MBS investors this week continued to bid up the price of agency product in the wake of rock-bottom oil prices and economic fears about Asia, Europe and any oil-producing nation that relies too heavily on the energy sector. According to figures compiled by MBS Quoteline, at one point this week investors were paying 105.10 for Fannie Mae MBS with a coupon of 3.5 percent. Back in October the bid on the Fannie 3.5 was a mere 101.83. “Who would pay 105...

The strong growth in issuance of jumbo mortgage-backed securities seen since 2010 stumbled in 2014, according to a new ranking and analysis by Inside Nonconforming Markets. Some $9.79 billion in jumbo MBS were issued last year, down 25.4 percent from activity in 2013. Issuance has been constrained by bank portfolio demand for jumbo mortgages. The spike in interest rates in 2013 led to nine months of very low issuance. Rates have since fallen and a number of new jumbo MBS issuers have entered the market, but quarterly volume has struggled to reach the levels seen in early 2013. Those looking for a silver lining could...[Includes one data chart]

Lenders are getting more comfortable with the Consumer Financial Protection Bureau’s ability-to-repay rule, according to industry participants. Loans that do not meet standards for qualified mortgages are only available in the non-agency market and most have been retained in portfolio to this point. Many lenders participating in a recent roundtable hosted by Standard & Poor’s said interest-only mortgages continue to be attractive products, even though the loans are non-QMs. “These loans have been originated post-crisis, and originators expect to continue lending to high-quality borrowers with substantial equity in their properties,” S&P said in a summary of the roundtable discussion. A large bank lender at the S&P roundtable said...

More investors would be willing to buy new non-agency mortgage-backed securities if loans in the deals had prepayment penalties, according to an industry analyst. The penalties offer investors protection, but their use has been limited by the Consumer Financial Protection Bureau’s ability-to-repay rule, among other factors. Lawrence White, a professor and deputy chair in economics at the New York University Stern School of Business, suggested that the non-agency MBS market would see increased demand from investors, particularly insurance companies, if loans in non-agency MBS included prepayment penalties. “These institutions have largely stayed...

Standards for qualified-residential mortgages along with risk-retention requirements for certain non-agency mortgage-backed securities take effect Dec. 24, 2015. The final rule establishing the implementation date was published in the Federal Register at the end of December 2014. Federal regulators first detailed...[Includes two briefs]

The FHA rarely talks about its lender and loan review process in detail but in the latest issue of Lender Insight the agency discusses how it is done and how it selects targets for each review. FHA’s overall counterparty quality-control efforts are divided into lender-monitoring reviews, nonperforming loan reviews, post-endorsement technical reviews of performing loans, post-endorsement technical reviews of early payment defaults (EPD), early cohort claim reviews and lender self-reports. For lender-monitoring reviews, the FHA uses a targeting methodology that takes into account loan volume, default/claim rates, participation in specific FHA loan programs, servicer loss-mitigation performance and certain other factors. Loans are selected to determine compliance with FHA requirements. The Quality Assurance Division (QAD) in the Department of Housing and Urban Development’s Single-Family ...

FHA borrowers who refinance through the agency’s Home Affordable Modification Program will also be eligible to earn $5,000 in the sixth year of their performing, modified loan, subject to the Department of the Treasury’s guidelines, the FHA has announced. The incentive to FHA-HAMP borrowers is one of several enhancements to the Making Home Affordable program that the Department of Housing and Urban Development and the Treasury Department unveiled in December last year. The enhancements were designed to motivate homeowners in MHA to continue making timely mortgage payments, strengthen the safety net for those still facing financial hardships, and help them build equity in their homes. Under the revised HAMP guidelines, all homeowners in the program become eligible to earn $5,000 in the sixth year of their loan modification. This means a borrower’s outstanding principal balance could ...

SunTrust Banks started off the new year reliving the pain of the last six years since the financial crisis by revealing it plans to take yet another financial hit – this time, a $145 million legal expense in its fourth quarter results tied to legacy mortgage issues. In a Form 8-K filing with the Securities and Exchange Commission early this week, David Wisniewski, deputy general counsel, said the bank was taking the charge “to increase legal reserves and complete the final resolution of one matter. Accordingly, based on current information, the company expects its estimate of reasonably possible losses related to legal matters, in excess of reserves, to decrease by approximately this amount.” Wisniewski did not specify...

Mortgage lenders and real estate agents called for further clarifications of an inter-agency proposed regulation that would mandate escrowing of all premiums and fees for flood insurance for most residential mortgages and mobile homes, with some exceptions, after Jan. 1, 2016. While supportive of the regulation, industry groups urged the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Federal Reserve Board, National Credit Union Administration and the Farm Credit Administration to proceed cautiously and ensure flood insurance remains affordable and available to consumers. The proposed rule covers...

With Fannie Mae and Freddie Mac on solid financial footing in terms of earnings, some factions of the mortgage industry believe the two should be allowed to rebuild capital by retaining some of their profits. But getting there would require a hard push from the White House, and the approval of the Treasury Department, which controls the senior preferred stock of the two. In a recent letter to Treasury Secretary Jacob Lew and Federal Housing Finance Agency Director Melvin Watt ...