Securities

Browse articles from all of our Newsletters related to Securities.

August 18, 2017 - Inside FHA/VA Lending

No Ginnie Mae Summit in 2017, Event Moved to January 2018

Ginnie Mae will not have an annual summit this year but has rescheduled it for January 2018, according to Ginnie Mae’s new spokesperson. Michael Huff, senior advisor, congressional and stakeholder relations, said a new administration and staff departures have caused organizers to reconsider having the annual Ginnie Mae Summit this year, usually held in October. The Trump administration has yet to announce a nominee for the top job at Ginnie Mae since former president Ted Tozer left in January. David Kittle is reportedly a leading contender, but there has been no official announcement or confirmation. So far, Kittle has declined to comment. Kittle is a mortgage industry veteran who began as a loan officer and now heads his own company. He also was a top executive with the Mortgage Bankers Association and managed, among other things, the group’s political action committee. In addition, Kittle co-founded the ...


August 18, 2017 - IMFnews

What We’re Hearing: The Nation’s Volume Leader in the ‘New’ Nonconforming Is… / Sales Executive Departs / Don’t Stop Believin’ (in Fannie and Freddie)? / ‘Contract Law’ and GSE Common Shares / A Legislative Snafu Called Donald Trump?

According to our calculation, Fannie common now trades at $2.80, a 20.17 percent improvement since the close of 2Q17, while Freddie’s value rose 21.08 percent to $2.70.


August 18, 2017 - Inside MBS & ABS

MBS & ABS Issuance at a Glance

One page of issuance data.


August 18, 2017 - Inside MBS & ABS

FOMC Minutes Shed More Light on Upcoming Efforts to Unwind Balance Sheet, Normalize Rates

The Federal Reserve this week released the minutes of the July meeting of its Open Market Committee, providing more detail and color regarding the central bank’s deliberations on shrinking its enormous holdings of agency MBS and the future path and timing of interest rate adjustments. FOMC members started their portfolio deliberations by discussing the appropriate time to start reducing the Fed’s securities holdings, a plan that had been formally announced in June. “Participants generally agreed that, in light of their current assessment of economic conditions and the outlook, it was appropriate to signal that implementation of the program likely would begin relatively soon, absent significant adverse developments in the economy or in financial markets,” according to the minutes. Many members of the committee noted...


August 18, 2017 - Inside MBS & ABS

GSE Shareholders Grow Weary of Drawn Out Discovery Process in Fairholme Case

Attorneys for Fairholme Funds filed another motion this week requesting to view about 1,500 government documents in a lawsuit challenging the government’s net-worth sweep of profits at Fannie Mae and Freddie Mac. And late last week, the government produced three more documents that were originally classified as “privileged.” In the new motion, the Fairholme attorneys asked the Federal Claims Court to use the “quick peek” procedure for more than 1,000 documents dating back to May 2012. These are among the many documents the plaintiffs say the government is still withholding under the deliberative process and bank examination privileges. It’s...


August 18, 2017 - IMFnews

Phoenix Capital Busy with MSR Auctions

The average loan balance on the $779 million MSR package is $241,000…


August 18, 2017 - Inside MBS & ABS

Court Denies WMC’s Motion, Class Accuses Deutsche Bank of Dipping into Trustee Funds, BNYM Wins

August is turning out to be an unfortunate month for WMC Mortgage and Deutsche Bank in terms of continuing legacy MBS litigation, but an auspicious one for Bank of New York Mellon, which won a favorable verdict in a residential MBS case. On Aug. 8, Judge Charles Haight of the U.S. District Court for the District of Connecticut denied defendant WMC Mortgage’s motion for partial summary judgment in Law Debenture Trust Co. of New York v. WMC Mortgage. The case involves a pool of 5,162 residential loans originated by WMC which were securitized in 2006 and sold to the trust for $1 billion, according to the law firm Orrick. The lender was...


