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Inside MBS & ABS

April 25, 2014

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Commercial Mortgage Securitization Activity Cools In Early 2014, Agencies Lose Some Multifamily Share

A total of $32.6 billion of income-property mortgages were securitized during the first three months of 2014, a soft beginning for a market that posted its best year since the financial collapse during 2013. Commercial mortgage securitization – including non-agency commercial MBS and multifamily securitizations by Fannie Mae, Freddie Mac and Ginnie Mae – declined by 22.1 percent in the first quarter of 2014. Total issuance was off 30.4 percent from the same period last year. Both agency and non-agency issuance was...[Includes two data charts] Read More

Improvements to Mortgage Performance Help to Stabilize Servicer Advances on Non-Agency MBS

Servicer-advance rates on vintage non-agency MBS have been up and down in recent quarters, showing further variances based on the servicer and issuer. The fluctuations have made it difficult to project valuations for certain securities, but industry analysts suggest that as mortgage performance continues to improve, servicer-advance rates will stabilize. The rate at which servicers advanced missed borrower payments on mortgages in non-agency MBS decreased slightly on a quarterly basis in the first quarter of 2014 after a gain the previous quarter, according to Fitch Ratings. Pooling and servicing agreements for non-agency MBS require servicers to continue making advance payments until the payments are deemed non-recoverable. Non-agency MBS values are... Read More

Johnson-Crapo Likely to Erode the Agency Pricing Advantages Seen in the Multifamily MBS Market

Passage of legislation from Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, to reform the government-sponsored enterprises would prompt some changes to the multifamily MBS market, according to industry analysts. While the bill’s impact on the multifamily market is expected to be modest overall, according to Moody’s Investors Service, the pricing advantages seen on multifamily MBS from Fannie Mae and Freddie Mac compared with non-agency commercial MBS would likely disappear. The Johnson-Crapo bill, which is scheduled for a markup next week by the Senate Committee on Banking, Housing, and Urban Affairs, calls for risk-sharing structures in the multifamily market already used by Fannie Mae and Freddie Mac for multifamily MBS, potentially limiting any broad disruptive impact to the multifamily market from the bill. Within one year after the bill becomes law, Fannie and Freddie would be required... Read More

Ginnie Mae Holds Up BofA MSR Sale to Nonbank; Agency Cautious About New Players’ Capacity

Ginnie Mae has asked Bank of America to provide missing documents on government insured loan pools after being informed by the MBS custodian that key paperwork is missing from the files. According to industry advisors familiar with the matter, the missing documents are tied to an $8 billion mortgage-servicing sale from BofA to PennyMac. So far, both parties have declined to discuss the matter publicly. One observer noted... Read More

Odds of More Oversight of Student Loan Servicing Rises After CFPB Criticizes Auto Default Practice

In a development with potentially negative implications for lenders, servicers and investors in student loan ABS, the Consumer Financial Protection Bureau released a report this week critical of the “auto-default” practice seen in private student lending. According to the CFPB’s Mid-Year Update on Student Loan Complaints, borrowers say that some lenders demand immediate full repayment upon the death or bankruptcy of their loan co-signer, even in cases when the loan is current. Borrowers also said they confronted bureaucratic barriers to releasing co-signers from their loans, something that could help avoid auto-defaults. “Students often rely... Read More

Another Active Year for GSE Multifamily MBS in The Works. The Big Question is: What Will Watt Do?

Government-sponsored enterprises Fannie Mae and Freddie Mac are off to a solid start to the year in terms of their multifamily business in what is expected to be a more competitive year in 2014 than the market saw last year. Whether they can match last year’s levels is an open question. Fannie issued...[Includes one data chart] Read More

UBS/Union Central, Allstate and Merrill Lynch Announce Settlements to Residential MBS Lawsuits

UBS AG and Union Central Life Insurance Co. this week announced they have settled their legal dispute regarding the sale of residential MBS that UBS sold to the insurer in the years leading up to the financial crisis. The settlement reached in early March but jointly announced just this week, ends the legal action begun in a New York federal court in 2011. Union Central and affiliates Ameritas Life Insurance Corp. and Acacia Life Insurance Co. sued UBS and other financial service companies and executives in 2011, alleging that the defendants misrepresented the quality of the loans underlying the residential MBS that they sold to the insurers. In a 2012 amended complaint, Union Central alleged... Read More

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