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 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.

Nearly 86% of the loans have been modified; by comparison, a higher percentage of loans backing Citi's previous deal, 97.2%, were modified.

However the collateral will total at least £370.4 million (US$424.5 million), including a £62.7 million prefunding account; the weighted average coupon of the collateral is 4%.

While the sponsor is borrowing more heavily against the 1,283 properties being rolled over, their values have also increased, resulting in a decline in the combined LTV, to 66.5% from 72%.

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.