Moody’s Investors Service is worried about increasing leverage in commercial MBS conduit deals, which reached peak levels not seen since 2007. Issuance of non-agency commercial MBS has been strong in recent years, boosted by demand for conduit deals. In a recent report, Moody’s noted that the credit quality of conduit deals continues to deteriorate, with the third-quarter pipeline indicating further increases to loan-to-value ratios derived by the rating service. The Moody’s LTV ratio on conduit CMBS hit...

The Federal Home Loan Bank Mortgage Partnership Finance program has announced its first security issuance with a Ginnie Mae guarantee. The $5 million security is backed by home loans originated by community banks and credit unions through the MPF Government MBS product. The Mortgage Bankers Association welcomed the new MBS, seeing it as another opportunity for all lenders to access the capital markets directly, reducing costs and increasing originations. “Many community banks use the FHLB MPF program to sell conventional mortgages into the secondary market,” observed Ron Haynie, senior vice president at the Independent Community Bankers of America. “This expansion in aggregating and securitizing government loans provides community banks with the opportunity to reach more borrowers, especially in rural and small-town markets, and to safely sell those loans to ...

Two rating services in the past month have completed reviews of jumbo mortgage-backed securities issued in 2010 and later. The reviews led to numerous rating confirmations, some upgrades and no downgrades, prompting questions about whether criteria for rating jumbo MBS are too stringent. “I’d guess the rating services internally said ‘never again’ for downgrades,” said one participant in the jumbo MBS market. Officials at Fitch Ratings and DBRS ...

Potential homeowners may be talking themselves out of the American dream, according to several recent surveys that show consumers underestimate their ability to get a mortgage. A Genworth survey of more than 100 lending executives found that 66 percent said eligible borrowers mistakenly think they don’t qualify for a mortgage. In a similar survey on consumer’s views on homeownership, Wells Fargo reported...

Neither of the credit-rating industry’s perennial market leaders – Standard & Poor’s and Moody’s Investors Service – managed to claim a top spot during the first quarter of 2015, according to a new Inside MBS & ABS ranking. Fitch Ratings ranked as the top player in rating the bigger non-mortgage ABS market. The company rated 43 ABS issued during the first quarter that represented 64.2 percent of total issuance by dollar amount. The company rated all eight credit-card ABS issued in early 2015, along with most of the student-loan deals. Fitch raised...[Includes two data tables]

Investor appetite for insurance risk continues to outstrip demand, prompting an increase in catastrophe bonds among other insurance-linked securities, according to industry analysts. Late last week, Fitch Ratings assigned a BB rating to a $200 million catastrophe bond that will provide re-insurance protection to Hannover Ruck for exposure to earthquakes in California. The deal will push U.S.-related issuance of catastrophe bonds to $3.86 billion in 2015, according to Artemis, a firm that tracks issuance of the bonds. A record volume of catastrophe bonds was issued...

Although the big three rating agencies have had a strong hold on rating commercial MBS for most institutional investors, the tides may be changing as bond buyers begin to relax their guidelines. Some of the largest bond buyers have been vocalizing frustration that the big three ratings firms, Moody’s Investors Service, Standard & Poors and Fitch Ratings, are being hired less, resulting in fewer bond offerings to choose from, according to a recent Bloomberg article. That’s good news for smaller ratings agencies like Kroll Bond and Morningstar. “We have proven...

A new feature Redwood Trust has included in its two most recent jumbo mortgage-backed securities has prompted support from AAA investors along with mixed reactions from rating services. The $356.45 million Sequoia Mortgage Trust 2015-2 issued in April and the $343.21 million Sequoia Mortgage Trust 2015-3 that was issued this week included a unique stop-advance feature. Servicers of the loans won’t be allowed to provide advances of principal and interest on loans that are 120+ days delinquent. The jumbo MBS were rated by Kroll Bond Rating Agency and Moody’s Investors Service ...

The frequently-asked-questions guidance to using the FHA’s consolidated Single Family Policy Handbook is good to have though it shows just how complicated the FHA’s mortgage origination process is, according to lenders. In fact, the updated FHA handbook could still be confusing to borrowers simply because a lot more information is concentrated in one source, lenders said. According to the FHA, the more than 290 FAQs will enable lenders to make operation adjustments before the handbook goes into effect on Sept. 14, 2015. The FAQs are for information purposes only and do not apply to current FHA policies. They do not establish or modify policy contained in the handbook. The FAQs reiterate information in the handbook under headings such as Credit Underwriting, Closing and Insuring, FHA System Support and Consumer Information. Industry observers noted that the FAQs did not ...

Redwood Trust is preparing to issue its second consecutive jumbo MBS that includes a new stop-advance feature. While officials at the real estate investment trust said the feature has been well received by AAA investors, Fitch Ratings warned late last week that it introduces some risks to deals. The stop-advance feature being used by Redwood prevents servicers from providing advances of principal and interest on loans that are 120+ days delinquent. The feature was first used on the $356.45 million deal Redwood issued in April and is set to be included in a pending $343.21 million jumbo MBS from the issuer. Fitch didn’t rate...