Securitization experts are expecting a rerun of last year in 2012, as the U.S. economy slowly rights itself and most segments of the asset-backed securities market generate reasonable new issuance and stable performance. While observers suggest the housing market may make only modest improvement this year, no one expects much non-agency mortgage activity. Growth in issuance of non-agency mortgage-backed securities is going to be very slow, said Ron Mass, co-head of structured products at Western Asset Management Co. Because the market is underwriting the mortgage borrower, and no longer relying...

If there was any question about what was driving the housing market in 2011, some year-end housing numbers have provided two clear answers: investors and distressed properties. The combination of investors buying up large amounts of distressed properties not only put downward pressure on home prices, but also cut into the home-purchase mortgage business by generating a significant number of cash sales. These are some of the major conclusions that can be drawn from a look at 2011 results from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Last year’s housing...(Includes one data chart)

The Federal Reserve’s recent suggestion that policymakers consider having the government-sponsored enterprises refinance underwater non-agency mortgages appears unlikely to happen, according to industry analysts and even the Fed. Still, the Fed claims such a program would stabilize the housing market and it would likely reduce losses on non-agency mortgage-backed securities. The Fed said the Home Affordable Refinance Program could be expanded beyond GSE loans – or Fannie Mae and Freddie Mac could implement new programs – to refinance non-agency borrowers that would otherwise meet HARP underwriting requirements. According to the Fed, 1.0 million to 2.5 million non-agency borrowers meet HARP refi standards ...

Insurance companies will likely increase their investment in non-agency residential MBS, with market and regulatory influences encouraging movement toward hybrid and floating-rate securities as opposed to fixed-rate bonds, according to some top securities industry analysts. The primary driver on the regulatory level is the anticipated slight rise in capital requirements expected to result from a recent action by the National Association of Insurance Commissioners, the association of state insurance regulators. On Dec. 27, 2011, the NAIC released updated pricing designations that...

Redwood Trust is set to issue a $415.73 million non-agency jumbo mortgage-backed security by the end of this month, continuing its run as the only issuer of new non-agency MBS. Unlike its three previous securities issued in 2010 and 2011, the real estate investment trust has faced little criticism from rating services regarding the characteristics of the new MBS. Fitch Ratings and, in a first, Kroll Bond Rating Agency are set to place AAA ratings on Sequoia Mortgage Trust 2012-1, which includes a pool of 30-year fixed-rate mortgages, ARMs and 15-year fixed-rate mortgages, 446 loans in all. Standard & Poor’s and Moody’s Investors Service were critical of Redwood’s previous deals and will not place ratings on the new issuance ...

Well-known jumbo originators contributed most of the collateral for Redwood Trust’s pending $415.73 million non-agency mortgage-backed security, but a handful of smaller lenders also benefitted from Redwood’s jumbo correspondent program. These lenders have little securitization experience but received strong endorsements from rating services and due-diligence firms. Redwood purchased most of the loans to be included in Sequoia Mortgage Trust 2012-1 on a flow basis, according to Kroll Bond Rating Agency. Flagstar Bank led the smaller originators, with $31.84 million of its loans included in the security ...

The Consumer Financial Protection Bureau will place an emphasis on nontraditional and subprime mortgages, according to origination exam procedures released last week for both banks and nonbanks. The new areas of emphasis largely fall under the CFPB’s recently gained authority to prohibit unfair, deceptive, or abusive acts or practices by lenders. The CFPB received the UDAP authority under the Dodd-Frank Act. In the CFPB’s originator exam procedures, the UDAP concerns are listed as ...

Only five non-agency mortgage-backed securities were issued in 2011 that were not re-securitizations, servicer advances or agency-related deals, according to the Inside Mortgage Finance MBS Database. Some $27.59 billion in non-agency MBS were issued in 2011, nearly all of which was re-MBS. The five transactions, totaling $1.31 billion, accounted for 4.7 percent of all non-agency MBS issued in 2011. The $1.31 billion in issuance was nearly evenly divided among newly originated jumbo mortgages included in two securities issued by Redwood Trust and three securities backed by seasoned loans from other issuers ... [Includes one data chart]

Analysts are divided regarding the outlook for Ocwen Financial as the special servicer has grown significantly in the past two years. Fitch Ratings and Moody’s Investors Service recently downgraded Ocwen and Saxon Mortgage due to concerns about Ocwen’s growth strategy and financial standing while others have endorsed Ocwen and its practices. Ocwen handled a $106.1 billion portfolio at the end of the third quarter of 2011, including $74.9 billion in subprime mortgages. The total included some of the $38.6 billion in subprime loans the servicer acquired from Litton Loan Servicing. At the beginning of February, the company is set to close acquisitions of the Saxon platform and its $26.6 billion portfolio as well as $15.0 billion in non-prime mortgage servicing rights from ...

Nationstar Mortgage’s servicing portfolio has grown significantly in the past year due to acquisitions from banks, a trend the company’s officials suggest will continue. “There is significant room for market penetration as larger banks dispose of servicing assets,” the nonbank servicer said in a recent presentation to investors. Nationstar is touting its growth prospects even after increasing its servicing portfolio to $102.7 billion at the end of the third quarter of 2011 from $12.7 billion at the end of 2007. The company owns 49.2 percent of the holdings, with the rest being subserviced for others ...