The performance of U.S. residential MBS keeps getting better, thanks mostly to favorable economic conditions, but the effects of greater regulatory oversight and intervention can be positive or negative, and sometimes both, depending on what hat a participant in the secondary market wears, according to experts at Moody’s Investors Service. “RMBS performance continues to improve, and that’s mainly because of the confluence of two factors: fewer borrowers are becoming delinquent for the first time because of the economy, and re-default rates on loans which have been modified – which is a significant share of the population of private-label MBS loans – continue to be stable,” said Youriy Koudinov, vice president and senior credit officer at Moody’s. “The second point we want to convey is...

Fitch Ratings placed a negative outlook on a number of servicer ratings for Caliber Home Loans this week. The rating service said the revision from a stable outlook was due to “rapid growth and heightened regulatory scrutiny.” Caliber was the 19th-ranked servicer as of the end of the second quarter of 2015, according to affiliated publication Inside Mortgage Finance. The nonbank handled a $75.23 billion portfolio, which increased by 27.1 percent compared with ...

A company that helped Ocwen Financial reduce the capital it needed for servicing non-agency mortgages was fined last week by the Securities and Exchange Commission. The federal regulator charged Home Loan Servicing Solutions for misstatements and inadequate internal controls. HLSS agreed to pay a $1.5 million penalty to settle the charges while not admitting to or denying the findings. The SEC noted that William Erbey, Ocwen’s former executive chairman ...

The supply of home mortgage debt outstanding started growing again during the second quarter of 2015, thanks to relatively strong growth in retained portfolios, according to an Inside Mortgage Finance analysis of new data from the Federal Reserve and other sources. The Fed reported late last week that $9.901 trillion of single-family mortgage debt was outstanding as of the end of June. That was up 0.4 percent from March and represented the biggest supply of mortgage servicing since the third quarter of 2013. The servicing market had been shrinking...[Includes two data tables]

The serious delinquency rate on subprime mortgages continued to improve in the second quarter of 2015 while the amount of subprime mortgages outstanding also dwindled. An estimated $330.0 billion in subprime mortgages were outstanding as of the end of the second quarter of 2015, according to Inside Nonconforming Markets. The volume was down by 14.5 percent compared with the second quarter of 2014. In that time, the serious delinquency rate ... [Includes one data chart]

The monitor of a $2.0 billion settlement involving Ocwen Financial revealed last week that the nonbank was found to have failed another metric under the settlement. However, the monitor noted that Ocwen has worked to address many of the issues that have dogged the company over the past year. The monitor re-tested Ocwen on a number of metrics under the settlement due to concerns that were raised about the integrity of the servicer’s internal review group ...

New issuance of non-mortgage ABS increased in most major product categories during the second quarter of 2015, although a slowdown in floorplan deals dampened the party slightly. The ABS market generated $54.15 billion in new issuance during the second quarter, a gain of 5.8 percent from the first three months of 2015. It was the strongest new issuance figure since the financial market meltdown, with the previous high ($54.22 billion) coming in the third quarter of 2007. ABS issuance has climbed...[Includes two data tables]

Ocwen Financial’s servicing of certain mortgages in non-agency mortgage-backed securities remains at risk due to a downgrade watch issued last week by Standard & Poor’s. Officials at Ocwen said they were surprised by the announcement while noting that Moody’s Investors Service upgraded various ratings relating to the nonbank. S&P said it placed servicer ratings for Ocwen on watch for downgrade last week due to regulatory scrutiny of the company, results from ...

Performance of subprime mortgages continues to improve as the volume of loans outstanding slowly declines. Some $320.0 billion in subprime mortgages were outstanding as of the end of the first quarter of 2015, according to estimates by Inside Nonconforming Markets. Volume was down 4.2 percent from the previous quarter and 16.0 percent from the first quarter of 2014. The total past-due rate for subprime mortgages fell to 17.60 percent ... [Includes one data chart]

Ocwen Financial filed its annual report for 2014 this week and noted that its auditors decided against requiring a “going concern” qualification for the nonbank. “We believe the filing of our annual report, without a qualification as to our ability to operate as a going concern, is additional evidence that our strategy to strengthen our compliance management system, strengthen the service we provide to our customers and improve our financial stability is working and that confidence ...