Credit Suisse and Shellpoint Partners decided to damn the torpedoes and issue a total of three non-agency jumbo MBS at the end of the second quarter of 2013 despite concerns about investor appetite. The Shellpoint MBS was a proof-of-concept affair, while at least one of the Credit Suisse deals appears to be aimed at unloading seasoned originations from one lender. The three deals totaled $1.10 billion. Analysts at Bank of America Merrill Lynch said...
Issuers of new non-agency MBS continue to resist requests from investors to standardize reps and warrants for new issuance. Issuers suggest that investors will eventually differentiate pricing between deals based on reps and warrants, but it hasn’t happened yet. “Securitization platforms do – and will likely continue to – differ in terms of the scope of the reps and warrants provided,” according to analysts at Standard & Poor’s. “While standardizing reps and warrants would be a step towards improving transparency in the residential MBS market, the new issue jumbo market has shown substantial diversity even with relatively few recent transactions.” S&P recently hosted...
A Wells Fargo securities trial is underway in Minnesota federal district court where jurors will decide whether the financial institution had misrepresented the safety and soundness of its securities lending program and lied to investors about the risks involved or whether the economic crisis was to blame for investor losses. The securities lending program (SLP) was marketed to large institutional investors, including pension funds. As part of the SLP, Wells Fargo held the participants’ securities in custodial accounts and loaned them temporarily to brokers. The brokers then posted cash collateral, which the bank invested until the securities were returned. Under agreements with SLP participants, Wells Fargo acted...
Roughly $495 billion of residential MBS and non-mortgage ABS were issued during the second quarter of 2013, according to a new Inside MBS & ABS market analysis.
Jumbo conduits such as Credit Suisse and Redwood Trust are working to increase the number of correspondent lenders they work with as the non-agency jumbo mortgage-backed security market starts to rebound. The conduits offer attractive execution for lenders that don’t want to hold jumbo originations in portfolio, according to industry participants. Jumbo conduits are “a real business that’s going to be in this for the long term,” said Peter Sack, a managing director at Credit Suisse, during a webinar hosted by Inside Mortgage Finance late last week. Some $3.9 billion in non-agency jumbo mortgage-backed securities were issued...
Although the recent spike in rates spooked some players in the non-agency market, conduits like Redwood Trust and Credit Suisse are still in the hunt for new customers.
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