FHA loans in Pennsylvania, New Jersey and Delaware performed better in 2008 and in 2009 than in 2006 and 2007 as credit quality became stronger, according to a new study by the Federal Reserve Bank of Philadelphia. The findings should allay concerns of policymakers in Washington, DC, that FHA defaults have risen during the housing crisis and may put the federal mortgage insurance fund in peril, the study said. Home Mortgage Disclosure Act data, one of the data sources used by Fed analysts, indicate that overall lending patterns in the Third District states have ...
Redwood Trust plans to issue two more jumbo mortgage-backed securities this year, the real-estate investment trust announced this month. Martin Hughes, president and CEO of the firm, said officials hope to issue a total of $800 million to $1.0 billion in jumbo MBS in 2011, including the $290.0 million security issued earlier this year. Officials at the REIT said they hope to issue their next jumbo security in the third quarter. At the end of April, Redwood had $87.0 million in loans purchased and held on balance sheet for future securitization along with a $200.0 million pipeline. Redwood is seeing strong demand from correspondent lenders looking to...
Turning profits by investing in distressed mortgages has become increasingly difficult, according to distressed asset investors. Many investors cannot get the internal rate of return necessary to invest in this space, according to Steven Grundleger, executive vice president of capital markets at FNC. Grundleger and other market participants detailed the state of the distressed asset sector at the recent secondary market conference hosted by the Mortgage Bankers Association. Some 47.7 percent of home sales completed in April involved distressed borrowers, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, a monthly measure of...
Performance of Home Affordable Modification Program mods does not vary much between non-agency mortgages and agency mortgages, according to a new analysis by Inside Nonconforming Markets. Performance has been generally lackluster, although differences have emerged among non-prime HAMP servicers. As of the end of March, 1.56 million trial HAMP mods had been started, including 716,006 on non-agency mortgages, according to the Special Inspector General for the Troubled Asset Relief Program. And 670,186 permanent HAMP mods had been started, including 309,027 on non-agency mortgages. Some 46.6 percent of trial mods started on... [Includes one data chart]
The federal government's gradual pullback as an investor in the MBS market is beginning to open more space for commercial banks and other private investors. Commercial banks increased their investment in residential MBS by a solid 6.5 percent during the first quarter, pushing their combined holdings to a record $1.311 trillion. That represented about 20.0 percent of an overall MBS market that has been shrinking since the third quarter of 2009. Bank holdings of residential MBS were up 14.2 percent from the first quarter of last year. Through the U.S. Treasury, the Federal Reserve and the retained holdings of Fannie Mae and Freddie Mac, the federal government held... [Includes two data charts]
The Securities and Exchange Commission this week unanimously approved a proposed rule intended to strengthen and improve the transparency of credit ratings via new requirements for the rating agencies themselves, as well as third-party due diligence providers, underwriters and issuers. The new proposed rule would implement provisions in the Dodd-Frank Act, in which Congress noted the importance of credit ratings, said SEC Chairman Mary Schapiro. "It also noted that ratings that were applied to structured financial products proved inaccurate and contributed significantly to the mismanagement of risks by...
Narrowly defined "qualified residential mortgages" under risk-retention rules and anything less than an absolute "qualified mortgage" safe harbor can severely limit credit availability and ultimately hamper the return of non-agency securitization, warned Amherst Securities Group in a new report. Arguing that risk retention may not produce any net benefit, the Amherst report said that the proposed definition of a qualified residential mortgage is too restrictive and that it may result in less mortgage credit being available. The effect would be more detrimental if Congress decides to further limit the reach of both...
Republican members of the House Financial Services Committee are warming up another set of bills designed to "tie the hands" of Fannie Mae and Freddie Mac. Unveiled last week, the seven bills affecting the operations of the government-sponsored enterprises while they remain in conservatorship will be discussed during a hearing next week in the House Financial Services Subcommittee on Capital Markets and GSEs. "These seven bills were carefully designed to tie the hands of Fannie and Freddie so that they are no longer a drag on American taxpayers, a threat to our economic security and an impediment to private market growth and...
The securitization market requires less of a heavy handed approach from government and a softer touch in order to restore investor confidence and lure private capital back into the market, industry executives told senators on Capitol Hill this week. Witnesses testifying before the Senate Banking Subcommittee on Securities, Insurance and Investment said the state of the securitization market is uncertain, due to government subsidies crowding out budding private sector resurgence, as well as an overly broad, but ambiguous, interpretation of the Dodd-Frank Act by regulators. "The consequences of failing to attract sufficient private-sector capital to...
Everyone seems eager to see the private sector re-enter the MBS market, but it simply isn't ready or willing, and won't be for a very, very long time, according to experts in an American Securitization Forum seminar held this week. "From our perspective as an investor, one of the things that you really have to think about when you look at the mortgage market is what investors, big institutional investors, are interested in purchasing. The biggest thing in our mind is liquidity," said Nancy Handal, a managing director at Metropolitan Life Insurance Company. "We learned a ton as investors from the crisis in 2008," she continued...