The latest prime non-agency mortgage-backed security from Flagstar Bank will differ somewhat from two similar deals issued by the bank this year, according to presale reports released this week. The share of mortgages subject to due diligence was adjusted and there will be a higher share of mortgages in the deal that are eligible for sale to the government-sponsored enterprises. The pending $466.93 million Flagstar Mortgage Trust 2018-4 follows deals from the bank that closed in ...

TIAA and Angel Oak Companies look likely to price separate new MBS before the end of the second quarter, according to documents filed with the Securities and Exchange Commission. JPMorgan Chase is also preparing an MBS that could differ from its typical issuance. Merrill Lynch agreed to a settlement with the Securities and Exchange Commission this week regarding non-agency mortgage-backed security trading from 2009 through 2012 ... [Includes two briefs]

Ellington Financial wants to speed up its issuance of non-agency mortgage-backed securities but competition for non-qualified mortgages is getting in the way. Ellington issued its first MBS backed by non-QMs in November. All of the mortgages in the $141.2 million deal were originated by LendSure. Ellington has an equity investment in the lender. Laurence Penn, president and CEO of Ellington, said the firm is preparing to issue another non-agency MBS and the nonbank would prefer to ...

Issuers of non-agency mortgage-backed securities continued to bring a variety of deals in May. JPMorgan Chase and Redwood Trust are set to issue separate prime non-agency MBS and nonprime MBS is on the way from Deephaven Mortgage and Lone Star Funds. Both Chase and Redwood continue to include mortgages eligible for sale to the government-sponsored enterprises in their issuance. Such loans will account for essentially half of the $650.5 million issuance ...

The Structured Finance Industry Group is developing best practices for servicing fees that are passed through to non-agency mortgage-backed securities. As part of the effort, the industry group is seeking examples of servicing fees that have been disputed. The non-qualified mortgage share of originations by banks increased slightly in 2017, according to a survey by the American Bankers Association. Some 10.0 percent of bank originations in 2017 ... [Includes five briefs]

2018 is shaping up to be the best year for the non-agency MBS market since the financial crisis, but it’s still just a small niche with potential.

Increased demand for non-agency MBS and pricing policies set by the government-sponsored enterprises are prompting some lenders to deliver high-quality GSE-eligible mortgages into non-agency MBS pools. If the trend persists, GSE MBS investors could face risks from adverse selection, according to industry analysts.

A key Treasury Department official said regulatory reform could help rejuvenate the non-agency MBS market but offered little guidance on the future prospects for Fannie Mae and Freddie Mac.

The volume of prime non-agency MBS issuance is on the rise as investor demand for the product increases. Pricing in the non-agency MBS market for jumbos is rivaling execution levels for holding the loans in portfolio, and some issuers are seeing better returns by placing loans in non-agency MBS instead of delivering them to the government-sponsored enterprises.

The types of investment-property mortgages being included in new non-agency MBS pose more risk to investors than similar mortgages eligible for sale to the government-sponsored enterprises, Fitch Ratings warned this week. [Includes one data chart.]