August 18, 2017 - Inside MBS & ABS

Merger of SFR Operators Invitation Homes and Starwood Could Spell More Opportunities for Fannie and Freddie

The proposed $4.3 billion merger of single-family rental operators Invitation Homes and Starwood Waypoint Homes will create a corporate landlord with 82,000 homes – and a behemoth of a potential client for Fannie Mae and possibly Freddie Mac. Earlier this year, Fannie agreed to provide Invitation Homes with $1 billion in financing. The deal broke new ground for the government-sponsored enterprise, but it also raised questions about whether a government-owned entity that received billions in taxpayer assistance should be lending money to a company (Invitation Homes) grubstaked by Wall Street. Since the Invitation-Fannie arrangement was unveiled, no other significant SFR financing vehicles involving a GSE has...


August 18, 2017 - Inside MBS & ABS

Consumer Finance ABS Issuers Seen as Feeding Investor Demand Without Tilting Too Much Toward Securitization

In the first half of 2017, the dollar volume of credit card ABS issued was nearly three times the issuance seen in the first half of last year. However, analysts at Fitch Ratings suggest that issuers of consumer finance ABS aren’t relying too heavily on the structured finance market for their funding. The rating service said increased issuance of ABS could affect some issuers’ credit profiles if it leads to a sustained increase in secured wholesale funding sources. “However, we believe that this trend does not yet represent a structural shift, with many consumer finance-oriented financial institutions raising consumer ABS issuance opportunistically to take advantage of attractive pricing and to enhance the liquidity of their ABS programs,” the rating service said. Some $24.38 billion of credit card ABS were issued...


August 18, 2017 - Inside MBS & ABS

Tricon American Brings First Rated Single-Family Rental Security with a Lifetime Property-Substitution Option

Tricon American Homes is set to issue the first rated single-family rental securitization to include a voluntary property-substitution provision for the life of the transaction. The provision provides the issuer with flexibility to manage its overall portfolio, but rating services cautioned that the feature could have negative implications for investors. The planned Tricon American Homes 2017-SFR1 is collateralized by a $498.60 million fixed-rate loan secured by mortgages on 3,480 single-family rentals. The deal received preliminary AAA ratings from Kroll Bond Rating Agency, Moody’s Investors Service and Morningstar Credit Ratings. KBRA noted...


August 18, 2017 - Inside MBS & ABS

MBS Trading Volume Weak in July, Hitting a New Low For the Year. A Growing Concern: Turmoil in Washington

The average daily trading volume in agency MBS fell to just $200.5 billion in July, the weakest reading of the year, according to the Securities Industry and Financial Markets Association. Compared to the prior month, MBS trading fell by 4.5 percent. The strongest month of the year came in January at $229.8 billion. In general, a lower reading on average daily trading volume means...


August 18, 2017 - Inside MBS & ABS

Portfolios Shrink at Fannie and Freddie as GSE Share of MBS Market Hits 3 Percent in 9th Year of Conservatorship

Fannie Mae and Freddie Mac are still titans in the residential MBS market when it comes to making new securities, but they have been forced to the sidelines as investors over nine years in conservatorship. The two government-sponsored enterprises held a combined $221.48 billion of residential MBS at the end of June. Firm numbers on the total volume of MBS outstanding at that point aren’t available yet, but it’s unlikely that Fannie and Freddie held more than 3.5 percent of the market. The two GSEs reduced...[Includes one data table]


August 18, 2017 - Inside MBS & ABS

Portfolios Shrink at Fannie and Freddie as GSE Share of MBS Market Hits 3 Percent in 9th Year of Conservatorship

The Home Affordable Refinance Program was arguably one of the most successful initiatives aimed at delivering consumer relief in the wake of the housing meltdown. It’s proving hard to kill. The Federal Housing Finance Agency this week extended HARP for another year, until the end of 2018. It was slated to sunset at the end of this year. The program has been extended several times since it was authorized back in 2009. The extra year is...


