Non-Agency MBS

Browse articles from all of our Newsletters related to Non-Agency MBS.

October 12, 2018 - Inside MBS & ABS

Wells Differs from Other Banks with Its First Post- Crisis Jumbo MBS, Prompting Low Credit Enhancement

Wells Fargo is testing the prime jumbo MBS market for the first time since the financial crisis with a transaction that has features that differ from those issued by other banks in recent years.

October 12, 2018 - Inside MBS & ABS

Non-Agency MBS Issuance Down Sharply in Third Quarter as Nonprime Sector Tops Prime

New production of non-agency MBS in the third quarter couldn’t keep pace with the record level reached in the previous period, but the market remained on track to top last year’s total issuance by the time 2018 ends. [Includes three data 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 Nonconforming Markets

AIG Picking up Pace of Jumbo MBS Issuance

American International Group is increasing the speed of its jumbo mortgage-backed security issuance and receiving better treatment in terms of credit enhancement requirements. An affiliate of AIG is preparing to issue a $395.7 million deal, according to presale reports released this week by Fitch Ratings and Kroll Bond Rating Agency. The issuance follows deals in March, May and September. The average loan age in AIG securities is also declining. Mortgages in the pending MBS have seasoned for ...

October 5, 2018 - Inside Nonconforming Markets

Aggregator Preps New Non-Agency Products

Mortgage Venture Partners, an aggregator, is acquiring a number of new non-agency products with plans to issue mortgage-backed securities. The first deals from MVP are expected by the first quarter of 2019. Jennifer McGuinness, head of aggregation and structured finance at MVP, said that in the past two years, the firm has focused on acquiring first-lien home-equity lines of credit from banks. “It’s a first lien on assets, giving the borrower the ability to tap their equity but also use it as ...

October 5, 2018 - Inside Nonconforming Markets

Expanded-Credit MBS Issuance Up in 3Q18, Prime Non-Agency MBS Declines

Issuance trends for non-agency mortgage-backed securities stocked with newly-originated mortgages were mixed in the third quarter, according to a new ranking and analysis by Inside Nonconforming Markets. Issuance of prime non-agency MBS declined significantly on a sequential basis in the third quarter. And for the first time, expanded-credit MBS issuance volume topped prime non-agency MBS activity. Some $3.58 billion of expanded-credit MBS was ... [Includes one data chart]

September 28, 2018 - Inside MBS & ABS

More Competition in Non-QM Market Would Reduce Prepayment Rates, S&P Analysts Say

Increased competition in the non-qualified mortgage market could reduce interest rates paid by borrowers and slow the sector’s speedy prepayment rates, said S&P Global Ratings. Non-QM loans, the fastest growing segment of the residential MBS market, repay quickly, often within one year of origination. S&P noted the conditional prepayment rate of non-QM loans is about 35 percent, while the rate for non-agency prime jumbos ranges from 5 percent to 15 percent. “The predominant reason to ...

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 28, 2018 - Inside MBS & ABS

Securitization Rates Plummeted in 2Q18 as the GSEs Continue to Lag Behind Traditional Norms

The overall mortgage securitization fell sharply in the second quarter of 2018 as Fannie Mae and Freddie Mac MBS issuance failed to keep pace with a surge in conventional-conforming mortgage originations in the primary market. During the second quarter, just 65.8 percent of newly originated mortgages were pooled in MBS, down from 71.7 percent in the first three months of the year and a 70.3 percent rate for all of 2017, according to a new Inside MBS ... [Includes one data chart]

September 28, 2018 - Inside MBS & ABS

Reps and Warrants on Expanded-Credit MBS Seen as Inadequate to Attract Major Investors

Issuance of expanded-credit MBS is booming but total volume remains relatively small as major investors continue to avoid the sector. Investors such as Blackrock and PIMCO are looking for improvements to representations and warranties, according to industry participants. Eric Kaplan, director of the housing finance program at the Milken Institute’s Center for Financial Markets, said some big investors prefer to acquire expanded-credit loans, such as non-qualified mortgages, as whole loans ...

