Issuers of non-agency MBS should be able to price loans that don’t meet the standards for qualified mortgages at nearly the same levels as QMs, according to Andrew Davidson & Co., a firm that provides risk analytics on non-agency MBS. Non-QMs actually perform better than similar QMs in certain scenarios, as long as underwriting on the products is strong. Beginning in late 2015, non-QMs included in new non-agency MBS will trigger risk-retention requirements. Only mortgages that meet QM standards will be deemed to be qualified residential mortgages and exempt from risk retention. Interest-only mortgages appear...

Roughly $4.7 billion of securities backed by loans on packages of single-family rental units have come to market this year with more on the way between now and yearend. But with real estate values increasing, the “easy money” may be in the past. “So far, all of the transactions we’ve seen have been single-loan deals,” said Nitin Bhasin, a managing director within Kroll Bond Rating Agency’s structured finance group. Bhasin anticipates...

Underwriting trends for jumbo mortgage-backed securities were mixed as of the third quarter of 2014, according to an analysis by Inside Nonconforming Markets. While some issuers started to include mortgages with higher loan-to-value ratios, average combined LTV ratios in jumbo MBS were actually higher for deals issued in the fourth quarter of 2013 than those priced in the third quarter of 2014. Average credit scores on issuance for the third quarter were ... [Includes one data chart]

Ginnie Mae this week provided new details to the long-anticipated plan for increased issuer net worth and liquidity and a new performance scoring method for issuer activity – changes that could adversely affect small issuers and portfolio servicers. In remarks at the Mortgage Bankers Association’s annual convention in Las Vegas, Ginnie Mae President Ted Tozer said the changes are part of a larger effort to ensure the continuing flexibility and availability of the agency’s mortgage-backed securities program to as many entities as possible. New types of issuers and counterparties have entered the agency-backed MBS market in the wake of the financial crisis, which called for adjustments and tailored approaches to the evolving housing finance market, Tozer noted. Tozer said both policy changes and staff expertise will ensure the success of ...

While the FHA’s share of the primary insurance market has dropped significantly since premiums were hiked in early 2013, the VA program and the rural housing loan program run by the Department of Agriculture are going strong, according to agency officials. During a panel discussion at the Mortgage Bankers Association annual convention this week, VA and Rural Development executives said that both agencies have been quietly building mortgage market share. Jeffrey London, deputy director of the VA’s loan guaranty service, reported that purchase-mortgage VA loan originations were up 11 percent in fiscal 2014, with 40 percent of the business being first-time homebuyers. Of that group, 80 percent took no-downpayment VA loans, the biggest selling point in the program, along with its relatively low costs. In earlier remarks, Housing and Urban Development Secretary Julian Castro revealed that ...

A shift from refinances to purchase mortgages has helped push combined loan-to-value ratios on jumbo mortgage-backed securities to the highest levels since the financial crisis. The higher LTV ratios are prompting an increase in credit enhancement requirements. JPMorgan Chase this week issued a $355.64 million jumbo MBS with an average combined LTV ratio of 74.0 percent. And WinWater Home Mortgage is preparing a $276.91 million jumbo MBS with an average combined LTV ratio of ...

Ginnie Mae issuance for the first nine months of 2014 totaled $207.5 billion as government-backed purchase-mortgage activity picked up in the third quarter, according to an analysis of agency data. New issuances rose 19.8 percent from the second quarter. FHA loans accounted for $116.9 billion of new Ginnie Mae issuances while VA and the Rural Housing Development funneled $75.9 billion and $14.2 billion, respectively, of new loans into Ginnie Mae pools. Mortgage securities backed by home-equity conversion mortgages are not included. Purchase mortgages totaling $140.6 billion comprised the bulk of new issuances over the nine-month period while the share of refinances totaled $49.8 billion. Modified loans accounted for $17.1 billion. Most of the FHA and VA loans originated during the first nine months came through the ... [ 2 charts ]

Issuers of securities backed by Home Equity Conversion Mortgages created $518 million in new HMBS pools during August, the third largest monthly HMBS issuance this year and the latest month for which HMBS issuance data was available. August’s new issuance total was up slightly from July’s $507 million, according to New View Advisors, which advises financial services clients on capital markets, product development and investment strategies. Ninety-one pools were issued, consisting of 46 original issuance and 45 tail pools. Original HMBS pools are created when a pool of FHA-insured reverse mortgages is securitized for the first time. Tail HMBS issuances are HMBS pools created from the uncertified portions of HECMs that have already had their original HMBS issuance. Tail issuances accounted for about $140 million. Beginning with FY 2014, HECM principal limits were ...

Together, Fannie Mae and Freddie Mac in August posted a combined increase in the volume of single-family mortgages securitized, according to a new Inside The GSEs analysis. Fannie and Freddie issued $61.1 billion in single-family mortgage-backed securities in August, a 5.5 percent increase from July.However, August's MBS issuance was down 56.7 percent on a year-to-date basis.

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the second quarter of 2014, with a very slight decline from the previous quarter, according to a new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. Meanwhile, Ginnie Mae securities posted an increase within the FHLBank system during the three-month period ending June 30, 2014.