MBS & ABS Performance

Browse articles from all of our Newsletters related to MBS & ABS Performance.

October 19, 2018 - Inside FHA/VA Lending

Prepay Speeds Remain a Concern for Ginnie Mae, Overseas Investors

Ginnie Mae has made considerable progress in dealing with rapid prepayments on VA loans but prepayment speeds on Ginnie mortgage-backed securities in general continue to annoy investors. Prepay speeds on Ginnie MBS are now at the lowest since 2014 but it is not enough for agency Executive Vice President Maren Kasper to feel confident as she addressed the annual convention of the Mortgage Bankers Association this week. “Our prepayment issue is not solved,” said Kasper, as she spoke on a panel with representatives of government-lending programs. The agency continues to hear from investors about the problem, she said. Kasper cited two instances where Ginnie officials were summoned to meetings in China and New York to explain the prepayments to irate investors. They threatened to stop purchasing Ginnie bonds, she said. Kasper declined to say how bad the ...

October 19, 2018 - Inside FHA/VA Lending

Ginnie Mae to Require Servicer, Credit Ratings for Largest Issuers

Participants in Ginnie Mae’s single-family mortgage-backed securities program may expect new policy changes, including servicer and credit ratings for the largest issuers, clarification of “appropriate sources of liquidity” and other financial requirements. The changes come as issuer liquidity continues to be a primary concern for Ginnie Mae, particularly with nonbanks now the dominant segment in the single-family MBS program. “We’re working on those policies right now,” said Leslie Meaux Pordzik, Ginnie’s acting senior vice president, Office of Issuer and Portfolio Management, at the Mortgage Bankers Association’s annual convention in Washington, DC, this week. Nonbanks account for nearly two-thirds of Ginnie MBS issuance and approximately 75 percent of FHA and VA lending. Nonbanks serviced a record 61.1 percent of outstanding Ginnie single-family MBS at the end of the ...

October 19, 2018 - Inside FHA/VA Lending

FHA, VA Delinquencies Tip Slightly Higher in 3Q18 GNMA MBS Pools

The amount of single-family Ginnie Mae mortgage servicing rights increased a modest 0.9 percent during the third quarter, according to a new analysis and ranking by Inside FHA/VA Lending. Some $1.858 trillion of Ginnie mortgage-backed securities were outstanding at the end of September, a 6.2 percent gain over the previous 12 months. Loans guaranteed by the VA continued to be the fastest growing segment of the Ginnie market. Volume was up 1.3 percent from the end of June, hitting $630.9 billion, an 11.0 percent increase from the same time last year. The FHA segment remained far bigger: $1.114 trillion at the end of the third quarter. However, its growth rate has been slower: 0.7 percent from June and 3.9 percent compared to September 2017. Loan performance deteriorated slightly in both programs. Some 92.9 percent of FHA loans were current at the end of September, down from ... [Charts]

October 19, 2018 - Inside Nonconforming Markets

Fitch Calls Out Other Ratings on Galton MBS

Top-notch ratings assigned by three firms to a non-agency mortgage-backed security from Galton Funding prompted criticism from Fitch Ratings, which didn’t rate the issuance. The planned $452.7 million Galton Funding Mortgage Trust 2018-2 diverges from traditional non-agency MBS in its treatment of unpaid interest from delinquent mortgages. Fitch suggested that the change to the deal structure was so significant that it wouldn’t rate the transaction. Fitch noted that losses from unpaid ...

October 19, 2018 - Inside MBS & ABS

Fitch Faults Rating Service Competitors on Galton Non-Agency MBS; Suggests Criticism Will Continue

Fitch Ratings issued a commentary this week criticizing other rating services for the preliminary ratings they made on a non-agency MBS from Galton Funding. The company also suggested that it will increase its output of unsolicited commentary due to “late-cycle credit behavior.”

October 12, 2018 - Inside MBS & ABS

Fitch Ratings Offers More Detailed Grading of MBS Due Diligence Firms

Fitch Ratings is now giving a more detailed assessment of MBS due diligence firms. This week, the company introduced a tiered rating system to replace the previous designations used for classifying third-party reviewers conducting due diligence on new non-agency MBS.