September 28, 2018 - Inside MBS & ABS

Record Attendance at ABS East Conference as Investors Look for Yield in Illiquid Assets and Loose Underwriting

The ABS East conference this week had its highest attendance in the 24-year history of the event, with investors looking for MBS and ABS that offer attractive yields. Nearly 5,000 people registered to attend the conference this year, according to Jade Friedensohn, a managing director of the structured finance division of Information Management Network, which produced the event in Miami Beach. Attendance in the previous two years was dampened by a hurricane and concerns about the Zika virus ...

September 21, 2018 - Inside Nonconforming Markets

Chase Tries New Servicing Fee Structure for MBS

JPMorgan Chase is changing the servicing-fee structure in its latest prime non-agency mortgage-backed security. Many of the loans will be subject to a variable servicing fee as opposed to the flat fee traditionally used by Chase and many other issuers. Some 80.1 percent of the unpaid principal balance of the planned $513.9 million issuance is subject to the variable fee, a structure that is more commonly seen on MBS backed by nonperforming mortgages. The servicing fee will ...

September 21, 2018 - Inside Nonconforming Markets

Chimera Preps Investment-Property MBS

Chimera Investment is preparing to issue a non-agency mortgage-backed security in which all the loans are eligible for sale to the government-sponsored enterprises. The deal is backed solely by mortgages on investment properties, according to presale reports by DBRS and Moody’s Investors Service. The deal follows a similar issuance in May by Flagstar Bank as industry analysts suggest that non-agency MBS offer issuers better execution than delivering some types of ...

September 21, 2018 - Inside Nonconforming Markets

Signs of Expanded-Credit Slowdown in MBS

Issuance of expanded-credit mortgage-backed securities is moving at a steady pace, but deal sizes are declining and loan seasoning is increasing, suggesting a slowdown in originations. Redwood Trust is set to issue a $362.7 million deal, according to presale reports by Kroll Bond Rating Agency and Moody’s Investors Service. It’s the fourth expanded-credit MBS of the year from Redwood, including a $520.5 million issuance in May and a $417.0 million deal in July. The average seasoning ...

September 21, 2018 - Inside Nonconforming Markets

Deephaven Brings its Largest Nonprime MBS

Deephaven Mortgage is preparing to issue its largest nonprime mortgage-backed security to date, according to presale reports published this week. The planned $326.1 million Deephaven Residential Mortgage Trust 2018-3 will top a $308.2 million deal the firm issued in January. Mortgages in the new deal look similar to previous issuance from Deephaven. The loans have a weighted-average credit score of 700, an average combined loan-to-value ratio of 72.7 percent and an average ...

September 21, 2018 - Inside Nonconforming Markets

Wells on Track to Test Issuance of Jumbo MBS; Assets Are a Good Bank Investment

Wells Fargo is getting closer to returning to the jumbo mortgage-backed security market, according to John Shrewsberry, a senior executive vice president and chief financial officer at the bank. “We will be securitizing some of our jumbo loans, which has been a dormant market for a long time, but just as a method of demonstrating liquidity and getting market pricing,” he said last week at a conference hosted by Barclays. Wells has been plotting a return to the non-agency MBS market for ...

September 21, 2018 - Inside MBS & ABS

Wells Getting Closer to Issuing Jumbo MBS, Plans to Test the Market within the Next Year

Wells Fargo plans to test the market for jumbo MBS issuance within the next year, according to John Shrewsberry, a senior executive vice president and chief financial officer at the bank.

September 7, 2018 - Inside Nonconforming Markets

News Briefs

The Securities and Exchange Commission levied $16.3 million in penalties against Moody’s Investors Service last week to settle charges involving internal control failures and failures to clearly define and consistently apply credit rating symbols. The bulk of the fine relates to more than 650 non-agency mortgage-backed security ratings issued between 2010 and 2013 that subsequently had to be corrected. Sens. Mark Warner, D-VA, and Mike Rounds ... [Includes four briefs]

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

Non-Agency MBS Issuers Aim for Specificity with Latest Representation-and-Warranty Framework

Non-agency MBS participants are developing a representation-and-warranty framework by learning from ongoing issues in pre-crisis non-agency MBS. The latest framework developed by the law firm of Alston & Bird features a number of new provisions to help address conflicts regarding breaches of reps and warrants.


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.