Mortgage securitization made a small comeback in 2015, but softness in the non-agency MBS sector and higher guaranty fees required by Fannie Mae and Freddie Mac still played a huge influence in the market, according to a new Inside MBS & ABS analysis. An estimated $1.210 trillion of newly-originated home loans were pooled in mortgage securities last year, representing 69.7 percent of the $1.735 trillion in new first-lien originations. That was up slightly from the 67.8 percent back in 2014, which ranked as the lowest securitization rate since 2004, when just 62.6 percent of new originations were securitized. One issue is...[Includes one data table]

Standard & Poor’s kept its position as the top provider of ratings for newly issued non-mortgage ABS last year, although the volume of deals the company rated fell 10.1 percent from 2014, according to a new Inside MBS & ABS analysis. S&P rated ABS bonds totaling $106.86 billion in new issuance in 2015, or 61.5 percent of deals for which rating information was available. That was down slightly from its league-leading 64.1 percent share of the rated 2014 ABS market. The company’s strong suits were credit card ABS and deals backed by vehicle loans and leases. Fitch Ratings finished...[Includes two data tables]

Proposed standards drafted by due diligence providers for how to handle TRID mortgage disclosure issues could be finalized as soon as next week, according to the Structured Finance Industry Group. TRID compliance violations uncovered by third-party due diligence firms are seen as a major contributor to the slowdown in non-agency mortgage-backed security issuance since the Consumer Financial Protection Bureau’s TRID rule took effect in October. And some have suggested ...

JPMorgan Chase is set to issue a $1.89 billion non-agency mortgage-backed security stocked with prime conforming mortgages and jumbo loans. The deal will allow Chase to sell credit risk on some of the mortgages the bank has originated and retained even though the loans were eligible for sale to the government-sponsored enterprises. Chase Mortgage Trust 2016-1 received preliminary AAA ratings from Fitch Ratings and Moody’s Investors Service last week ...

Issuance in the jumbo mortgage-backed securities market has nearly stopped in the first quarter of 2016, but not all issuers are ready to abandon the sector. “The securitization market has been slow to re-open but there’s a lot of optionality to that business to the extent that the banks’ lust for mortgages on their balance sheets changes in different interest rate environments,” said William Roth, CIO of Two Harbors Investment. “The ability for us to grow that business dramatically is there ...

After starting 2015 with a net decline in supply of outstanding single-family mortgage securities, the market began to rally and ended the year with a modest gain. A new analysis by Inside MBS & ABS reveals that total residential MBS in the market reached $6.412 trillion at the end of last year, an 0.5 percent increase from the third quarter and up 1.0 percent from yearend 2014. The growing supply of residential MBS slightly outpaced the 0.3 percent increase in home mortgage debt outstanding, resulting in a 64.2 percent securitization rate in the fourth quarter. There are...[Includes two data tables]

JPMorgan Chase is preparing to issue the first non-agency MBS that will comply with a securitization safe harbor established by the Federal Deposit Insurance Corp. in 2010, according to presale reports published this week. The $1.89 billion Chase Mortgage Trust 2016-1 received preliminary AAA ratings from Fitch Ratings and Moody’s Investors Service. According to Fitch, Chase will sell only the subordinateclasses to investors, retaining the senior tranche, which accounts for 87.7 percent of the MBS. To meet the FDIC safe-harbor requirements, Chase will also retain...

When the Securities and Exchange Commission issued a final rule in August 2014 setting disclosure requirements for publicly-registered MBS and ABS, one of the outstanding provisions was whether to apply the loan-level disclosure requirements to private-placement 144A deals. More than 18 months later, it’s unclear whether the SEC will increase disclosure requirements for private placements, though industry participants expect that some action is in the works. Charles Sweet, a practice development leader at the law firm of Morgan Lewis, noted that the SEC asked the Structured Finance Industry Group to submit refreshed comments regarding the outstanding provisions included in the so-called Regulation AB2 final rule. “They are...

The development of the “deal agent” concept and the recommendations to standardize documentation are crucial to the revival of the non-agency MBS market, according to the Urban Institute. However, more work needs to be done to refine and implement the principles underlying the deal-agent concept and document standardization, said Laurie Goodman, director of the Housing Finance Policy Center at UI, in a new report. Many investors remain...

A lack of demand from investors continues to stymie efforts to revive issuance of non-agency MBS. While issuers have made concessions to potential investors, wide gaps remain in various areas. Some of the frustrations were discussed last week at the ABS Vegas conference produced by Information Management Network and the Structured Finance Industry Group. Diane Wold, a managing director at Two Harbors Investment, said that while non-agency MBS investors have repeatedly called for increased disclosure, issuers’ disclosure efforts sometimes go unnoticed. The Securities and Exchange Commission requires issuers to disclose results from third-party due diligence reviews at least five days before a non-agency MBS prices. The disclosures offer extensive loan-level details and are required for both publicly-registered deals and private ...