RMBS

Fannie Mae's first-quarter profits were enough for it to rebuild its minimum capital buffer and pay the Treasury Department dividend after being forced to take a draw during the previous fiscal period.

The Federal Housing Finance Agency's plan to combine Fannie Mae and Freddie Mac mortgages into a single security starting in June 2019 promises to bring both benefits and challenges to the mortgage sector.

The real estate investment trust is issuing $450 million of five-year notes backed by rights to excess servicing strips of Fannie Mae loans.

The 860 loans backing its latest transaction, the $258.4 million Verus Securitization Trust, 2018-INV1, are all "business purpose investor loans,” according to S&P.

A large portion of the collateral for the $1.06 billion IH-2018-SFR1 is being rolled over from two transactions originally issued in 2015.

HELOCs make up just 2.9% of the $281 million pool of collateral; 81.8% of the HELOC borrowers are currently ineligible to make draws; another 18.2% are permanently frozen.

The investigation targeted 36 residential mortgage-backed securities deals involving $31 billion worth of loans, more than half of which defaulted, according to the Justice Department.

Lenders should not get so desperate chasing volume by originating lower credit non-qualified mortgage products that they are inviting the next regulatory crackdown, said David Stevens, the Mortgage Bankers Association's CEO.

The non-bank lender's $299.8 million prime, high-balance deal is no surprise; it follows a warehouse securitization last year. Angel Oak is also in the market with a $238.8 million deal.

Banks would welcome a proposal to loosen Basel III capital restrictions because it would make holding mortgage servicing rights easier and stem the recent exodus of depositories from the servicing business, executives said.