The new central counterparty for MBS trades is having a difficult time delivering results and is, in fact, experiencing a drawback because of stringent margin rules as well as other internal issues, according to financial advisory firm NewOak Capital Advisors. The regulated multilateral central counterparty trading platform for executing to-be-announced agency MBS is not at full power because most TBA participants are not doing what they are supposed to, observed Ron D’Vari, chief executive officer and co-founder of NewOak. “The key drawbacks are...

Ginnie Mae issuance fell in the first quarter of 2013 but was easily offset by significant gains from a year ago, according to Inside FHA Lending’s analysis of FHA data. Mortgage-backed securities production at the government facility dropped 5.1 percent to $104.1 billion in the first quarter but increased 28.6 percent year-over-year , which was more than enough for an offset. The securities were backed mostly by FHA and VA loans with a combined total of $99.33 billion. Federally guaranteed rural housing loans totaling $4.84 billion were also in the mix. Wells Fargo and Chase Home Finance led the Ginnie Mae market with a combined ... [1 chart]

The International Accounting Standards Board has proposed an accounting treatment that would force holders of all but the most senior tranche of an MBS to account for those assets at fair value through net income – something that has the Mortgage Bankers Association expressing concern. The MBA generally supports the introduction of fair value through an “other comprehensive income” (OCI) classification for financial assets held within a business model in which assets are managed both in order to collect contractual cash flows and for possible sale, according to James Gross, vice president of financial accounting and public policy for the trade group. However, the MBA has...

Investors in ABS backed by private student loans strongly oppose proposals in Congress to change bankruptcy laws in an effort to help such borrowers. In a letter this week to members of Congress, the American Securitization Forum said the proposals would increase the cost of private student loans and harm the investments of those holding private student loan ABS.

It hasn’t been an easy time for due diligence firms that make their living off the mortgage business, at least not this year. Firms like Allonhill LLC, which bulked up on staff to handle the rush of work on investor buyback demands, have been cutting back in recent months as those contracts run their natural course.

The majority of financial institutions defending themselves against a massive litigation initiative by the Federal Housing Finance Agency on behalf of Fannie Mae and Freddie Mac for toxic mortgage-backed securities purchased by the GSEs launched a counteroffensive this week by urging a federal appeals court to intervene in their favor against the “unfair” trial judge. Fifteen banks, including JPMorgan Chase, UBS Americas, Citigroup, Deutsche Bank and Bank of America, filed a joint petition with the Second Circuit Court of Appeals in New York complaining that U.S. District Judge Denise Cote has engaged in a “one-sided” approach designed to force a settlement rather than “foster fair and reasonable determination of the issues.”

Streamline refinancing helped boost FHA origination volume as lenders reported substantial increases on monthly and year-over-year bases, according to Inside FHA Lending’s latest analysis of FHA data. Despite increases in mortgage insurance premium and other policy changes aimed at reducing FHA market share and strengthening the Mutual Mortgage Insurance Fund, FHA endorsements were up 18.7 percent in January 2013 from December 2012, and a hefty 38.7 percent from January last year. However, FHA refis accounted for 54.3 percent of total production while purchase mortgages made up ... [1 chart]

Banks with major Ginnie Mae portfolios – and even smaller firms – increased their purchases of delinquent mortgages out of MBS pools in the fourth quarter compared to the third as a way to save money and refinance troubled loans. According to an analysis by Inside FHA Lending, the top 50 Ginnie Mae issuers bought $12.65 billion of problem loans out trusts in fourth quarter compared to $11.17 billion in the third, an increase of 13 percent. “Once you buy the loan it goes into your portfolio,” said Tim Rood, a partner in The Collingwood Group, a Washington-based advisory firm. “You can try to re-perform it and then re-securitize it,” he said. Wells Fargo, the largest Ginnie Mae servicer in the nation with a portfolio of $412 billion, purchased ... [1 chart]

A modest decline in FHA endorsements of jumbo loans in the fourth quarter of 2012 could presage further declines this year, following the Department of Housing and Urban Development’s recent proposal to raise the downpayment requirement to 5 percent, from 3.5 percent, for loans above $625,500. The FHA already has raised its jumbo mortgage insurance premiums to 1.55 percent annually and increased the monthly premiums on new, non-jumbo FHA mortgages by 10 basis points. The agency retained the 3.5 percent downpayment for new forward mortgages below $625,500. The increased premiums are ... [2 charts]

A major surge in the securitization of student loans helped push overall non-mortgage ABS issuance up 65.9 percent during the fourth quarter of 2012, according to a new Inside MBS & ABS ranking and analysis. Total non-mortgage ABS issuance climbed to $147.0 billion in 2012, up 15.9 percent from the previous year. It was the strongest market for ABS securitization since 2009, but still trailed the levels reached prior to the financial market collapse in 2008. ABS backed by retail vehicle financing were...[Includes two data charts]