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TH E M REP O RT | 61 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T SECONDARY MARKET THE LATEST Treasury Extends MHA, Renews PLS Push The administration wants to keep its good example up and running. T he Treasury Depart- ment announced new efforts by the Obama Administra- tion to further stabilize the housing market. During his remarks at the Making Home Affordable (MHA) Fifth An- niversary Summit, Secretary Jack Lew announced an ex- tension of the MHA program for at least one year and a new effort to help jump-start the private-label securities (PLS) market. "Families and neighbor- hoods across the country continue to recover from the financial crisis, and we must not lose our resolve to help them, even as the economy continues to expand," Lew said. "From day one, the Obama Administration has worked to provide relief to struggling homeowners and stabilize hard-hit communities. Today's announcement con- tinues that effort. These new actions will help provide more affordable options for renters, assist homeowners facing fore- closure or juggling bills to pay their mortgages, and expand access to credit for prospective borrowers." The extension of MHA would push the end of the program to December 31, 2016 and allow American homeowners more time to take advantage of the suite of programs, which Lew has characterized as an example for the mortgage industry on how to restructure loans aimed at avoiding foreclosures and addressing homes that are underwater. In his remarks, Lew asserted that the Home Affordable Modification Program (HAMP), one of the MHA's hallmark programs, has provided aid for more than 1.3 million homeowners by allowing them to perma- nently modify their mortgages, saving an average of $540 per month. The Treasury con- tends that more than 5 million homeowners have been as- sisted by private lenders who have mostly used a similar framework to that established by HAMP. Additionally, Lew an- nounced an effort by the Treasury Department to revamp the PLS market. Prior to the housing crisis, the private-label securities market allowed access to credit for qualified Americans who fell short of GSE and FHA eligi- bility requirements by bun- dling mortgages and allowing the risk to be to be spread out among investors. Since the financial crisis, the PLS market has undergone extensive regulation. Many of the largest investors who were active in the market pre-crisis have yet to return. To deter- mine what can be done to en- courage new PLS investment, the Treasury Department will be hosting a series of meetings with investors and is publish- ing a request for comment in the Federal Register. Home Price Gains Leave RMBS Cushioned Against Economic Stress The gains may be slowing, but borrowers are still safe. E ven as home price growth starts to level off, recent prime mort- gage borrowers remain well-cushioned against any unexpected economic stress, ac- cording to one ratings agency. In its newest monthly prime jumbo trends report, Fitch Ratings finds weighted average combined loan-to-value (LTV) ratios for resi- dential mortgage-backed securities (RMBS) deals made in the last few have fallen substantially, fueled by ongoing gains in house prices. According to the ratings agency, the weighted average combined LTV for deals made in 2011 has improved to 50 percent from 64 percent previously; the LTV for 2012 vintages has dropped to 55 percent from 68 percent; and the LTV for 2013 deals has come down to 59 percent from 68 percent. "Home price increases are slowing, and some regions may still be vulnerable to a correction, but most recent vintage RMBS borrowers will still be left with more equity than they had at origination even if home prices fall 10 percent," said Grant Bailey, managing director at Fitch. Together, the improvement in equity positions combined with stronger borrower credit profiles has helped keep delinquency down, Fitch reports. As of the most recent data, the agency reports only 13 basis points of out- standing prime RMBS borrowers were delinquent. $1B Fannie Mae Portfolio Hits Market And it comes with great amenities. A s the second quarter comes to a close, a new $1 billion Fannie Mae bulk residential mortgage servicing rights (MSR) portfolio has hit the market. The announcement of the sale was made by Interactive Mortgage Advisors (IMA), which is acting as exclusive broker. The company describes the offering as "an excel- lent opportunity to focus and bid on newly originated MSRs with below-market interest rates." According to IMA, the weight- ed average note rate for the portfolio is 4.11 percent. Other quality characteris- tics include a wide geographic dispersion, zero delinquencies, a weighted average loan-to-value ratio of 72 percent, and a weight- ed average FICO score of 745. The servicing is a portion of recent originations from the seller, which IMA describes as a "well-known, established mortgage company with strong financials and solid reputation." "All written bids for the offer- ing should be emailed by June 25 at 2 p.m. Eastern," IMA said. Prospective purchasers must be approved Fannie Mae servicers or have a structure in place with an approved servicer who can take ownership and service on their behalf.

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