A number of non-agency MBS investors with mezzanine and subordinate positions in deals serviced by Ocwen Financial support the troubled servicer, according to industry participants. The investors have pushed back against an effort by other investors holding senior tranches to get servicing transferred from Ocwen. “Ocwen is a critically important servicer in private-label residential MBS,” John Devaney, CEO of United Capital Markets, wrote in a recent letter ...

Security issuances backed by FHA and VA loans totaled $267.6 billion in 2014, with several large states accounting for a significant share of FHA/VA originations. An estimated $158.1 billion of FHA-insured loans, including modified loans, were securitized last year, with purchase home loans comprising most of the transactions. Approximately $30.0 billion of FHA refinance loans were securitized as well. The FHA MBS had an average loan-to-value ratio of 92.3 percent and a debt-to-income ratio of 40.1 percent. The average FICO score was 672.3, which was indicative of first-time homebuyers and borrowers with slightly tainted credit. First-ranked California, Texas (#2) and Florida (#3) combined for a total of $48.0 billion, which represented 30.3 percent of FHA loans in Ginnie Mae mortgage-backed securities in 2014. Fourth-ranked New York reported a total of $6.7 billion while ... [ 2 charts]

The representations and warranties used in jumbo MBS can sufficiently handle some breaches but fail to completely protect investors, according to Moody’s Investors Service. In a report released this week, the rating service noted that issuers use two main varieties of reps and warrants: those that allow for an open-ended review of loans and those that employ a prescriptive framework. The open-ended reviews are seen in jumbo MBS from Redwood Trust, WinWater Home Mortgage and others...

What started as an alternative to investing in certificates of deposit has attracted interest from institutional investors and even some ABS issuance. Marketplace lending, also known as peer-to-peer lending, has strong growth prospects, according to industry analysts. Eric Rapp, a senior vice president at DBRS, estimated that $9.0 billion in marketplace loans were originated in 2014, including personal loans and financing for small business, students and real estate. “It’s still relatively small, but it’s got a fast growth trend,” he said late last week during a teleconference hosted by DBRS. Rapp said...

Issuers and other participants in future structured-finance deals will face a higher hurdle of data quality expectations from Moody’s Investors Service, according to a new credit rating methodology the company put out this week. An important part of the initial rating analysis that Moody’s will perform of a structured security is an evaluation of the attributes of the assets that underlie it, the document said. “In assessing those characteristics, we typically use...

Moody’s Investors Service started using new criteria to rate prime non-agency mortgage-backed securities at the end of February. As part of the new criteria, the rating service is allowing non-agency MBS issuers to have access to the tool used to estimate Moody’s initial calculation of triple-A stress loss for a potential security. Moody’s Individual Loan Analysis model, known as MILAN, will be the main quantitative tool for collateral analysis by ...

With new consumer disclosures from the Consumer Financial Protection Bureau set to take effect in August and lenders still grappling with the ability-to-repay rule, due diligence is likely to continue to be a high priority for loans included in jumbo mortgage-backed securities, according to industry participants. Only a handful of jumbo MBS issued in recent years have included third-party due diligence for fewer than 100 percent of the loans. Issuers have been ...

A planned jumbo mortgage-backed security from Credit Suisse received some criticism from Fitch Ratings due to concerns about the origination practices of some of the lenders that contributed mortgages to the deal. The rating service increased its default assumptions for the $405.27 million CSMC 2015-1. “Fitch applied a conservative treatment – higher probability of default – due to its limited visibility to the individual lender origination practices ...

The FHA has delayed the effective date of new guidance that will require reverse mortgage lenders to perform a financial assessment of applicants for a Home Equity Conversion Mortgage. The FHA indicated that the change was necessary to allow vendors and the Department of Housing and Urban Development to align their respective software before the new system can be operational. Those familiar with the technology said delivering the required system enhancements should not take long. The FHA said a new effective date should be expected within 30 to 60 days of the original March 2 effective date. It will be announced in a new mortgagee letter, the agency added. The new guidance requires lenders to evaluate HECM borrowers’ willingness and capacity to meet their obligations and to comply with program requirements. “Financial assessment” means doing a much more ...

The Department of Veterans Affairs expects to have a finalized Qualified Mortgage (QM) rule by May to help clear up some issues that have arisen since the agency issued an interim final rule last spring. The VA issued the interim QM rule for comment on May 9, 2014, to define which VA loans will have QM status under the ability-to-repay (ATR) rule. Issued by the Consumer Financial Protection Bureau, the ATR rule provided temporary QM status to loans eligible for FHA insurance and guaranties by the VA and the Department of Agriculture’s Rural Housing Service. Eligible government-backed loans must be 30-year fixed-rate with no interest-only, negative amortization or balloon features. Total points and fees must not exceed 3 percent of the total loan amount for loans of $100,000 or more. Loans that meet the definition of a temporary VA-eligible QM are considered as in compliance with the ATR rule. They are designated as “safe harbor QMs,” provided they are not ...