MBA president Dave Stevens is concerned that events could soon overtake policy makers and force an “imperfect solution” to Fannie Mae and Freddie Mac.

Issuance of non-agency jumbo mortgage-backed securities increased by 9.9 percent in the second quarter of 2013 compared with the elevated levels seen in the previous quarter, according to the Inside Mortgage Finance MBS Database. However, rising interest rates and a reduction in refinance originations could slow issuance going forward, according to industry analysts. A total of $4.34 billion in non-agency jumbo MBS was issued in the second quarter of 2013, with deals from five issuers ... [Includes one data chart]

As issuance of non-agency jumbo mortgage-backed securities has increased in recent quarters and conforming jumbo MBS issuance has remained relatively flat, the non-agency sector has started to account for a larger share of jumbo mortgage securitization. A total of $15.07 billion in jumbo MBS – mortgages with balances above the traditional conforming loan limit of $417,000 – was issued in the second quarter of 2013, according to the Inside Mortgage Finance MBS Database ... [Includes one data chart]

A subsidiary of Nomura Holdings is preparing to issue a non-agency jumbo MBS, the Wall Street firm’s first deal backed by new production since 2007. Rising interest rates and concerns about investor demand don’t seem to have put a damper on non-agency MBS issuance, as Redwood Trust cranked out another jumbo deal last week and Springleaf Finance issued a security backed by vintage subprime mortgages this week. The $440.08 million non-agency jumbo MBS from Nomura Corporate Funding Americas is set to receive a AAA rating with credit enhancement of 7.60 percent on the top-rated tranche, according to a presale report released this week by Kroll Bond Rating Agency. The credit enhancement was increased due to geographic concentration risk because 74.0 percent of the mortgages to be included in NRP Mortgage Trust 2013-1 were originated in California. Fitch Ratings warned...

A subsidiary of Nomura Holdings is working on issuing a non-agency jumbo mortgage-backed security comprised solely of originations by First Republic Bank. The pending deal is set to receive a AAA rating from Kroll Bond Rating Agency, while Fitch Ratings warned that the proposed credit enhancement levels on the deal are too low for a AAA rating. The $440.08 million NRP Mortgage Trust 2013-1 is structured to include credit enhancement of 7.60 percent on the tranche with a AAA rating from KBRA. Fitch said ...

Hedge funds continue to salivate over mortgage servicing rights. Meanwhile, the Hensarling GSE bill goes down like a Led Zeppelin.

Beginning Jan. 1, capital requirements for bank holdings of certain non-agency mortgage-backed securities will begin to increase. The changes were included in the Basel III reforms approved by federal banking regulators last week. The Basel III final rule includes the simplified supervisory formula approach in lieu of the use of credit ratings to determine capital requirements for holdings of non-agency MBS. The SSFA relies on the 90+ delinquency rate, risk weights of the underlying exposures ...

After long delays, Freddie Mac is close to selling a mortgage-backed security that will include non-agency risk-sharing features. The sale will be part of efforts by the two government-sponsored enterprises to test risk-sharing arrangements on at least $30 billion of business this year, as required by the Federal Housing Finance Agency. A Freddie spokesman said it is “premature” to comment on any deals, but those with knowledge of the pending issuance said the GSE hired Credit Suisse to help market the security ...

Investors in new non-agency jumbo mortgage-backed securities are particularly concerned about representations and warranties regarding mortgage underwriting. Investors at a recent roundtable hosted by Standard & Poor’s stressed that particular risks should be borne by the party with the best information. “Since originators and arrangers are in a better position to ascertain the true quality of the loans, [investors said] reps and warrants should serve to protect investors from risks arising from ...

Correspondent lenders working to sell originations to Redwood Trust are particularly comfortable with how the jumbo conduit handles appraisals. Redwood offers validation of appraisal values early in the underwriting process, providing lenders with some assurance that disagreements regarding an appraised value won’t prevent a delivery to Redwood. During a recent webinar hosted by Inside Mortgage Finance Publications, Jonathan Groesbeck, a managing director at Redwood, said appraisal validation is one of ...