New MBS and ABS issuance was up sharply in the first quarter of 2012, building on the momentum of a strong finish last year and heavy mortgage refinance activity. According to a new Inside MBS & ABS analysis, a total of $430.0 billion of residential MBS and non-mortgage ABS were issued during the first quarter, up 17.8 percent from the final three months of 2011 and 13.4 percent higher than in first quarter of last year. It was the market’s highest three-month volume since the fourth quarter of 2010, another period of heavy mortgage refinance volume. Residential...(Includes two data charts)

Non-agency MBS deals have been plagued in the last two to three years by increasing instances of gaps and mismatches between expected collateral cash flow and payouts to bond holders, according to analysts at Barclays Capital. Most of the mismatches are attributable to balance capitalization, modifications and advances, either stopped or recovered by the mortgage servicers. Since most of the discrepancies are due to the treatment of delinquent mortgages, the gaps are widest in subprime. Sporadic mismatches have been spotted in option ARMs and Alt A hybrid loans as well, the analysts said...

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the Federal Home Loan Banks during the fourth quarter of 2011, with a minor decline posted from the previous quarter, according to a new analysis by Inside The GSEs based on data from the Federal Housing Finance Agency. Ginnie Mae securities likewise posted a decline within the 12 FHLBank system during the three-month period ending Dec. 31, 2011. GSE MBS accounted for 69.6 percent of combined FHLBank MBS portfolios, down 2.1 percent from the third quarter of 2011. The Finance Agency’s data do not separately break out Fannie and Freddie volume or share.

A mere 4.7 percent of repurchase demands on loans in non-agency mortgage-backed securities have been resolved, according to a new analysis by Inside Nonconforming Markets. The $352.7 million in completed repurchases account for a small portion of the up to $64.18 billion in recoveries analysts estimate non-agency MBS investors could see from representation and warranty issues. According to new filings with the Securities and Exchange Commission, $7.45 billion in repurchase demands on non-agency MBS had been made as of the end of 2011. The first-time reports were filed by securitizers that are still in business and did not include heavyweights such as Bear Stearns, Countrywide Financial, IndyMac, Lehman Brothers and Washington Mutual ... [Includes one data chart]

Redwood Trust has packaged its fourth non-agency jumbo MBS of the past two years and achieved the lowest credit-enhancement requirement during that span thanks largely to a more appealing geographic mix of properties backing the loans. Sequoia Mortgage Trust 2012-2 looks a lot like the three previous jumbo deals Redwood has issued in its solo effort to re-ignite the non-agency MBS market. In some ways, the collateral is slightly less pristine than some of the earlier transactions, although all four have been backed by very high quality prime loans. Credit enhancement for the AAA-rated classes is 7.15...

After suggesting that it would consider selling jumbos to investors via whole loan sales, Redwood Trust this week issued a $327.94 million non-agency jumbo mortgage-backed security. While the real estate investment trust has not ruled out whole loan sales, the issuance reflects confidence in the non-agency market – from Redwood and investors. Redwood’s latest security, Sequoia Mortgage Trust 2012-2, is similar to other recent non-agency MBS issuance by the REIT. Redwood has now issued five non-agency MBS deals since April 2010, the only non-agency MBS issuance backed by new originations since 2008. At the end of February, Redwood officials revealed that the REIT was considering bulk sales ...

The Securities and Exchange Commission and Wells Fargo are in a dispute regarding due diligence reports relating to almost $60.0 billion in non-agency mortgage-backed securities issued by Wells between September 2006 and early 2008. The SEC last week filed a subpoena enforcement action against Wells for failure to produce documents. The bank disputes the SEC’s account. The SEC said it has been seeking the documents since September. The regulator claimed that Wells agreed to produce the documents but has failed to do so. The SEC said its action relates to its investigation into whether Wells made material misrepresentations or omitted material facts on certain non-agency MBS issued by the bank ...

Iowa Attorney General Tom Miller downplayed concerns raised by investors in non-agency mortgage-backed securities regarding the pending $25.0 billion servicing settlement. “The current set of concerns aren’t particularly warranted,” he said this week during a webinar hosted by Inside Mortgage Finance Publications. The Association of Mortgage Investors has asked for a number of changes to the settlement, including a cap on the amount of principal reduction that can be completed on non-agency MBS to meet the participating servicers’ loss mitigation requirements. Miller said the AMI is the only group he is aware of that might challenge approval of the settlement by the U.S. District Court for the District of Columbia. “I think that their concerns are not going to be realized ...

An estimated 82.8 percent of single-family mortgages originated in 2011 ended up being financed through securitization, according to a new Inside MBS & ABS analysis. That’s the second highest level on record, falling slightly below the 84.4 percent securitization rate in 2009. Virtually all government-insured mortgages are securitized through the Ginnie Mae program, which securitized some $284.6 billion in newly originated FHA and VA loans last year. The big increase in securitization rate came in the conventional conforming market, where high loan limits have greatly expanded (Includes one data chart)...

A conservative, non-partisan public interest group has filed suit against the Federal Housing Finance Agency, claiming the FHFA has improperly denied the group’s request for documents relating to the Finance Agency’s decision to sue 17 financial institutions last fall on behalf of Fannie Mae and Freddie Mac over alleged misrepresentations of mortgage-backed securities.Last week, Judicial Watch filed its lawsuit in the U.S. District Court for the District of Columbia after the FHFA denied the group’s Freedom of Information Act request for documents related to the agency’s litigation. The Finance Agency argued that as private companies, FOIA requests do not apply to Fannie and Freddie.