Freddie Mac is preparing to sell its second “Whole Loan Securities” transaction, according to a presale report from Moody’s Investors Service. The planned $634.64 million deal will be structured like a non-agency mortgage-backed security with senior tranches and subordinate tranches. Unlike the first deal from the government-sponsored enterprise, the planned issuance received ratings on some of the subordinate tranches. The unrated senior ... [Includes three briefs]

A new research paper aims to settle the debate about whether loose underwriting or the downturn in home prices was the biggest factor in the poor performance of subprime mortgages originated before the financial crisis. There was a sharp divergence in the performance of subprime mortgages originated in 2003 and those originated in 2006 and 2007. Some have suggested that the subprime mortgages originated just before the crash defaulted at higher rates largely because underwriting standards on the loans deteriorated, while others claim the main issue was that house price declines left the borrowers with negative equity. A paper by Christopher Palmer, a professor of real estate at the University of California at Berkeley’s Haas School of Business, claims...

Parkside Lending’s insurance subsidiary recently became a member of the Federal Home Loan Bank of Cincinnati. Parkside said access to FHLBank advances will help provide leverage to Parkside Mortgage Trust, a real estate investment trust. Officials at Parkside wouldn’t address the amount of advances PSL Insurance Company will have access to or whether the advances will help fund originations of non-agency mortgages. In addition to conventional conforming offerings, Parkside originates non-qualified mortgages. Resitrader recently launched...[Includes four briefs]

The non-agency MBS market sputtered to its weakest new issuance volume in a year during the third quarter of 2015, according to a new market analysis and ranking by Inside MBS & ABS. A total of $9.43 billion of non-agency MBS were issued during the third quarter, down 39.7 percent from the second quarter. Thanks to a strong start in the first half of 2015 – and weak new issuance during the same time last year – year-to-date production was up 47.5 percent from the first nine months of 2014. The two mainstays that have been propping up non-agency MBS issuance have been...[Includes two data tables]

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...

Caliber Home Loans is touting its non-agency product line as a way to provide mortgages to borrowers with less-than-pristine credit who cannot qualify for conforming loans. The nonbank is backed by Loan Star Funds, which has raised more than $1.0 billion for funding non-agency mortgages, according to William Pendleton, senior vice president of portfolio lending at Caliber. “We believe we are in the best position of all major lenders to remain on the cutting edge of product ...

The Consumer Financial Protection Bureau issued a final rule this week that will significantly expand the data collected under the Home Mortgage Disclosure Act. Many of the newly required data fields are aimed at giving federal regulators better information regarding discriminatory lending practices. The reporting requirements will start to take effect at the beginning of 2018. Among the new fields required to be reported under HMDA are credit scores, debt-to-income ratios ...

With action from Congress to reform the government-sponsored enterprises not expected in the next year and a half, the GSEs’ risk-sharing activities have been seen by some as a de facto housing finance reform program. Industry participants and members of Congress suggest that the risk-sharing initiatives aren’t a replacement for GSE reform, even while calling for adjustments to the programs. Kevin Chavers, a managing director at BlackRock, said the back-end ...

Rep. Andy Barr, R-KY, used a recent hearing by the House Financial Services Committee as an opportunity to promote a bill that would grant qualified mortgage status to loans held in portfolio. He was particularly critical of an exemption in QM standards that currently applies to mortgages eligible for purchase by the government-sponsored enterprises. Such loans can have debt-to-income ratios above 43 percent and still be deemed safe-harbor QMs. “The policy is counterproductive ...

The IRS approved Bank of America’s $8.5 billion settlement involving vintage non-agency mortgage-backed securities this week. The approval paves the way for investors to receive funds from a settlement that was announced in 2011. Mortgages play a role in a dispute between a former internal auditor at BofI Holding and the bank. Matt Erhart, the former auditor, filed a federal lawsuit this week with a wide range of allegations, including that BofI ... [Includes two briefs]