October 5, 2018 - Inside FHA/VA Lending

Around the Industry

FHA Issues Waiver of Property Inspections in Disaster-Stricken California Counties. FHA has issued a waiver of its timing policy for completing property inspections prior to closing or endorsing a loan for FHA insurance. The waiver is in effect in presidentially declared major disaster areas in Lake and Shasta Counties, CA, that were ravaged by wildfires and high winds. FHA believes that the wildfires and high winds have stabilized so as not to cause any further damage to properties, even though FEMA has not declared “all clear” in the affected areas. The waiver allows damage inspections to be completed after Oct. 2, for properties located in the PDMDA. NC Commissioner of Banks Amends State Reverse Mortgage Rules. The North Carolina Commissioner of Banks recently amended its ...

October 5, 2018 - Inside FHA/VA Lending

Senate Still Has Time to Enact VA ‘Orphan’ Loan Bill, Says MBA

The mortgage banking industry is optimistic about Congress enacting legislation that would cure VA orphan loans before the midterm elections. The U.S. Senate still has time to consider H.R. 6737, the Protect Affordable Mortgages for Veterans Act, according to Bill Kilmer, chief lobbyist at the Mortgage Bankers Association. “Most observers think [lawmakers are] going to be around until Oct. 18 or 19, which is when Senate Majority Leader Mitch McConnell said he wants to keep folks around to work on nominations and other measures they need to clear,” Kilmer said. “There is time and, more to the substantive point, the bill passed the House.” H.R. 6737 would provide a technical fix so that certain VA refinance loans would be eligible for pooling in a Ginnie Mae mortgage-backed security. The bill was reported out of committee by a unanimous 49-0 vote, and was approved quickly by the House ...

October 5, 2018 - Inside FHA/VA Lending

Solid Gains in Purchase-Mortgage Business Offset 3Q18 Refi Slump

Ginnie Mae issuance of single-family mortgage-backed securities rode a homebuying wave during the third quarter of 2018, according to a new Inside FHA/VA Lending ranking and analysis. Ginnie issuers produced $105.63 billion of new MBS backed by forward mortgages during the July-September cycle, a 7.1 percent increase from the second quarter. That brought year-to-date production to $296.88 billion – down 11.3 percent from the first nine months of 2017. Purchase mortgages provided the boost for the Ginnie market. Some $75.69 billion of FHA and VA purchase mortgages were pooled in Ginnie MBS in the third quarter, a sturdy 13.1 percent increase from the previous period. Purchase loans accounted for 75.1 percent of FHA and VA loans securitized in the third quarter, compared to 64.7 percent for all of last year. Although production of these loans has gone up since the first quarter, year-to-date volume ... [Charts]

October 5, 2018 - Inside Nonconforming Markets

Non-Agency Reverse Mortgage MBS Expected

FHA home-equity conversion mortgages have dominated originations of reverse mortgages but tighter underwriting requirements on HECMs are expected to prompt issuance of non-agency mortgage-backed securities backed by conventional reverse mortgages, according to industry analysts. “Many originators that were solely dependent on HECM originations have begun to diversify into jumbo, uninsured, proprietary reverse mortgages, which allow higher proceeds amounts than HECMs,” ...

October 5, 2018 - Inside MBS & ABS

Re-Performing Loans Reenergized by Recovering Housing Market, Issuance on the Rise, Says DBRS

Securitization of re-performing loans has seen a significant uptick since more borrowers moved from nonperforming to re-performing status as a result of modifications and other loss-mitigation techniques, according to an analysis by DBRS.

September 28, 2018 - Inside MBS & ABS

Greatest Risks for CMBS Predominantly Tied to Weak Malls Though Exposure has Been Limited

Ongoing challenges in the retail sector are raising questions about the credit implications for some structured finance collateral, though the negative effects on the commercial MBS market appear to be limited due to a strong economy, according to a report by Moody’s Investors Service. The disruption in the U.S. retail sector has been caused by the growth of online shopping, cutthroat competition, over-expansion and inability to adapt to changing consumer demands, the report indicated ...