August 18, 2017 - Inside MBS & ABS

Banks Add to Residential MBS Holdings During Second Quarter, More Interest in GSE Securities

Commercial banks and savings institutions continued to stockpile agency MBS during the second quarter of 2017 with a strong appetite for Fannie Mae and Freddie Mac pass-through securities. Total bank investment in residential MBS rose by $36.28 billion during the second quarter, lifting the industry’s aggregate portfolio to a record $1.799 trillion. Bank MBS holdings have risen steadily since the third quarter of 2014, growing by $264.07 billion over that period. In addition to those held-to-maturity and available-for-sale accounts, about a dozen banks held $16.34 billion of residential MBS in trading accounts. All of the growth has been...[Includes two data tables]


August 18, 2017 - IMFnews

Those Incredibly Shrinking GSE MBS Portfolios – a 5.3 Percent Decline in 2Q17

Today, Fannie and Freddie hold $13.50 billion of subprime and Alt A MBS. At the end of 2005, they had a staggering $258.67 billion in such assets.


August 16, 2017 - IMFnews

Alternative Credit Scores for GSE Loans will Have to Wait for the Single-Security Project

Mel Watt called the credit score explorations one of the “most difficult” evaluations he’s taken on as FHFA director.


August 16, 2017 - IMFnews

For Sale by MountainView: $94 Million of NPLs/RPLs and More

Over the past three years MountainView has sold $3.8 billion of whole loans as measured by unpaid principal balance…


August 16, 2017 - IMFnews

Fannie, Freddie Earnings Could Hit $10 Billion in 3Q17 Thanks to RBS Settlement

If the $10.4 billion figure proves accurate it will result in another hefty dividend payment by Fannie and Freddie to the holder of its senior preferred stock: the U.S. Treasury.


August 15, 2017 - IMFnews

LIBOR is Being Phased Out. A Big Deal or Ho-Hum?

Fannie Mae and Freddie Mac are well aware of the issue and have leeway to replace LIBOR with another benchmark when the time comes, industry officials said.


August 14, 2017 - IMFnews

Freddie Mac Picks up the Pace in CRTs During 2Q17

Freddie Mac issued $2.11 billion of new Structured Agency Credit Risk notes, an impressive increase of 35.6 percent…


August 14, 2017 - IMFnews

KBW Weighs in on GSE Earnings, PSPA Lawsuits, Says Stocks are Worth $1 Each

Although Fannie and Freddie continue to earn money hand over fist, their common shares are probably worth just $1 a piece, according to a new research report…


August 11, 2017 - Inside MBS & ABS

MBS & ABS Issuance at a Glance

One page of issuance data.


August 11, 2017 - Inside MBS & ABS

Investors Closer to Getting Paid as Agent Announces Plan to Disperse JPMorgan RMBS Bulk Settlement

Investors in certain residential MBS transactions backed by defaulted mortgages in the run-up to the financial crisis are a step closer to being made whole, more than four years after the Securities and Exchange Commission announced a settlement with JPMorgan Securities, Bear Stearns and some affiliates over allegations they misled investors and mishandled bulk settlement proceeds. The case involved is Securities and Exchange Commission v. J. P. Morgan Securities LLC, EMC Mortgage, LLC, Bear Stearns Asset Backed Securities I, LLC, Structured Asset Mortgage Investments II, Inc., SACO I, Inc., and J. P. Morgan Acceptance Corporation I, Case No. 12-CV-1862 (RLW). In November 2012, the SEC filed...


August 11, 2017 - Inside MBS & ABS

Fraudulent Activity in the Mortgage Market May Be On the Upswing Thanks to Growing Purchase Market

The transition from a market hot with refinances to a more traditional purchase market has made the industry ripe for new and old mortgage fraud schemes, according to CoreLogic. The company’s National Fraud Risk Index reached 133 in the second quarter, a slight uptick from the first quarter, but it represents the highest it’s been since the index was introduced in 2010. That number was 122 in the fourth quarter of last year. With all of the moving parts and players involved in a purchase transaction versus a refinance, CoreLogic said, there are...


August 11, 2017 - Inside MBS & ABS

Direct Issuance Transactions Can Become a Viable Alternative Model for CMBS Deals, Expert Says

In the new world of risk retention and commercial real estate securitization, direct issuance could be a potential financing alternative should third-party risk-retention capital become inadequate to meet demand, according to a CRE debt market expert. Direct issuance and other alternative types of transactions may become increasingly viable in addressing the difficulty of refreshing on an ongoing basis the amount of capital necessary to float the commercial MBS industry, said Rick Jones, a partner with Dechert and co-chair of the firm’s finance and real estate group. Jones cited...


