Overseas investors were net sellers of U.S. agency notes and bonds – including agency MBS – during the first quarter of 2011, according to an analysis of market data by the Securities Industry and Financial Markets Associations. Foreign investors bought some $5.46 billion of agency paper during the first quarter of this year, but that wasn’t...[Includes one data chart]

Ginnie Mae has agreed to issuer requests for changes regarding the collection and reporting of new pool data to provide clearer and more transparent information to investors. The changes were announced during a webinar with program participants in connection with eight new data elements on all single-family forward mortgages, which issuers are required to provide on all submissions beginning Sept. 1. Ginnie Mae announced the new requirements in APM 11-05, along with a new file layout that would accommodate the new data elements. The new data fields will show the following: combined loan-to-value ratio percent; total debt expense ratio...

Lawmakers on the House Financial Services Committee this week approved by a wide bipartisan margin a bill that would create the legislative framework for a covered bond market in the U.S., but not before some haggling regarding the role of the federal regulators. The committee voted 44-7 in favor of H.R. 940, the U.S. Covered Bond Act of 2011, clearing the way for the bill’s consideration by the full House of Representatives. Rep. Scott Garrett, R-NJ, chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, said H.R. 940 sets up “legal certainty” that is a core element of...

The challenges confronting the recovery of the non-agency MBS market are many, but legacy issues, such as representations and warranties, are the cause of huge frustration in the industry, according to panelists at the American Securitization Forum this week. “Some of these legacy issues have very far-reaching tentacles,” observed Mani Sabapathi, principal at Prudential Fixed Income. The housing finance world has been bracing for the coming risk-retention rule with great apprehension, he said, raising the possibility that reps and warrants could be included as a part of it. “I think it can be an important aspect to the extent that if you have these loans that don’t meet...

There is a huge disconnect between some members of Congress and the reality of the private market, that broad investor appetite for non-agency mortgage-backed securities is unlikely to rebound anytime soon, according to panelists at the American Securitization Forum annual conference. “Once you figure out how to get the government sector out of the market, [the belief is that] the private sector will step in and pick up all of that slack, and therefore they will do...

The Federal Reserve Bank of New York last week sold only $1.9 billion of the initial $3.8 billion of non-agency MBS up for auction out of its Maiden Lane II portfolio. On March 30, 2011, the NY Fed announced that through its investment manager, BlackRock Solutions, it would begin the process of selling assets in the MLII portfolio both individually and in segments “over time as market conditions warrant through a competitive sales process.” Maiden Lane was created to bail out American International Group during the financial crisis and acquired...

The supply of single-family MBS outstanding in the market declined again in the first quarter of 2011, hitting its lowest level since the third quarter of 2007, according to an Inside MBS & ABS analysis of new agency data. Single-family MBS totaled $6.564 trillion as of the end of March, down 0.4 percent from the end of 2010. The single-family MBS market peaked in the third quarter of 2009 at $6.981 trillion and has been in steady decline since then. That’s largely because the supply of home loan debt has been declining since early 2008 as house values have eroded, cash-out refinance activity has...[includes one data chart]

Mortgage investors are calling on federal policymakers to bring more transparency into the securitization process along with a host of other best practices in order to attract sorely needed private capital back into the mortgage marketplace. “Today, mortgage investors face enormous challenges in the capital markets due to opacity, an asymmetry of information, poor underwriting, conflicts-of-interests among key parties in the securitization process, as well as the inability to enforce...

Statutes of limitation will soon force undecided non-agency mortgage-backed security investors into action, according to industry attorneys. Josh Silverman, counsel at Pomerantz Haudek Grossman & Gross, noted that many investors will lose buyback claims if they do not act shortly. In May, Option One Mortgage was the latest non-agency MBS issuer to be hit with repurchase requests. A group of investor clients organized by Talcott Franklin claimed that Option One improperly...

Two Harbors Investment Corp. announced last week that it has taken its first steps toward setting up a securitization issuance program, with a goal to issue a $250 million jumbo non-agency MBS sometime in 2011. The New York-based real estate investment trust will partner with Barclays Capital to close on a $100 million mortgage loan warehouse facility, which is subject to future increases. Two Harbors will buy prime, fixed-rate jumbo residential mortgages and aggregate them in the facility. It is currently targeting a $250 million deal size for the initial securitization. Barclays will act as underwriter, according to Two Harbors. The program is aimed at...