Plans at Wells Fargo to issue non-agency mortgage-backed securities in 2017 didn’t come to fruition. But growth limitations recently placed on the bank by the Federal Reserve have prompted speculation that Wells could issue non-agency MBS this year. This month, the Fed issued a cease and desist order that temporarily limits the firm’s maximum total consolidated assets to the level they were as of the end of 2017. The order was one of the last acts of former Fed Chair Janet Yellen, who ...

Ellington Financial is looking to ramp up activity involving non-qualified mortgages after a positive reception for its first mortgage-backed security. In November, Ellington issued a $141.2 million MBS predominantly backed by non-QMs. The deal closed with “excellent execution and strong investor demand,” according to Laurence Penn, president and CEO of Ellington. Investors included Putnam Investments, Janus Henderson Investors and JPMorgan Asset Management. “We had a ...

The nonprime mortgages held in portfolio by the government-sponsored enterprises continued to decline in 2017, according to an analysis by Inside Nonconforming Markets. And while the GSEs sold vintage non-agency mortgage-backed securities during the year, pre-crisis Alt A mortgages guaranteed by Fannie Mae and Freddie Mac are largely running off instead of being sold. Fannie and Freddie had a total of $108.23 billion in nonprime mortgage holdings ... [Includes one data chart]

S&P Global Ratings released a revised methodology and assumptions this week for non-agency mortgage-backed securities issued in 2009 and later. The revision included slightly more favorable treatment of mortgages to multiple borrowers and recalibrated loss severity assumptions, including an over/undervaluation framework that incorporates property values in markets compared with price-to-income ratios. New Penn Financial loosened ... [Includes two briefs]

A bank owned by Teachers Insurance and Annuity Association of America is preparing to issue a $381.5 million jumbo MBS, according to presale reports published this week. Only two other banks are actively issuing jumbo MBS: JPMorgan Chase and Flagstar Bank.

Citadel Servicing’s foray into securitizing home loans that don’t meet the qualified-mortgage test is now slated for some time in March, after multiple delays, according to sources familiar with the company’s operations. The nonbank’s first nonprime deal is expected to be roughly $150 million.

The Federal Home Loan Banks may be required to jointly establish at least one entity to aggregate conventional mortgages and use a new government program to issue guaranteed MBS under draft legislation from Sen. Bob Corker, R-TN.

Analysts are expecting private capital to play a much greater role in housing finance in 2018 through both non-agency MBS and additional credit-risk transfers from the government-sponsored enterprises, according to Standard & Poor’s.

The jumbo mortgage-backed security market received a boost this week as a new issuer stepped into the ring. Teachers Insurance and Annuity Association of America is preparing to issue a deal this month, according to presale reports. TIAA, a multi-faceted enterprise with more than $1 trillion in managed assets, acquired EverBank in 2017 and rebranded the operations as TIAA, FSB. The bank is set to issue a $381.54 million jumbo MBS using EverBank’s MBS shelf registration ...

The delinquency rate on non-qualified mortgages in mortgage-backed securities remains low, as issuers are largely avoiding risk-layering. As of the end of 2017, the average current-to-delinquent roll rate for non-QMs in MBS seasoned for one year was 0.4 percent, according to Bank of America Merrill Lynch. Only three non-QM loans tracked by CoreLogic have liquidated so far, and none realized a loss. Non-QM MBS have thicker credit enhancement than ... [Includes one data chart]