August 11, 2017 - Inside MBS & ABS

LIBOR is Being Phased Out, Leading to Adjustments In the Mortgage Market. A Big Deal or Ho-Hum?

The clock is ticking on the phrase-out of the London Interbank Offered Rate, or LIBOR, a benchmark the mortgage market has relied on for the past few decades. Now comes the debate: is it something to worry about or no big deal? A new report from Bank of America Merrill Lynch suggests that when it comes to MBS at least, the changes will be felt, depending on the sector. “Certain agency MBS cash flows will be impacted directly,” BAML notes. “For example, underlying cash flows on LIBOR-indexed hybrid ARMs may change if an alternate index is chosen.” The researchers noted...


August 11, 2017 - Inside MBS & ABS

Wells Withholding Funds from Vintage Non-Agency MBS Prompts Concerns About the Market for New Loans

The surprise tactic by Wells Fargo to withhold millions of dollars from investors in vintage non-agency MBS spurred Redwood Trust officials to try to protect the reputation of jumbo MBS. “We’re frustrated, not just for us, but for other market participants,” Christopher Abate, Redwood’s president and CFO, said late last week during the real estate investment trust’s earnings call. “For now, we’ll just have to continue updating and educating new-issue investors, and I hope for a quick resolution to this legacy litigation issue.” As of the end of June, Wells Fargo had withheld...


August 11, 2017 - Inside MBS & ABS

New Issuers Poised to Enter Non-Agency MBS Market Bringing Deals Backed by Jumbo Loans and Non-QMs

A number of new issuers appear set to come to market with non-agency MBS backed by newly originated jumbo loans and non-qualified mortgages. Officials at Redwood Trust said they see new issuers emerging, which they said will put pressure on loan prices for aggregators while increasing liquidity in the secondary market. Since the third quarter of 2016, the jumbo MBS arena has been dominated...


August 11, 2017 - Inside MBS & ABS

Freddie Picks Up the Pace in Credit-Risk Transfers During 2Q17, Reinsurance Activity a Little Soft

Fannie Mae and Freddie Mac continued to lean heavily on their structured debt programs to meet credit-risk transfer goals originally set by their regulator that have become key features in their business strategies. The two government-sponsored enterprises issued $4.48 billion of credit-risk transfer debt during the second quarter, a modest 5.8 percent increase from the first three months of the year. Overall MBS issuance by the two GSEs was down during that period, but their CRT debt issuances are typically linked to MBS issued six months prior. Fannie’s Connecticut Avenue Securities program produced...[Includes one data table]


August 11, 2017 - Inside MBS & ABS

Mortgage REITs Boost Holdings During 2Q17 and Show Healthy Appetite for Risk-Transfer Deals

Real estate investment trusts that focus on the residential MBS market reported a modest increase in their portfolios during the second quarter of 2017. The 15 mortgage REITs tracked by Inside MBS & ABS held a combined $233.34 billion of residential MBS at the end of June. That was up 1.4 percent from the end of the first quarter, though down 2.9 percent from the midway point in 2016. Ten of the REITs reported...[Includes one data table]


August 11, 2017 - IMFnews

Mortgage REITs Boost MBS Investments During 2Q17, Show Healthy Appetite for Risk-Transfer Deals

Annaly Capital Management remained the largest MBS investor in the group, accounting for 32.2 percent of the market…


August 10, 2017 - IMFnews

FHFA Chief Concerned about GSE Zero Capital Buffer, but Doesn’t Want to Promote ‘Recap and Release’

Some have suggested that Watt may act yet, but wants "political" cover...


