The securitization market generated $1.847 trillion in new residential MBS and non-mortgage ABS in 2012, reversing two straight years of declining volume, according to a new Inside MBS & ABS analysis and ranking. Last year’s output was up 41.2 percent from total issuance in 2011, and it marked the strongest annual new issuance volume since 2009. Total securitization volume rose modestly, by 2.3 percent, from the third quarter to the fourth quarter, and activity cooled significantly in December. As has been the case since the financial market meltdown in 2008, securitization was dominated...[Includes three data charts]

Carrington Mortgage Holdings, which became a Ginnie Mae issuer last year, is eyeing the nonconforming market, but isn’t ready to commit to any securitization plans, at least not yet. Company Executive Vice President Rick Sharga told Inside MBS & ABS that “we’re looking at creating some non-agency products that serve borrowers whose credit has been damaged during the Great Recession, but who otherwise would be good loan candidates.” Sharga noted...

Nationstar Mortgage announced this week that it agreed to purchase $113 billion in non-agency mortgage servicing rights, as measured by unpaid principal balance, from Bank of America. The sale will more than double Nationstar’s non-agency servicing portfolio. Some $102 billion in agency mortgages are included in the sale, which priced at $1.3 billion. Walter Investment Management concurrently announced the purchase of $93 billion of unpaid principal balance in Fannie Mae-backed servicing assets from BofA. Ocwen Financial also reportedly bid...

Redwood Trust is set to issue its first non-agency jumbo mortgage-backed security of the year, a portion of which will include ARMs and significant contributions from EverBank. The real estate investment trust said it is close to being able to issue one non-agency MBS a month this year, up from six in all of 2012. Sequoia Mortgage Trust 2013-1 largely includes characteristics common to other recent Redwood deals, including 7.30 percent credit enhancement for the two tranches set to receive AAA ratings from Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service. However, ARMs have not been included in a Redwood deal since a January 2012 issuance. ARMs will account...

Servicers handling portfolio loans and non-agency mortgages continue to increase their use of principal reduction loan modifications, according to the Office of the Comptroller of the Currency. Some 23,335 principal reduction mods were completed in the third quarter, up from 11,178 in the third quarter of 2011 and from 14,944 in the second quarter of 2012. The mods accounted...[Includes four briefs]

Staff at the Securities and Exchange Commission this week recommended that the agency do more research before making a decision on how to implement a controversial provision in the Dodd-Frank Act involving random assignments of credit ratings in structured finance. Sen. Al Franken, D-MN, was the major proponent of a requirement that the SEC study the feasibility of creating a government body that would pick which credit rating agency would evaluate new non-agency MBS, non-mortgage ABS, commercial MBS and other structured finance transactions. The provision, Sec. 15e(w) of the Dodd-Frank Act, essentially requires the SEC to implement the new system unless the agency determines that an alternative system would better serve the public interest and protect investors. Although some investors and rating services support the Sec. 15e(w) concept, most securitization market participants oppose...

Analysts expect issuance of new production non-agency MBS to increase in 2013 from this year’s level but remain well below historical non-boom standards. Investor demand for new non-agency MBS has increased recently and a number of issuers are looking to enter the market, but the non-agency sector also faces significant hurdles. Reform of the government-sponsored enterprises and pending risk-retention rules need to be resolved before non-agency MBS production will increase significantly, according to industry analysts. Through the beginning of December, $13.01 billion in non-agency MBS had been issued...

City councils on each end of the U.S. have responded to the foreclosure crisis by demonstrating an interest in controversial proposals to use eminent domain to seize underwater mortgages, refinance them into FHA loans at fair market value, and then sell them off to other investors. The Salinas (CA) City Council has gone the furthest of the two jurisdictions, choosing Mortgage Resolution Partners earlier this month to develop such a program for the benefit of the homeowners in its jurisdiction. At its Oct. 16, 2012, meeting, the council’s housing subcommittee directed staff to develop and circulate a request for proposals to determine the magnitude of the local residential foreclosure crisis and possible solutions. On Nov. 1, 2012, the RFP was circulated...

Investors in non-agency MBS have numerous concerns about a loan modification program proposed by the Obama administration, according to Tom Deutsch, executive director of the American Securitization Forum. The so-called Market Rate Modification program would target borrowers with negative equity on a mortgage in a non-agency MBS. “For the many significantly underwater borrowers that would not default on their mortgage loans, the MRM proposal would ultimately represent a transfer of wealth from the pension fund and 401(k) investors who lent the mortgage principal through residential MBS to borrowers that have not demonstrated any material life changes that would impair their ability to make their monthly mortgage payments,” Deutsch said in a letter this week to the Treasury Department. He noted...

Standard & Poor’s, Moody’s Investors Service and Fitch Ratings accounted for a combined 96 percent of all credit ratings across all five rating categories, according to the Securities and Exchange Commission’s annual report on nationally recognized statistical rating organizations (NRSROs). There were NRSROs registered with the SEC during the year ending in the second quarter of 2012. They were A.M. Best Co.; DBRS, Inc.; Egan-Jones Ratings Co. (EJR); Fitch; Japan Credit Rating Agency; Kroll Bond Rating Agency (KBRA); Moody’s; Morningstar Credit Ratings; and S&P. They provided ratings in five credit rating categories: asset-backed securities (including mortgages); corporate issuers; financial institutions; government securities; and insurance companies. The report showed...