Draft standards proposed by the Structured Finance Industry Group to address TRID mortgage disclosure issues adequately address the risks posed to non-agency MBS, according to Moody’s Investors Service. The rating service published a detailed analysis of SFIG’s draft proposal this week. On March 18, SFIG proposed a draft standardized approach to the scope of review for exceptions to the combined Truth in Lending Act and Real Estate Settlement Procedures Act ...

The track record of U.S. re-performing loan MBS transactions rated by Fitch Ratings is pretty much what the ratings service expected, and somewhat better than other deals that were not rated, analysts at Fitch said in a new report. “While still very early, the rated transactions issued since 2014 have performed within initial expectations, reflecting positive selection of the borrowers included in the mortgage pools, extensive up-front diligence and supportive transaction structures,” ...

Single-family rental properties are still enjoying a downward trend in vacancies as well as low delinquencies, according to a new report from Morningstar Credit Ratings. However, with more leases set to expire in coming months, vacancy rates may begin to increase. “Vacancy rates have trended lower for the sixth consecutive month,” Morningstar analysts said in their new report. “However, we may see a reversal in this trend in the coming months, given ...

Retail loan originations account for most new VA lending, but the correspondent channel plays an outsized role in the FHA market, especially in purchase-mortgage lending, according to a new analysis of Ginnie Mae mortgage-backed securities data by Inside FHA/VA Lending. Over half (51.1 percent) of VA loans securitized through Ginnie MBS in the first quarter of 2016 were retail originations, but only 39.1 percent of FHA loans came through that channel. The biggest source of FHA loans was correspondent lenders, which accounted for 45.8 percent of loans securitized during the first three months of this year. That was actually slightly below the 49.2 percent correspondent share of FHA loans back in 2014 and 46.8 percent last year. Correspondents accounted for well over half (53.9 percent) of FHA purchase mortgages during the first quarter, while playing a more ... [ 3 charts ]

The alternatives to credit ratings mandated by the Dodd-Frank Act aimed to address contributors to the financial crisis have their own challenges, according to a new report from the Treasury Department’s Office of Financial Research. John Soroushian, a research analyst for policy studies at the OFR, noted that before the financial crisis, rating services had an incentive to inflate ratings for MBS, ABS and other investments to expand their business. He said rating services were “key enablers” in the creation of MBS and collateralized-debt obligations. “Without ratings, it would have been...

Structured finance investors don’t have much of an appetite for new non-agency MBS, but they appear to be hungry for fast-food business securitizations. Taco Bell is the latest firm to enter the market, offering a $2.10 billion securitization. The planned Taco Bell Funding LLC Series 2016-1 received preliminary BBB ratings from Standard & Poor’s late last week. It’s the second whole-business securitization to price this year, following a $575.0 million deal involving Sonic Drive-In that also priced in April. The Taco Bell securitization is backed...

A lender that focuses on investment properties is preparing to issue a non-agency MBS backed by adjustable-rate mortgages on residential and commercial properties. The deal shares some characteristics with non-agency MBS backed by new loans, but it’s different in a lot of ways. The planned $358.60 million Velocity Commercial Capital 2016-1 received provisional AAA ratings this week from Kroll Bond Rating Agency. Residential properties account for 55.3 percent of the collateral, with small commercial properties making up the rest. All of the mortgages backing the planned MBS are for investment properties. Velocity Commercial Capital issued...

Relatively strong pricing for a jumbo mortgage-backed security issued at the end of March appears to have done little thus far to open the spigot for deals that include loans subject to the TRID mortgage disclosure rule. The $331.95 million Agate Bay Mortgage Trust 2016-2 was issued by Two Harbors Investment at the end of March. The deal included 43 mortgages subject to TRID, many of which had initial compliance exceptions. Analysts at Interactive Data said ...

Caliber Home Loans was assessed by Moody’s Investors Service as an originator of “expanded-credit” mortgages last week. Caliber is the first lender to receive a rating from Moody’s for expanded-credit mortgages, which could pave the way for the first rated non-agency mortgage-backed security that includes non-qualified mortgages. The rating service defined Caliber’s expanded-credit mortgages as non-agency mortgages that are not prime jumbo loans. Moody’s said ...

Kroll Bond Rating Agency warned recently that it might refuse to rate certain non-agency mortgage- backed securities subject to the TRID mortgage disclosure rule until the CFPB issues formal guidance.The rating service said it’s currently unclear whether certain corrections of errors under the bureau’s integrated disclosure rule will subject non-agency MBS investors to assignee liability. This is an issue that the Structured Finance Industry Group continues to work on, with SFIG also stressing that formal guidance from the CFPB is necessary. “In instances where these violations go un-corrected by an originator, KBRA believes the risks associated with TRID-eligible loans, in material concentration, become more significant and that KBRA may consider additional credit enhancement, applying a rating cap, or declining ...