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Inside MBS & ABS

June 5, 2015

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Agency MBS Issuance Falters in May as Refinance Spigot Tightens; Ginnie Market Share Spikes Higher

Gross new issuance of Fannie Mae, Freddie Mac and Ginnie Mae single-family MBS declined by 6.3 percent from April to May, according to a new Inside MBS & ABS ranking and analysis. The agencies produced $113.46 billion of new single-family MBS last month. Though down from April, it was still significantly higher than at any time in 2014, when production averaged just $77.46 billion per month. The key to the drop-off in May was...[Includes two data tables] Read More

Issuers, Underwriters Prepare for Rule Requiring Disclosure of Third-Party Due Diligence Results

June 15 marks a new era for issuers and underwriters of MBS and ABS as a new rule from the Securities and Exchange Commission takes effect. For rated securities, even private placements, public disclosure of results from third-party due diligence reviews will be required before a deal is priced. Industry analysts suggest that the rule will prompt a number of changes in the market. “Many in-scope third-party due diligence services will have to be completed... Read More

FINRA Starts Disclosing Post-Trade Pricing Details For ABS, Transparency Expected to Slow Trading

The Financial Industry Regulatory Authority started publishing pricing data for a broad range of ABS this week in an effort to increase transparency. Industry participants suggest that the new disclosures will prompt a decrease in trading and have some impact on pricing. The ABS pricing details are available through the Trade Reporting and Compliance Engine and include deals issued as 144A private placements. “The dissemination of transaction information in ABS is... Read More

MBS Investing REITS May Go ‘Sideways’ For a While and Maybe That’s Not So Bad

With interest rates rising again, the future looks somewhat cloudy for real estate investment trusts that invest in MBS, a situation that investors have grown accustomed to the past few years. According to figures compiled by Keefe, Bruyette & Woods, the 28 mortgage investing REITs tracked by the firm had a combined market capitalization rate of $47.8 billion at the end of May, a slight drop from a year ago when the tally was $49.0 billion. Then again, not all of the 28 are... Read More

Redwood’s Agreement with Federal Home Loan Banks Gets Higher Loan Limit, Prospects for Volume Unclear

The loan limit more than doubled for the Mortgage Partnership Finance program through which members of certain Federal Home Loan Banks can deliver jumbos to Redwood Trust. Officials at both the Federal Home Loan Bank of Chicago and Redwood are optimistic about the MPF Direct product, though it’s unclear how much volume the new offering will generate. Beginning in the third quarter, the loan limit for MPF Direct will increase from $729,750 to $1.5 million. Previously, the MPF Direct product targeted loans with balances between $625,500, which is the current conforming loan limit for certain high-cost areas, and $729,750, which was the high-cost loan limit during a time when the FHLBank of Chicago was working to launch MPF Direct. Outside of MPF Direct, Redwood purchases... Read More

Fitch Ratings Details Latest Revisions to Its RMBS Surveillance and Re-REMIC Criteria

Fitch Ratings this week put out a new report detailing the latest updates to its criteria for monitoring U.S. residential MBS for possible ratings changes and to analyze re-securitizations of real estate mortgage investment conduit deals. Among the most significant revisions is a loss severity adjustment for newly-issued re-REMIC transactions. Fitch will adjust the model-projected loss severity assumption for pools backing newly issued re-REMIC transactions by as much as 10 percent to account for differences between model projections and recently observed loss severity trends, according to the report. Fitch’s RMBS loan loss model “assumes... Read More

Dismal Short-Term Outlook for Prime Jumbo Market But Some Optimism in the Long Term, Says DBRS

The dreary state of the prime jumbo mortgage securitization market will continue for the short term but there’s a silver lining around the bend, according to an analysis by rating agency DBRS. Despite last year’s downturn, the jumbo prime market has seen steady growth in the last five years. In 2010, Sequoia Mortgage ended the drought in the non-agency MBS with a $478.1 million deal backed by newly originated prime jumbo loans. There have been... Read More

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