Ginnie Mae guaranteed more than $109.7 billion in mortgage-backed securities in the fourth quarter of 2012, with Wells Fargo and Chase Home Finance accounting for nearly half of the issuance, according to an Inside FHA Lending analysis of issuer data. Ginnie Mae issuers securitized 9.1 percent more in government-backed mortgages in the fourth quarter than in the previous quarter while issuance was significantly higher year-over-year, rising a whopping 44.8 percent. Although the top five Ginnie Mae issuers combined for 56.6 percent of the quarter’s total Ginnie Mae MBS production (Wells and Chase were on top with a combined 45.8 percent market share), 10 lower-ranked issuers posted ... [1 chart]

The Consumer Financial Protection Bureau this week spread a huge safety net under the agency mortgage market, ruling that loans deemed suitable for Fannie Mae, Freddie Mac, the FHA and the Veterans Administration will be “qualified mortgages” that provide strong protection against litigation for mortgage lenders. The CFPB’s long-awaited ability-to-repay final rule provides a safe harbor for loans that meet its QM definition and also are not considered “higher-priced mortgages” under an older Truth in Lending Act regulation promulgated by the Federal Reserve back in 2008. That rule classifies first mortgages as higher-priced if the annual percentage rate exceeds the average offered rate for comparable loans by 1.5 percentage points or more. Generally, the CFPB final rule defines...

Now that Bank of America has inked a long-rumored deal to sell mortgage servicing rights on some $308 billion of distressed mortgages to Nationstar and Walter Investment Management, the question becomes how much more the bank may unload. The answer may be quite a lot. Paul Miller, an analyst with FBR Capital Markets, said that he anticipates the megabank will sell between $300 billion and $400 billion of MSRs by the time 2013 ends. According to Miller, the “to be sold” product includes $100 billion of Ginnie Mae servicing, $150 billion of Fannie Mae MSRs and $100 billion to $200 billion of Freddie Mac servicing. A BofA spokesman declined...[Includes one data chart]

Staff at the Securities and Exchange Commission this week recommended that the agency do more research before making a decision on how to implement a controversial provision in the Dodd-Frank Act involving random assignments of credit ratings in structured finance. Sen. Al Franken, D-MN, was the major proponent of a requirement that the SEC study the feasibility of creating a government body that would pick which credit rating agency would evaluate new non-agency MBS, non-mortgage ABS, commercial MBS and other structured finance transactions. The provision, Sec. 15e(w) of the Dodd-Frank Act, essentially requires the SEC to implement the new system unless the agency determines that an alternative system would better serve the public interest and protect investors. Although some investors and rating services support the Sec. 15e(w) concept, most securitization market participants oppose...

The agency residential MBS market expanded for the third consecutive quarter during the three months ending in September, according to a new Inside MBS & ABS analysis. A total of $5.39 trillion of single-family MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae were outstanding as of the end of the third quarter of 2012. That was up by a scant 0.2 percent from the previous period, although it was still 0.4 percent below the level at the same time in 2011. Both Ginnie (2.1 percent) and Fannie (0.6 percent) posted...[Includes two data charts]

Investors in non-agency MBS have numerous concerns about a loan modification program proposed by the Obama administration, according to Tom Deutsch, executive director of the American Securitization Forum. The so-called Market Rate Modification program would target borrowers with negative equity on a mortgage in a non-agency MBS. “For the many significantly underwater borrowers that would not default on their mortgage loans, the MRM proposal would ultimately represent a transfer of wealth from the pension fund and 401(k) investors who lent the mortgage principal through residential MBS to borrowers that have not demonstrated any material life changes that would impair their ability to make their monthly mortgage payments,” Deutsch said in a letter this week to the Treasury Department. He noted...

MBS analysts hold differing expectations as to what the potential replacement of the “temporary” head of the Federal Housing Finance Agency could mean to Fannie Mae, Freddie Mac and the mortgage securities sector. Recently reported Obama administration backchannel chatter suggests that the White House is actively seeking potential candidates to replace FHFA Acting Director Edward DeMarco, who has been the de facto agency chief since the departure of James Lockhart in September 2009. A report last week by Credit Suisse speculated...

Standard & Poor’s, Moody’s Investors Service and Fitch Ratings accounted for a combined 96 percent of all credit ratings across all five rating categories, according to the Securities and Exchange Commission’s annual report on nationally recognized statistical rating organizations (NRSROs). There were NRSROs registered with the SEC during the year ending in the second quarter of 2012. They were A.M. Best Co.; DBRS, Inc.; Egan-Jones Ratings Co. (EJR); Fitch; Japan Credit Rating Agency; Kroll Bond Rating Agency (KBRA); Moody’s; Morningstar Credit Ratings; and S&P. They provided ratings in five credit rating categories: asset-backed securities (including mortgages); corporate issuers; financial institutions; government securities; and insurance companies. The report showed...

Fannie Mae and Freddie Mac, under directions from the Federal Housing Finance Agency, are close to issuing risk-sharing transactions, according to market participants. The securities will be structured to allow non-agency investors to take subordinate risk on government-sponsored enterprise mortgage-backed securities and will likely help set GSE guaranty fees going forward. Martin Hughes, CEO of Redwood Trust, said his company is currently under a non-disclosure agreement regarding risk-sharing ...

Investors in non-agency mortgage-backed securities are pushing back against a loan modification program proposed by the Obama administration that would target underwater loans backing their investments. “Quite simply, investors have already been significantly harmed by the poor performance of many of the mortgage loans in non-agency MBS, and the Market Rate Modification proposal would only increase the severity of losses suffered by institutional investors,” Tom Deutsch ...