Issuance of prime non-agency mortgage-backed securities fell sharply during 2016 from already low issuance levels, according to a new ranking and analysis by Inside Nonconforming Markets. Forecasts for issuance this year are largely subdued, with some industry analysts noting that the prime non-agency MBS market is “in limbo.” Some $9.32 billion in prime non-agency MBS were issued in 2016, a 22.8 percent decline from the previous year. Issuance volume ... [Includes one data chart]

A number of large investors that purchased non-agency mortgage-backed securities before the financial crisis have indicated that they won’t be willing to invest in new issuance until issuers standardize representations and warranties. “Investors have lost confidence in the architecture of this market,” an investor said in December at the Structured Finance Industry Group’s RMBS Symposium, which was produced by Information Management Network. The investor was frustrated ...

Redwood Trust is preparing to issue a $343.28 million jumbo mortgage-backed security, according to a presale report by Kroll Bond Rating Agency. Sequoia Mortgage Trust 2017-1 will include mortgages from 132 lenders, led by Quicken Loans with a 7.8 percent share. Servicing for loans in the MBS will mostly be handled by Shellpoint Mortgage Servicing. Redwood will retain 1.0 percent of the dollar volume of the MBS, according to KBRA. Three firms ... [Includes two briefs]

Jim Parrott, a senior fellow at the Urban Institute and owner of Falling Creek Advisors, last week outlined three steps industry participants and federal regulators could take to boost issuance of non-agency MBS. The proposal involves the establishment of a self-regulatory organization, regulatory relief for MBS that meet standards set by the SRO, and allowing non-agency MBS to be issued through the common securitization platform being developed by Fannie Mae and Freddie Mac. Parrott detailed...

In the past few years, efforts facilitated by the Treasury Department and the Structured Finance Industry Group have helped develop standards for a deal agent in non-agency MBS. The concept took a major step forward last week when SFIG published a draft deal-agent agreement. However, the agreement didn’t delve into the specifics about how a deal agent would be compensated and industry participants have a wide range of opinions on the issue. A lawyer involved with the creation of the deal agent standards said...

The mortgage securitization rate jumped significantly higher during the third quarter of 2016, spurred by a bigger market share for Fannie Mae and Freddie Mac. A total of $416.5 billion of relatively newly-originated mortgages were included in single-family MBS issued during the third quarter, according to a new Inside MBS & ABS analysis. That figure, which excludes modified loans and most mortgages aged more than three months, represented 71.2 percent of the $585.0 billion of first-lien mortgages originated during the period. During the second quarter, the securitization rate was...[Includes one data table]

Fitch Ratings edged out Standard & Poor’s as the most active rating services in the non-mortgage ABS market during the first nine months of 2016, a new Inside MBS & ABS analysis and ranking reveals. Fitch also was the top rating service in the more subdued non-agency MBS market. The company rated some $10.80 billion of non-agency MBS, or 64.8 percent of the total market, which includes a substantial volume of unrated private deals. DBRS (37.2 percent market share) and Moody’s Investors Service (34.5 percent) were...[Includes two data tables]

Social Finance, a nonbank that started offering mortgages in 2014, is preparing to issue a $168.79 million jumbo mortgage-backed security, according to presale reports. It will be the first jumbo MBS from SoFi, which originated all of the mortgages backing the deal. While SoFi started operations in 2011 as a peer-to-peer or marketplace lender, Fitch Ratings noted that its funding strategy has evolved to more traditional sources, such as banks and other large financial institutions ...

A new nonprime MBS from an affiliate of Lone Star Funds has two significant distinctions: it’s the first post-crisis nonprime MBS backed by new originations to receive a AAA rating and it’s the largest post-crisis nonprime MBS backed by new originations. COLT 2016-3 Mortgage Loan Trust received AAA ratings from DBRS and Fitch Ratings. “Over the past year, Fitch has become more comfortable with the operational risk of the issuer through extensive due diligence results, multiple ...

The Structured Finance Industry Group released the fifth edition of its RMBS 3.0 green papers last week, featuring a draft deal-agent agreement and proposed bondholder-communication protocols. The green paper effort to revive the non-agency mortgage-backed securities market started in 2013 and now totals 400 pages. “That’s a lot of work for an industry that apparently doesn’t exist,” Richard Johns, SFIG’s executive director, said last week at the trade group’s annual ...