Morningstar Credit Ratings plans to increase the types of assets it will consider for credit ratings. This month, it published proposed rating methodologies for MBS backed by reverse mortgages and cash flows from Property Assessed Clean Energy assessments on residential properties.

Several rating services have received gentle warnings from the Securities and Exchange Commission for failing to follow policies and procedures, according to the latest annual report from the federal regulator.

The Federal Housing Finance Agency proposed new standards Fannie Mae and Freddie Mac must use to consider approving new credit-scoring models.

DBRS continued to rank as the most active rating servicing in non-agency MBS as of the end of the third quarter, with S&P Global leading the industry in ABS ratings, according to a new ranking by Inside MBS & ABS. [Includes two data charts.]

VantageScore Solutions has hired Emre Sahingur, a former chief risk officer for model risk management at Fannie Mae, as senior vice president for predictive analytics, research and product management.

This week, Ginnie Mae issued an all-participants memo dictating new standards for firms seeking to become issuers, including the stipulation that applicants submit to a corporate credit evaluation. Ginnie said the financial exercise will be “similar to those employed by credit rating agencies.” The evaluation will determine whether an applicant is qualified to be an issuer or whether additional criteria should be imposed even if the basic standards are met. Applicants that rely on a subservicer arrangement will be scrutinized even more. The bulletin also notes that, effective immediately, the agency is implementing new notification requirements for MBS issuers engaged in “certain subservicer advance or servicing income agreements, which do not require prior Ginnie Mae approval, but can impact an issuer’s ongoing liquidity position and financial obligations.” While Ginnie currently permits subservicers to advance ...

Increasingly worried about the financial condition of its largest nonbank issuers amid declining market conditions, Ginnie Mae in late October shot off a liquidity letter to 14 companies, asking them to develop contingency plans. The identity of the firms was not revealed to Inside FHA/VA Lending, but it’s no secret which companies rank among the top echelon of issuer/servicers. The five largest nonbank Ginnie MBS servicers as of Sept. 30 are PennyMac Financial Services, Lakeview Loan Servicing, Freedom Mortgage, Quicken Loans and Mr. Cooper. According to the letter, a copy of which was obtained by this publication, Ginnie wants the companies to develop strategies to right-size their operations. One of the agency’s goals is to lay the groundwork for financial stress tests that all issuer/servicers eventually must meet. Ginnie expects to sit down with the executive management teams of the ...

Fitch Ratings issued a commentary this week criticizing other rating services for the preliminary ratings they made on a non-agency MBS from Galton Funding. The company also suggested that it will increase its output of unsolicited commentary due to “late-cycle credit behavior.”

Top-notch ratings assigned by three firms to a non-agency mortgage-backed security from Galton Funding prompted criticism from Fitch Ratings, which didn’t rate the issuance. The planned $452.7 million Galton Funding Mortgage Trust 2018-2 diverges from traditional non-agency MBS in its treatment of unpaid interest from delinquent mortgages. Fitch suggested that the change to the deal structure was so significant that it wouldn’t rate the transaction. Fitch noted that losses from unpaid ...

Fitch Ratings is now giving a more detailed assessment of MBS due diligence firms. This week, the company introduced a tiered rating system to replace the previous designations used for classifying third-party reviewers conducting due diligence on new non-agency MBS.