With qualified-mortgage underwriting requirements set to take effect Jan. 10, the rating services are beginning to detail the role QM status will play in ratings for non-agency mortgage-backed securities. Fitch Ratings appears to be the furthest along in adjusting its ratings process to account for the Consumer Financial Protection Bureau’s ability-to-repay rule and QM standards. The rating service this week released its initial perspective for rating non-agency MBS with loans originated in a QM world ...

After a relatively strong first eight months of the year, no jumbo MBS were issued in September or October. Although investor interest seems tepid, the market is showing signs of life as Citigroup issued its first post-crisis jumbo MBS this week, and Redwood Trust offered its first jumbo deal since August. The activity comes just weeks after Shellpoint Partners tried twice to sell a jumbo MBS, eventually pulling the deal and opting for a whole-loan sale. Pricing for jumbo MBS has improved enough for Citi and Redwood to test the market, and investors have also shown strong interest in other recent non-agency offerings. The $209.95 million Citigroup Mortgage Loan Trust 2013-J1 received...

The non-agency mortgage market is expected to take the brunt of the changes prompted by the Consumer Financial Protection Bureau’s new ability-to-repay rule and requirements for qualified mortgages. However, two months before the rule takes effect, the rating services haven’t released guidelines for how non-QMs will be rated, prompting issuers to be cautious with plans for non-QMs. Kroll Bond Rating Agency was the only rating service to offer details to Inside MBS & ABS in response to questions about ratings for non-agency MBS once the QM requirements take effect. Glenn Costello, a senior managing director at KBRA, said the securitization of non-QM loans will require additional credit enhancement relative to QMs. DBRS and Standard & Poor’s declined...

The jumbo MBS market is frozen because investors in the AAA tranches are scarce and still lack confidence in the product following the housing bust and the ensuing tidal wave of litigation swamping issuers and underwriters. According to MBS pioneer Lewis Ranieri, there’s only one to fix the problem: give investors more information on the deals. At a speech this week during the annual convention of the Mortgage Bankers Association, Ranieri, the chairman and CEO of Shellpoint Partners, noted...

Standard & Poor’s rated more non-agency MBS, by dollar volume, than any of its peers during the first nine months of 2013, according to a new Inside MBS & ABS analysis and ranking. S&P rated $11.65 billion of non-agency MBS issued through the end of September. Although that was more than any of the other four rating services, it represented just 43.4 percent of total issuance in a market that is significantly more fragmented than it was before the financial crisis. Back in 2006, for example, S&P rated...[Includes two data charts]

Shellpoint Partners this week pulled the plug on its second jumbo non-agency MBS issuance of the year and will instead sell the mortgages as whole loans. Shellpoint Asset Funding Trust 2013-2 was initially offered as a $308.64 million deal in September. The company then reduced the offering to a $250.85 million securitization with a number of tweaks aimed at attracting investors. In the end, the company couldn’t structure...

Jumbo mortgage-backed security structures used by Redwood Trust, PennyMac Corp., and others pose risks for investors, according to Moody’s Investors Service, although the rating service said bonds will only incur losses in “low-probability scenarios.” Moody’s raised concerns about features that go beyond the simple senior-subordinate structures that have been most common since the restart of the non-agency MBS market. Those features include...

HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

Moody’s Investors Service this week warned of increasing complexity in the structures of new jumbo MBS. However, losses on the deals will only occur in “low probability scenarios” and issuers have yet to bring back all of the non-agency MBS features seen before the financial crisis. Moody’s said complex cash-flow structures in new jumbo MBS can increase risks on senior bonds in the event of high mortgage losses. The features include super-senior support bonds, exchangeable securities, principal-only bonds, and pool interest-only bonds. “These securities pose...

Home Loan Servicing Solutions is preparing to issue a $350 million servicer advance receivable ABS, according to a presale report issued late last week by Standard & Poor’s. With the deal, $5.3 billion in mortgage servicer advance ABS will have been issued this year, according to the rating service. S&P has been the dominant rating agency in servicer advance ABS. Erkan Erturk, senior director of global structured finance research at the rating service, said issuance of servicer advance ABS is on track to reach the $7.0 billion in issuance S&P predicted at the beginning of the year. HLSS Servicer Advance Receivables Trust Series 2013-T6 received...