An affiliate of Bayview Asset Management issued a $230.0 million non-agency mortgage-backed security this week largely stocked with seasoned mortgages, including one non-qualified mortgage. DBRS and Fitch Ratings placed AAA ratings on Bayview Mortgage Fund IVc Trust 2017-RT3, without putting much emphasis on the non-QM. Non-QMs had accounted for 2.1 percent of a $125.82 million MBS from Bayview that priced in July and 1.0 percent of a $208.13 million deal it priced in April. The sponsor of the deal will retain...

Redwood Trust is preparing to issue its first non-agency mortgage-backed security backed by “expanded prime” mortgages. In the second quarter, Redwood acquired approximately $240.0 million of such mortgages, which have somewhat looser underwriting standards than what’s typically seen in the jumbo MBS market. Clayton Holdings reviewed 417 mortgages for the planned issuance, according to documents filed Aug. 30 with the Securities and Exchange Commission. The total unpaid principal balance of the loans wasn’t disclosed. The deal will include...

The Structured Finance Industry Group pushed for trustees of non-agency MBS to increase disclosures to investors as the industry continues to deal with the aftermath of Wells Fargo withholding millions of dollars of funds in vintage deals. In a statement released late last week, the industry group said it has a policy of not engaging in issues involving legacy transactions that may be associated with litigation, especially where such litigation is between various members of SFIG. The Wall Street group issued...

Fitch Ratings announced last week that non-agency MBS with a unique structure will be eligible to receive AAA ratings. The rating service said deals with a shifting-interest structure are now eligible for the top ratings after previously limiting ratings on such deals to single-A. Both DBRS and S&P Global Ratings have assigned AAA ratings to some MBS backed by re-performing mortgages where the deals had shifting-interest structures. MBS with such structures distribute...

Commercial banks and savings institutions continued to stockpile agency MBS during the second quarter of 2017 with a strong appetite for Fannie Mae and Freddie Mac pass-through securities. Total bank investment in residential MBS rose by $36.28 billion during the second quarter, lifting the industry’s aggregate portfolio to a record $1.799 trillion. Bank MBS holdings have risen steadily since the third quarter of 2014, growing by $264.07 billion over that period. In addition to those held-to-maturity and available-for-sale accounts, about a dozen banks held $16.34 billion of residential MBS in trading accounts. All of the growth has been...[Includes two data tables]

Fannie Mae and Freddie Mac are still titans in the residential MBS market when it comes to making new securities, but they have been forced to the sidelines as investors over nine years in conservatorship. The two government-sponsored enterprises held a combined $221.48 billion of residential MBS at the end of June. Firm numbers on the total volume of MBS outstanding at that point aren’t available yet, but it’s unlikely that Fannie and Freddie held more than 3.5 percent of the market. The two GSEs reduced...[Includes one data table]

JPMorgan Chase and Redwood Trust are set to continue their regular issuance of non-agency mortgage-backed securities, with deals scheduled to close on Aug. 30. The planned JPMorgan Mortgage Trust 2017-3 is a $1.02 billion deal, while Sequoia Mortgage Trust 2017-6 is sized at $355.4 million. Both of the MBS are predominantly backed by non-agency jumbo mortgages along with some loans eligible for sale to the government-sponsored enterprises. Rating services ...

Two nonbanks involved in originating and acquiring non-qualified mortgages aren’t satisfied with the amount of volume they have taken in thus far. “We like our portfolio, but we wish it would ramp faster,” Mark Tecotzky, co-chief investment officer at Ellington Financial, said during the company’s earnings call for the second quarter. Ellington has made an equity investment in an unidentified lender and as of the end of the second quarter was holding non-QMs with an unpaid principal balance of ...

Real estate investment trusts that focus on the residential MBS market reported a modest increase in their portfolios during the second quarter of 2017. The 15 mortgage REITs tracked by Inside MBS & ABS held a combined $233.34 billion of residential MBS at the end of June. That was up 1.4 percent from the end of the first quarter, though down 2.9 percent from the midway point in 2016. Ten of the REITs reported...[Includes one data table]

A number of new issuers appear set to come to market with non-agency MBS backed by newly originated jumbo loans and non-qualified mortgages. Officials at Redwood Trust said they see new issuers emerging, which they said will put pressure on loan prices for aggregators while increasing liquidity in the secondary market. Since the third quarter of 2016, the jumbo MBS arena has been dominated...