With financial markets awaiting, with some uncertainty, the public policy positions of the incoming Trump administration and the new Congress, industry analysts say ABS investors can expect most sectors to turn in stable performances in 2017. “As we look back on 2016 and consider the 2017 global structured finance outlook, most markets and their credit conditions seem favorable, and in some cases, even ideal. However, 2017 has many unknowns, especially the specific policies and priorities that will be adopted by the new U.S. administration,” said analysts with S&P Global Ratings in a recent outlook report. “Some would suggest government-sponsored enterprise privatization is possible, risk retention could be revised, and an appropriate/globally consistent capital treatment for structured finance products could be approved.” Further, “For the most part, we expect...

Mortgage compliance experts say there’s still a strong need for the Consumer Financial Protection Bureau to provide more guidance about acceptable business relations under Section 8 of the Real Estate Settlement Procedures Act. One of the issues that came to the fore in the bureau’s enforcement action against PHH Mortgage was lenders’ relationships under marketing services agreements. Even though banks these days may be using MSAs to a lesser extent than nonbanks, there is still a need for the CFPB to more clearly delineate do’s and don’ts. “On the lender side of the mortgage industry, there is...

Some borrowers are obtaining mortgages for investment properties and occupying the home as a primary residence instead of renting out the home, according to industry analysts. Such “reverse-occupancy fraud” is especially prevalent among first-time homebuyers who might not otherwise qualify for a mortgage. Borrowers completing reverse-occupancy fraud aim to qualify for a mortgage with help from the theoretical rental income from the so-called investment property. Mortgages for a business purpose – typically including mortgages for investment properties – aren’t subject to the Consumer Financial Protection Bureau’s ability-to-repay rule, allowing lenders to use looser underwriting standards. Fannie Mae issued...

With two of the nation’s largest originators of nonprime and non-qualified mortgages hoping for a record production year in 2017, the mostly anemic securitization market for these types of credits could receive a real boost. But the big question remains: how much will the two firms – Angel Oak Mortgage Solutions and Citadel Servicing Corp. – tap the MBS market? In 2016, the Irvine, CA-based Citadel funded...

The incoming Trump administration has yet to pick a new president for Ginnie Mae, but foreign investors will be keeping a close eye on the selection for the simple reason they own a ton of the agency’s MBS. According to Sept. 30 figures provided to Inside MBS & ABS, foreign investment in Ginnie MBS is now at a record $552 billion, or roughly 35 percent of all outstanding securities. The agency could not provide...

The only word from the incoming Trump administration about the fate of Fannie Mae and Freddie Mac is that the prospective Treasury secretary wants to bring them out of conservatorship. The Obama administration, however, commits only to preserving an explicit government guarantee for a “defined class” of MBS. “The explicit government guarantee would be funded by financial institutions and would act as insurance against catastrophic losses,” said the Treasury in a late December blog posting by Jane Dokko, deputy assistant secretary for financial economics, and Sam Valverde, a counselor in the Office of Domestic Finance. However, the authors don’t elaborate on what would shape the defined class. Under the new guarantee, investors would be assured...

With structured finance performance having peaked for many sectors, analysts at Fitch Rating and S&P Global Ratings anticipate some modest asset-level deterioration in 2017 – most notably in both prime and subprime auto ABS. On the other hand, they expect relatively stable performance from credit card ABS. “Both prime and subprime auto ABS loss rates could be...

The denial rate on jumbo mortgages varies significantly among lenders, according to an Inside Nonconforming Markets analysis of data from the Home Mortgage Disclosure Act. Among the top 25 lenders, denial rates for jumbo applications in 2015 ranged from a low of 2.3 percent to a high of 76.8 percent. Overall, the top 25 lenders denied 18.1 percent of the $367.49 billion in total unpaid principal balance for jumbo-mortgage ... [Includes one data chart]

Small servicers have significantly outpaced larger servicers in terms of growth in the past year. While many nonbanks focused on servicing nonperforming mortgages in the past, the more recent growth by small servicers has been in performing mortgages, including those originated in-house. The total unpaid principal balance of single-family mortgages outstanding at the end of the third quarter of 2016 was $10.11 trillion, up by 1.6 percent, according to the Federal Reserve. Growth was...

Ever since the nation’s financial crisis, commercial banks and other depositories have dominated the second-lien business and likely will continue to do so in the coming years, but that isn’t stopping nonbanks from testing the waters once again. According to research by Inside Mortgage Finance, several nonbanks have slipped back into the market, albeit with muted production volumes. And many of the firms that have crept back in are partnering with depositories. The reason for the strategy is...