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...

In late December, Freddie Mac issued a $934.27 million security backed by seasoned mortgages. It was the first seasoned credit-risk transfer from the government-sponsored enterprise. While Freddie has issued fully guaranteed securitizations backed by seasoned mortgages, Freddie Mac Seasoned Credit Risk Transfer Trust, Series 2016-1 included tranches without a guarantee from the GSE, similar to a non-agency senior-sub MBS. The transaction included...

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]