September 28, 2018 - Inside MBS & ABS

DBRS Maintains Lead in Rating Non-Agency MBS, S&P Still on Top in ABS Rating Race

DBRS was the most active rating service in the non-agency MBS market during the first six months of 2018, according to a new Inside MBS & ABS analysis. DBRS rated 26 non-agency MBS totaling $14.08 billion during the first half of the year, which represented 43.5 percent of total issuance. Its market share was up 4.0 percentage points from 2017. Fitch Ratings grew its market share in rating non-agency MBS, which rose from 31.0 percent last year to ... [Includes two data charts]

September 14, 2018 - Inside MBS & ABS

Residential PACE Securities Performing Better than Expected, Prepayments Remain Difficult to Predict

Securitizations of residential property assessed clean energy assessments are performing better than projections made by Kroll Bond Rating Agency when issuance started four years ago, according to the rating service. Meanwhile, predicting prepayment rates remains difficult, KBRA noted in a report released late last week.

September 7, 2018 - Inside FHA/VA Lending

GNMA MBS Issuance Nudges Higher in August, Trails 2017

Ginnie Mae issuers produced $36.68 billion of new single-family mortgage-backed securities last month, a modest 5.0 percent gain from July, according to a new Inside FHA/VA Lending analysis and ranking. Through the first eight months of the year, Ginnie issuance was down 11.0 percent from the same period in 2017. The MBS figures do not include FHA home-equity conversion mortgages, and loan amounts are truncated to the lowest $1,000. Purchase mortgages accounted for 75.6 percent of new issuance in August, although volume was up just 1.9 percent from July’s level. On a year-to-date basis, the purchase-mortgage share rose from 65.7 percent in 2017 to 70.0 percent for the first eight months of this year. Total volume, however, was down 5.1 percent. The refinance market has been more wobbly. As of the end of August, refi volume totaled $65.87 billion, down 26.2 percent from the ... [Chart]

September 7, 2018 - Inside Nonconforming Markets

Assessments of Caliber’s Documentation Differ

Rating services are divided on whether the income documentation used by Caliber Home Loans qualifies as full documentation. The differences are apparent in a pending $342.6 million issuance from Lone Star Funds, which is stocked with mortgages from Caliber. According to Fitch Ratings, Lone Star is the only current issuer of nonprime MBS to keep mortgages with nontraditional income-documentation out of its deals. The rating service said 99.4 percent of the dollar volume of the loans ...

September 7, 2018 - Inside Nonconforming Markets

Flagstar Keeps 30 Percent Due Diligence Sampling

Flagstar Bank looks to have found an agreeable due diligence sampling rate for loans in its prime non-agency mortgage-backed securities. The company is preparing to issue a $476.1 million prime non-agency MBS, according to presale reports published last week. It’s the second issuance in a row from Flagstar where 30.0 percent of the loans were subject to third-party reviews. Only 20.0 percent of the loans in a $704.1 million deal Flagstar issued in April were subject to ...

September 7, 2018 - Inside MBS & ABS

Blackstone Takes a Hard Look at Incenter’s MBS and Trading Operations. A New President for TORO Unit

The Blackstone Group in the past few months has taken a hard look at the operations of Incenter, a portfolio company it controls that has diversified businesses that include loan and MBS trading/investments as well as servicing brokerage, according to market sources familiar with the situation.

September 7, 2018 - Inside MBS & ABS

S&P Alternates Method to Analyze Subprime Auto Loan ABS Losses Due to Longer Amortization

Longer auto loan terms and softer collection practices by some lenders are slowing amortization schedules and backloading losses in certain subprime auto loan ABS, said S&P Global Ratings.


Who "owns" the mortgage customer that’s brought to a wholesale lender through a loan broker?

The broker. It’s his/her client.


The wholesale/table funder. They’re taking the financial risk.


The broker, but only for the first year. After that, the borrower is fair game.


Hard to answer. It’s a complicated issue.