The supply of residential MBS in the market grew tepidly in the second quarter of 2015, but not enough to increase the overall securitization rate for home mortgages. A total of $6.335 trillion of single-family MBS were outstanding at the end of June, a slim 0.1 percent increase from the previous quarter. The supply of MBS has been bouncing slightly higher and lower over the past six quarters, without gaining much traction. With total home mortgage debt outstanding climbing by 0.4 percent during the second quarter, the share of securitized loans fell...[Includes two data tables]

Nearly a year has passed since the Structured Finance Industry Group released documents relating to the RMBS 3.0 project and the leader of the Treasury Department’s non-agency reform efforts left the Treasury in May. However, at the ABS East conference sponsored by Information Management Network this week in Miami, industry participants noted that progress is being made on both initiatives. Panel sessions on reforming the non-agency mortgage-backed securities markets have been a staple at industry conferences since 2008, and some observers question whether much progress has been made. “I think...

The Common Securitization Platform currently under development for use by the government-sponsored enterprises has seen some twists and turns regarding potential use for non-agency mortgage-backed securities. Various officials working on the CSP stressed this week at the ABS East conference in Miami that the focus for the platform is activity by Fannie Mae and Freddie Mac. “The platform is adaptable, but our focus is on the enterprises,” said David Applegate, CEO of Common Securitization Solutions, the Fannie Mae/Freddie Mac joint venture that is developing the CSP. At the conference produced by Information Management Network, he noted...

Select Portfolio Servicing is among the firms that demonstrate the highest standards in overall servicing ability, according to Fitch Ratings. The rating service released an assessment of Credit Suisse’s servicer last week, noting that SPS is a key component of Credit Suisse’s conduit operations. SPS handled an $86.04 billion portfolio as of the end of the second quarter of 2015, according to Fitch. The vast majority of the firm’s servicing involves non-agency mortgages, both vintage loans and newer mortgages included in jumbo mortgage-backed securities. Some 13.6 percent of SPS’s servicing volume at the end of June was classified as third-party servicing. The company has been servicing...

Jumbo MBS issued since 2010 have better tail-risk protection than deals issued before the financial crisis, according to analysts at Moody’s Investors Service. Provisions addressing tail risk aren’t uniform, however, with some differentiation among issuers. Tail risk occurs when only a few loans remain in an MBS, with activity on the loans subjecting investors to potentially unexpected losses. The risk is particularly pronounced for jumbo MBS as the average loan amount on many deals tops $700,000, and many of the transactions include loans with balances above $1.5 million. In a report released late last week, Moody’s noted...

Legacy-era non-agency MBS litigation continues to be a ripe field of opportunity for U.S. regulators and industry attorneys alike, years after the financial crisis and Great Recession ended, thanks to some key recent judicial rulings. Late last month, Judge Alvin Thompson of the U.S. District Court for the District of Connecticut gave the green light to the Federal Housing Finance Agency to continue to pursue its claims against the Royal Bank of Scotland. The regulator for Fannie Mae and Freddie Mac alleged that RBS provided misleading statements related to $32.1 billion in RMBS the bank sold to the two government-sponsored enterprises between 2005 and 2008. The thrust of the FHFA’s complaint is...

Federal regulators have implemented a number of rules in recent years aimed at moving banks away from a reliance on credit ratings when making investing decisions. Officials at the Federal Deposit Insurance Corp. stress that if a bank’s management doesn’t have comprehensive understanding regarding a security, the bank shouldn’t invest in the MBS or ABS. “The gist of these new requirements is simple: banks should understand the risks associated with the securities they buy and should have reasonable assurance of receiving scheduled payments of principal and interest,” said Robert Hendricks, capital markets policy analyst at the FDIC. In an FDIC report, Hendricks provided...

Information regarding the $72.11 million non-agency mortgage-backed security from Lone Star Funds’ Colt Funding has been limited, although a document obtained by Inside Nonconforming Markets provides some more details on the deal. COLT 2015-A was the first non-agency MBS to be backed predominantly by non-qualified mortgages. Credit Suisse was the lead manager, and U.S. Bank is the trustee. The MBS was backed by mortgages originated by Caliber Home Loans ...

Unfavorable economics and new regulations appear to have slowed the issuance of jumbo mortgage-backed securities in recent months. New deals from Credit Suisse and Two Harbors Investment suggest that the market could be regaining its legs in September. Mid-way through the third quarter of 2015, only four jumbo MBS had been priced, according to the Inside Mortgage Finance MBS Database. An average of about 11 deals per quarter have been issued in the past year ...

Commercial banks and savings institutions continued to grow their investments in agency MBS during the second quarter of 2015, according to a new Inside MBS & ABS ranking and analysis. Banks and thrifts held $1.583 trillion of agency and non-agency MBS on their balance sheets at the end of June. That was up just 0.3 percent from the first quarter, but it was the highest level since the first nine months of 2012, when bank and thrift MBS holdings topped $1.60 trillion. All the gain came...[Includes two data tables]