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Inside MBS & ABS

June 9, 2017

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Refinance Market Continues to Fizzle, Dimming Some Of the Glow From Surging Purchase-Mortgage Business

Agency issuance of single-family MBS posted a solid, if unspectacular, gain from April to May, according to a new Inside MBS & ABS ranking and analysis. Fannie Mae, Freddie Mac and Ginnie Mae issued a combined $98.52 billion of single-family MBS last month, up 4.1 percent from their April volume. Monthly production in 2017 still hasn’t caught up to the $134.21 billion issued in January but, on a year-to-date basis, it’s running about 5.3 percent ahead of the pace set in the first five months of last year. The story in 2017 has been...[Includes two data tables] Read More

Non-Agency MBS Market Gets Busy With New Deals From Redwood, Deephaven, Mill City, MFA and New Residential

June is shaping up to be a strong month for the non-agency MBS market with a handful of new deals that reflect the character of the sector: a reliance on scratch-and-dent transactions mixed with an emerging nonprime component and opportunistic prime jumbo issuance. Five non-agency MBS totaling $1.90 billion hit the market in the first week of June, with three S&D deals accounting for $1.30 billion of the total. The biggest of these was... Read More

House of Representatives Passes CHOICE Act But Legislation Likely Faces a Dead End in Senate

The House of Representatives late this week passed H.R. 10, the Financial CHOICE Act, which would undo a number of changes to the secondary market and to the regulatory landscape that were ushered in by the Dodd-Frank Act. As previously reported, among these are the elimination of the Dodd-Frank risk-retention requirements for ABS other than residential mortgages. Another provision would enable the president to remove the director of the Federal Housing Finance Agency before the end of the director’s appointed term, with or without cause. It also would make... Read More

With Nonbank Mortgage Stocks Treading Water, Will Corporate Bonds Emerge?

When it comes to price performance, it’s been an ugly couple of years for mortgage stocks, particularly for struggling lender/servicers such as Ocwen Financial, PHH Corp., and Walter Investment Management Corp. In a nutshell, it’s been impossible for many firms to go public or issue additional shares, though there have been exceptions, such as the MBS-investing real estate investment trusts and Impac Holdings. But now there’s talk that some larger nonbanks, and even some smaller players, might be able to issue corporate bonds. According to investment banking advisors, one trend that favors such a development is... Read More

Mortgage REITs Positive on Opportunities to Invest in Agency MBS Despite Tightening Spreads, Analysts Say

Mortgage real estate investment trusts are expressing optimism about investment opportunities in agency MBS despite tighter spreads on credit assets, according to industry analysts at a recent mortgage finance conference in New York City. Mortgage REITs were positive on investment opportunities and believed that interest rate increases were likely to be moderate in the months ahead, said analysts with Keefe, Bruyette & Woods, which hosted the conference. Industry executives, however, noted... Read More

Agency MBS Investors Hold Their Noses; Overseas Demand is Robust; Call Risk Rising

Product valuations are not the most appealing to agency MBS investors right now – not enough to keep them from buying, perhaps, but enough to dry up whatever enthusiasm they might have, according to a new structured finance report from analysts at Wells Fargo Securities. “The core theme in the financial markets right now seems to be ‘reluctant buying,’” the report said. Most of the spread products at this point are trading at multiyear tights. And the bloom may be off the rose when it comes to the so-called Trump trade. “Some of the optimism around fiscal policy post-election that drove risk-premiums tighter is... Read More

SFR Vacancy Rates Rise Slightly; Invitation Homes Reports a Loss, But Its Cash-Flow Remains Strong

The vacancy rate on homes that collateralize single-family rental securitizations rose ever so slightly to 4.3 percent in May, but high renewal rates on tenant leases were strong, according to figures compiled by Morningstar Research. The firm noted that the average retention rate rose for the fourth straight month and now stands at 79.8 percent “for the most recent data available.” Two SFR securitizations, including one from market leader Invitation Homes, paid off... Read More

Fannie/Freddie Shareholder Cases Still Linger In Court, New Case in Michigan Introduced

A number of lawsuits involving Fannie Mae and Freddie Mac shareholders remain unresolved and a new one just hit the court system last week. Three shareholders filed a lawsuit in the U.S. District Court for the Western District of Michigan arguing that the court should vacate the third amendment to the preferred stock purchase agreement and declare the structure of the Federal Housing Finance Agency unconstitutional. The plaintiffs also asked... Read More

Trustees Accept Lehman’s $2.4 Billion Offer to Settle RMBS Dispute; Wells Fargo Sues Investment Advisors

Trustees for 244 residential MBS trusts have accepted a $2.4 billion settlement offer from Lehman Brothers to resolve repurchase claims related to pre-crisis RMBS transactions that went bad. The trustees filed a notice of acceptance and a motion seeking bankruptcy court approval of the settlement on May 22. A hearing on the motion will be heard by Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District of New York on July 6, 2017. The trustees in the settlement include... Read More

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