August 9, 2017 - IMFnews

In 2Q17, Correspondent Channel Held Up in a Shifting FHA/VA Market

Brokers saw the biggest increase in FHA business, with volume up 14.5 percent…


August 8, 2017 - IMFnews

Utah-Based Nonbank Nixes Purchase of Ron McCord’s FMC After Lawsuit is Filed

Among other things, CapLoc – an affiliate of Eli Global – charges that FMC pledged “ineligible” mortgages as collateral…


August 8, 2017 - IMFnews

Loans in New ‘Nonprime’ MBS Look like ‘Alt A’ Loans Really

In fact, some of the underwriting characteristics on new nonprime loans are even stronger than the credit quality on pre-crisis Alt A mortgages…


August 7, 2017 - IMFnews

Fairholme Predicts Trump’s DOJ Will See (GSE) Things Its Way

“There is a proven blueprint to succeed, and we hope to successfully resolve this matter before reaching the Supreme Court of the United States,” the company told investors.


August 4, 2017 - Inside FHA/VA Lending

GNMA Fully Automates Platinum Securities Processing, Issuance

Ginnie Mae this week announced the full automation of Platinum securities processing and issuance – a key step in modernizing the agency’s outdated technology and infrastructure. Automation went into effect in mid-July and nearly $1 billion of the Platinum pools have been processed through the MyGinnieMae portal, the agency said in a statement. MyGinnieMae is a self-servicing portal that connects users and enables collaboration and the sharing of organizational knowledge, the agency explained. The year-to-date volume for Platinum mortgage-backed securities is $6.1 billion. Ginnie’s Multiclass Securities Program allows participating issuers to pool some of their MBS into a single Platinum trust, which issues securities based on the pool. A Platinum security is designed to improve liquidity of Ginnie MBS through trades or use in structured finance and repurchase transactions. Previously, Platinum products were ...


August 4, 2017 - Inside MBS & ABS

MBS & ABS Issuance at a Glance

One page of issuance data.


August 4, 2017 - Inside MBS & ABS

Ginnie Mae Announces Full Automation of Platinum Issuance in a Shift That’s Expected to Boost Liquidity

Ginnie Mae this week announced that processing and issuance of its Platinum MBS are now fully automated – a key step in modernizing the agency’s aging technology and infrastructure. Automated processing will allow current issuers to increase their Platinum volumes as well as potentially draw new issuers into the program, the agency said. Under Ginnie’s Multiclass Securities Program, participating issuers may pool MBS into a single Platinum trust, which issues securities based on the pool. Automation went...


August 4, 2017 - Inside MBS & ABS

Lawmakers Introduce Bills to Override Madden Ruling on Interest Rates for Loans That are Sold

In a move that would benefit the secondary market for loans made by national banks, members in the Senate and the House of Representatives recently introduced legislation to clarify that interest rates on certain loans remain unchanged after the sale or transfer of the loan. In the Senate, Democrat Mark Warner of Virginia late last week introduced S. 1642, which would amend the National Bank Act to clarify that loans which are valid when made remain valid when they’re sold, even to buyers subject to different state law. Similar language would be added to the Home Owners’ Loan Act, the Federal Credit Union Act, and the Federal Deposit Insurance Act. Joining Warner in sponsoring the bill were...


August 4, 2017 - Inside MBS & ABS

SFIG Raises Questions About Underwriting Self- Employed Borrowers Under CFPB’s ATR Rule

Mortgage investors and lenders alike have a number of questions about underwriting self-employed borrowers under the federal ability-to-repay rule issued by the Consumer Financial Protection Bureau. As the CFPB undertakes a mandatory review of the ATR rule and its qualified-mortgage provisions, the Structured Finance Industry Group pointed to the self-employment issue, starting with how the term is defined and the documentation required by the rule’s Appendix Q underwriting guidance. “Many times, consumers have...


August 4, 2017 - Inside MBS & ABS

Fannie Reports 18 Percent Profit Increase in 2Q17 While Freddie Posts 25 Percent Decline

This week, the government-sponsored enterprises reported combined earnings of $4.86 billion in the second quarter, which was down 2.4 percent from the first three months of the year. The two GSEs’ fortunes went in opposite directions: Fannie’s net income rose 15.4 percent from the first quarter while Freddie’s was down 24.7 percent. Fannie CEO Tim Mayopoulos said...


