MBS

Truist Financial Corp. plans to stop sales and trading of mortgage-backed securities and government-agency and Small Business Administration bonds by January.

The company shifted $189 billion of agency mortgage-backed securities to held-to-maturity on its balance sheet, shielding its shareholder equity from unrealized losses.

Excess returns on the bonds, which compares mortgage backed security performance to Treasuries, are -0.94% for March, on track for the worst relative performance since September.

Among its major accomplishments in the past year were an update to its Reference Model, the foundation for most of its standards.

Scores will be assigned to all loan pools created since 2010, including future securitizations, and are expected to help investors determine the share of mortgages meeting specific characteristics.

The Federal Reserve Bank of Philadelphia also found that interest rate spikes are preventing modification programs from effectively reducing principal and interest payments as originally intended.

The Fed chair said actively selling securities will become necessary as it looks to reduce its balance sheet, but not anytime soon.

Bond credit enhancement has benefited from historically higher-than-average prepayment speeds and low realized losses despite a COVID-related rise in delinquencies.

In a letter addressed to the heads of the agency and of Ginnie Mae, the association asked them to consider recommendations made by a former government housing policy leader.

The Treasuries market is girding for potential disruptions from the next and trickiest stage of policymakers’ tightening campaign: the shrinking of an $8.5 trillion bond portfolio.

Purchasing mortgage-backed securities—and that strategy is not out of the question as the central bank works to promote equilibrium in the housing markets over time.

Together, the deals OBX programs will issue about $850.5 million in prime jumbo and non-prime RMBS paper, and are expected to close on May 10.

Almost the entire deal will issue notes through a senior-subordinate capital structure repaying principal sequentially, instead of on a modified sequence.

With ADFITECH as a held company now, Mortgage Connect says it is well equipped to be a linear provider of credit, compliance and servicing review services.

Lenders financed the properties through first-lien, fixed-rate mortgage loans, most of which were on 30-year terms extended to prime borrowers, many self-employed.

Anticipation of the Federal Reserve’s balance-sheet reduction is weighing on bonds backed by mortgages, but the actual event may make them an attractive alternative to corporate debt.

Only about 1.0% of the mortgage assets in the collateral pool are for the respective borrowers’ personal use, and qualify as mortgages under Regulation Z.

Secured by a single Morgan Stanley first-lien mortgage, the SFR is the largest deal since the program priced its $2 billion transaction in July 2021.

Non-QM assets overlap almost perfectly with the portion of loans, 52%, financing properties where the borrower intends to maintain as a primary residence.

The current program, which included more than 580 separate operations to buy Treasuries and 1,200 to purchase mortgage-backed securities, has dwarfed all three of the Fed’s previous quantitative-easing programs combined.