UPDATE 2-US mortgage bond issuance plunges in 1st half

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NEW YORK, June 30 (Reuters) - U.S. mortgage-backed securities issuance plunged more than 80 percent in the first six months of 2008 from the same period a year earlier amid continued uncertainty in the housing market and as investors shied away from risky instruments, a survey showed on Monday.

Thomson Reuters said U.S. mortgage-backed securities issuance totaled $117.4 billion in the first half of 2008, down from $622.1 billion a year earlier, a drop of 81 percent.

By proceeds, the second quarter 2008 total of $48.6 billion from 83 issues was the lowest quarterly volume since the second quarter 2000 when there was a total of $33.3 billion from 102 issues, said Matthew Toole, an analyst in the deals group at Thomson Reuters.

It was the lowest number of deals in a quarter since the first quarter of 1995 when 61 issues came to market, he said.

"Without the implied U.S. government guarantee that Fannie Mae and Freddie Mac offer it is hard to bring deals to the market," he said.

"Even big banks that have mortgage arms are not doing deals, which shows the dearth of opportunity that investors have for any type of collateral," he said.

Issuance of bonds backed by companies other than Fannie Mae (FNM.N) and Freddie Mac (FRE.N) has virtually come to a halt as investors refuse to buy securities backed by loans where payments are not guaranteed.

Bank of America Securities LLC (BAC.N) was the top underwriter of U.S. mortgage-backed securities for the first half of 2008, the survey showed.

Bank of America Securities LLC underwrote 25 issues of mortgage-backed bonds, totaling $20.2 billion, for a 17.2 percent market share.

JPMorgan Chase & Co. (JPM.N) ranked second, with a 14.0 percent share. The firm underwrote 25 issues worth $16.4 billion.

Credit Suisse Group (CSGN.VX) was third, with a 12.4 percent share. The firm underwrote 26 issues worth $14.6 billion.

Originators have shifted supply to the agency MBS market. The agency MBS market has overwhelmingly captured the lion's share of issuance in 2007 and 2008, with non-agency mortgage origination virtually non-existant as buyers fled the sector on growing concerns about mortgage foreclosures.

Thomson Reuters tracks mortgage bonds backed by whole commercial and residential real estate loans as well as the mortgage-backed securities initially packaged by Fannie Mae, Freddie Mac and Ginnie Mae. Interest-only and principal-only strips of the so-called agencies are not tracked. (Reporting by Julie Haviv; Editing by Tom Hals)