August 4, 2017 - Inside MBS & ABS

New Residential Goes Whole-Hog into MSR While Largest REIT MBS Investor Takes a Different Tact

Two high-profile real estate investment trusts – Annaly Capital Management and New Residential Investment Corp. – appear to be refining their investment strategies these days, heading in different directions in terms of what asset classes they prefer. New Residential is continuing to make huge bets on mortgage servicing rights. According to its just-released earnings statement, the investor is showing no reluctance whatsoever when it comes to size. A new tally from Inside Mortgage Finance shows that New Residential ended the second quarter with $353.0 billion of “full servicing” rights in its possession, up 40.1 percent from March 31. A year ago, the REIT wasn’t...


August 4, 2017 - Inside MBS & ABS

Non-Agency MBS Issuance May Grow in 2017 But a Major Revival Still Looks Years Away

Industry analysts expect that issuance of non-agency MBS in 2017 will outpace the volume seen last year. But 10 years after the start of the financial crisis, the non-agency MBS market is nowhere close to its level before the crisis, and a full recovery doesn’t look imminent. Some $28.8 billion of non-agency MBS was issued in the first half of 2017, up 32.0 percent from the same period last year, according to the Inside Mortgage Finance MBS Database. Non-agency MBS issuance peaked in 2006 at $1.19 trillion. Some 71.8 percent of the issuance that year was backed by subprime mortgages and Alt A loans. Post-crisis non-agency MBS issuance has been dominated...


August 4, 2017 - Inside MBS & ABS

David Kittle is White House Pick to Head Ginnie Mae, But Michael Bright Holds the Fort for Now

For months now, the industry has expected the Trump administration to tap veteran mortgage banker David Kittle to be the new president of Ginnie Mae – but so far it’s a no go. According to industry officials who claim to have knowledge of the matter, Kittle is still the top pick, and they’re not sure why his name hasn’t shown up on the White House “Nominations & Appointments” webpage. Kittle, so far, has declined to comment. Industry officials interviewed by Inside MBS & ABS believe...


August 4, 2017 - Inside MBS & ABS

New Accounting Rules Offer Flexibility in Hedging MBS, But No Significant Changes Expected for Bank Holdings

New accounting rules for prepayment-sensitive assets that could give banks more flexibility in how they hedge their MBS investments are expected to be unveiled sometime in the third quarter. The Financial Accounting Standards Board recently announced that it will issue a new standard to simplify rules for hedge accounting. The standard will take effect for public companies in 2019 and private companies in 2020. “The amendments in the new standard will permit more flexibility in hedging interest rate risk for both variable-rate and fixed-rate financial instruments,” FASB said. The organization said...


August 4, 2017 - Inside MBS & ABS

Agency MBS Issuance Up Again in July as Purchase-Mortgage Market Hit a New Level

Mortgage lenders last month pumped a hefty $112.36 billion of single-family home loans into the MBS platforms of Fannie Mae, Freddie Mac and Ginnie Mae, according to a new ranking and analysis by Inside MBS & ABS. July’s agency MBS production was up 2.9 percent from the previous month, though it still hasn’t caught up to the monthly volume issued from May of last year through January 2017. Year-to-date production was down 0.3 percent from the first seven months of 2016. The purchase-mortgage business continued...[Includes two data tables]


August 4, 2017 - IMFnews

Red Hot Housing: July MBS Total the Largest Monthly Purchase-Mortgage Volume Since Loan-Level Data Became Available

Freddie’s purchase-mortgage business soared 17.1 percent from June to July, while Fannie’s was up 9.0 percent…


August 4, 2017 - IMFnews

Redwood Trust Ready to Test the MBS Waters with ‘Expanded’ Prime

Choice mortgages carry rates that are roughly 100 basis points to 125 basis points higher than rates on Redwood’s super-prime program, known as Select.


August 3, 2017 - IMFnews

Short Takes: By September 30, the FHFA will Change the GSE Dividend Payment? / Not All Are in Favor / Profits and Volatility / A Loss for Nationstar but Stock Jumps a Bit / Flagstar Taps Fannie Mae Exec for Top Mortgage Post

September 30 isn't far away...


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