Ginnie Mae issued $46.5 billion of single-family mortgage-backed securities in August, up slightly from July, according to an analysis of Ginnie data. Single-family MBS monthly issuance in August was the highest monthly volume so far this year. Total issuance also was up 12.3 percent from the same month last year., Strong purchase and refinance originations in the second quarter helped push production in the third quarter. Although purchase loans with private mortgage insurance outpaced gains in FHA and VA loans in the second quarter, deliveries to Ginnie so far appear to indicate a strong third quarter. Meanwhile, VA volume has been fueled largely by refinance activity over the past few years and does not appear to be letting up. PennyMac and Freedom Mortgage battled for first place with $4.35 billion and $4.34 billion, respectively, in MBS issuance in August. Despite cutting back on its ... [1 chart]

Issuers delivered $8.1 billion of rural mortgage loans with a U.S. Department of Agriculture guarantee into Ginnie Mae pools during the first six months of 2016, according to an analysis of Ginnie data. Securitized USDA mortgages accounted for 1.3 percent percent of total MBS issued by Ginnie Mae during the period and comprised 2.5 percent of total loans originated during the six-month period. USDA-backed loan deliveries to Ginnie Mae in the second quarter rose 9.8 percent from the previous period. Year-over-year, issuance of MBS backed by rural loans fell 3.8 percent. USDA-backed mortgages require no downpayment. Over the first six months, the average credit score for rural borrowers was 688.1 and the average debt-to-income ratio was 34.9 percent. An estimated 93.2 percent of USDA loans originated during the period were purchase mortgages, 1.0 percent were refinances and the ... [ 2 charts ]

FHA saw a modest rise in originations midway through 2016 compared to the same period last year, but VA did a lot better with a double-digit increase in loan production, according to an analysis of Ginnie Mae data. Lenders delivered $123.0 billion of FHA-insured loans to Ginnie pools during the first half of 2016, up 8.4 percent from the previous year. FHA’s midyear production was driven by a surge in purchase-mortgage lending in the second quarter, which also pushed volume higher for VA as well as conventional-conforming mortgages. Government-backed lending rose 32.3 percent from the first quarter to approximately $131.0 billion in second-quarter originations, according to Inside Mortgage Finance, an affiliate publication of Inside FHA/VA Lending. It was the highest three-month total for government-insured lending on record, although private mortgage insurance did more business in the ... [2 charts]

Commercial banks and savings institutions continued to load up on residential MBS during the second quarter of 2016, pushing their investment in the sector to a new high, according to a new analysis and ranking by Inside MBS & ABS. Banks and thrifts reported MBS holdings of $1.684 trillion as of the end of June, a 1.4 percent increase since the previous quarter. These are long-term holdings in banks’ held-to-maturity and available-for-sale portfolios. The industry held another $46.02 billion of MBS in their trading accounts. Not surprisingly, all of the gain came in agency MBS, particularly pass-through securities issued by Fannie Mae and Freddie Mac. The industry’s aggregate holdings of these securities, $867.64 billion, were up 4.1 percent from the ...

Fitch Ratings released criteria for rating MBS backed by nonperforming loans late last week, saying it will cap ratings for such deals at “A” due to “the idiosyncratic and adverse-selection risk.” As mortgage performance has improved in recent years, issuance of MBS backed solely by nonperforming loans has been limited. However, Fitch said it considers a transaction as an NPL issuance if more than 10.0 percent of the collateral is 60+ days delinquent at the time of issuance. The rating service will require such MBS to meet a number of standards to receive a low investment-grade rating of “A” or “BBB,” including a sequential-pay structure and application of available funds to pay interest to the rated notes. “Absent these structural ...

With balances on non-agency MBS issued before the financial crisis falling to levels where clean-up calls can be initiated, clean-up call activity is rising with prospects for further growth. Rights to clean-up calls on non-agency MBS can typically be exercised when the outstanding balance of the MBS is lower than 10.0 percent of the original balance. The owner of the call rights (typically the master servicer) can purchase loans from the pool at par plus expenses and make a profit by selling or re-securitizing performing loans at a premium and retaining distressed loans to modify or liquidate. According to Bank of America Merrill Lynch, about 37 deals have been called this year totaling about $800 million in unpaid principal balance ...

The average daily trading volume in agency MBS totaled $219.3 billion in July, the best reading in 18 months, according to the Securities Industry and Financial Markets Association. However, the sequential improvement was a mere 3.30 percent. Then again, any gain is better than none. For all of 2016, the worst reading came in March at $189.4 billion. The strong showing (relatively speaking) comes as the primary market has produced a better-than-expected $890 billion for the first six months of 2016. Some industry executives believe loan originations could top $2 trillion this year, which would increase the supply of outstanding MBS. For the past few years there has been a debate in the industry about the significance of lower trading ...

A ruling late last year by a state appeals court in New York threatens to upend the practice of providing “gap” or “bridge down” representations and warranties on residential MBS, according to a brief submitted on behalf of the Securities Industry and Financial Markets Association. SIFMA asked the New York State Court of Appeals to reverse the lower court’s ruling in Bank of New York Mellon v. WMC Mortgage. Lawyers at the law firm of Stroock & Stroock & Lavan submitted an amicus brief to the N.Y. State Court of Appeals on behalf of SIFMA regarding the case. “The court’s resolution of this issue could have...

Fannie Mae’s new securitization program for modified single-family mortgages could generate as much as $24 billion in issuance, according to an analysis by Bank of America Merrill Lynch. The program will create “an asset class meriting investor focus,” BAML noted. Fannie recently released...

Ginnie Mae issuers produced a hefty $125.42 billion of new single-family mortgage-backed securities during the second quarter of 2016, according to a new Inside FHA/VA Lending analysis of MBS data. The government-insured market continued to run hotter than the Fannie Mae and Freddie Mac sector. Ginnie MBS issuance – including FHA’s home-equity conversion mortgage program – was up 31.1 percent from the first quarter, while single-family MBS issuance by the two government-sponsored enterprises rose 26.2 percent over the same period. Excluding HECM, Ginnie issuance was up 31.5 percent in the second quarter. While FHA forward mortgages continued to be the biggest source of collateral, the VA program actually produced a bigger gain, 42.4 percent, from the first to the second quarter. VA production saw a major boost in refinance activity, up 58.4 ... [Includes four charts ]