Fannie Mae and Freddie Mac loan limits is one of the easiest levers the federal government could pull to increase non-agency participation in the mortgage market but most market participants favor keeping them at their current levels. In December, the Federal Housing Finance Agency announced that it was considering reducing the loan “purchase limits” for the government-sponsored enterprises. Under the plan, the GSEs could not purchase loans exceeding ...