FHA loan originations declined by 10.5 percent in August from July, following a downward trend that seems to suggest that private mortgage insurance companies are gaining the upper hand against their biggest government-backed competitor. Volume dropped to $16.8 billion in August from $18.8 billion in July, and from $22.1 billion a year ago, according to Inside FHA Lendings analysis of FHA data. Purchase-mortgage originations comprised 68.7 percent of FHA business for the month as rising interest rates slowed refinancing activity. Despite the increase in purchase lending, FHA lenders noted it was ... [1 chart]
Communication among investors in non-agency MBS as well as between issuers and investors has been inadequate, according to industry participants. Trustees and others are working to address the issues, both with new jumbo MBS and vintage non-agency MBS. Investors cite problems with data availability, consistency, timing and quality. Paul Burke, head of North American agency and trust sales at Citibank, said the communication system currently used for non-agency MBS leaves something to be desired. Communication regarding potential votes for action on non-agency MBS, due to a perceived breach of representations and warranties, for example, is generally funneled...
Residential mortgage delinquency rates have turned around nicely from their worst levels in the wake of the financial crisis, but mortgage servicer timelines continue to increase, according to recent findings by industry analysts. The improvement in the broad U.S. economy in general, and the steady decline of the unemployment rate and the strong rebound of the housing market in particular, have significantly reduced the residential mortgage serious-delinquency rate across all credit spectrums, Deutsche Bank analysts said in a report issued last week. Delinquency rates have declined...
Seven different issuers generated a relatively strong $3.94 billion in jumbo non-agency MBS during the third quarter, but the sectors resurgence in 2013 seemed to be losing steam and faces an uncertain future. Jumbo MBS issuance declined 9.1 percent from the second quarter and one transaction Shellpoints second of the year was pulled back as September came to a close. Redwood Trust managed $1.18 billion in new issuance, a 34.1 percent drop from the second quarter, while the two other jumbo veterans, Credit Suisse and JPMorgan Chase, saw reduced production as well. Industry participants are divided...[Includes three data charts]
Investors at the ABS East conference in Miami this week had a positive outlook for most structured finance investment options, such as vintage non-agency MBS, auto and credit card ABS, collateralized loan obligations and esoteric assets. They were less bullish about new jumbo MBS. More than 3,500 people registered for the conference this year including more than 1,000 investors. Jade Friedensohn, a senior vice president at Information Management Network, the event sponsor, said it was the biggest turnout for ABS East since before the financial crisis. In the short term things are...
A steady decline in single-family agency MBS issuance led to a 13.8 percent decline in MBS and ABS production during the third quarter of 2013, according to a new Inside MBS & ABS analysis. A total of $388.53 billion of single-family MBS were issued during the third quarter, a 15.7 percent drop from the previous three-month period. It marked the lowest quarterly output for single-family MBS since the second quarter of last year, although year-to-date production was still up 9.0 percent from the first nine months of 2012. Every component in the residential MBS market was...[Includes three data pages]
Reforms seen in the new era of non-agency jumbo MBS issuance arent enough to prompt significant investor participation, according to John Gidman, president of the Association of Institutional Investors. At a hearing this week by the Senate Committee on Banking, Housing and Urban Affairs, Gidman and others called for a number of changes to the non-agency market. The fundamental structural and process weaknesses for non-agency residential MBS securitization have not been fixed in the current private-label securities market, Gidman said. The issuance process itself is very opaque. Ratings continue to be shopped, issuers are still incentivized to water down representations and warranties, and continued variability in structures and documentation make the market more challenging for investors and raise the costs of funding. He acknowledged...
Issuance from new participants in the non-agency jumbo mortgage-backed security market wasnt enough to offset reduced activity by Redwood Trust and others in the third quarter of 2013, according to a new ranking and analysis by Inside Nonconforming Markets. Issuance of jumbo MBS slowed particularly in September, as Shellpoint Partners delayed its planned security and PennyMac Corp. made changes to attract investors. A total of $3.94 billion in non-agency jumbo MBS was issued in the third quarter, a 9.1 percent decline from the previous quarter and about level with the issuance seen in the first three months of 2013. Redwood and Credit Suisse, the jumbo MBS sectors two biggest players, slowed...[Includes one data chart]
Jumbo mortgage-backed security structures used by Redwood Trust, PennyMac Corp., and others pose risks for investors, according to Moodys Investors Service, although the rating service said bonds will only incur losses in low-probability scenarios. Moodys raised concerns about features that go beyond the simple senior-subordinate structures that have been most common since the restart of the non-agency MBS market. Those features include...
While the Consumer Financial Protection Bureau has encouraged originations of non-qualified mortgages, industry analysts predict that such originations will begin slowly. Even before the QM and risk-retention requirements are implemented for non-qualified residential mortgages, few lenders have been willing to offer subprime mortgages. Originations of subprime mortgages will likely be non-QMs due to the higher interestrates required for subprime borrowers. According to a survey completed by Zillow, borrowers with credit scores under 620 who requested a quote for a 30-year fixed-rate mortgage were...