After a tough economic environment had officials at Redwood Trust considering whole loan sales in lieu of non-agency securitization, the real estate investment trust revealed last week that it profited from the two securities it issued during the first quarter of 2012. However, the REIT is still set to complete some whole-loan sales and even intends to add conforming-balance loans to its product menu ...

Redwood Trust is looking to invest in mortgage servicing rights and recently adjusted its accounting for non-agency mortgage-backed security issuance, the real estate investment trust said last week. “The recent decline in the market value of servicing rights – from an historic range of roughly 5 to 6 times the annual servicing fee to approximately 2 to 3 times today – has piqued our interest in an investment in servicing rights,” Redwood said ...

The Federal Housing Finance Agency’s non-agency mortgage-backed security repurchase claims against UBS can proceed, according to a ruling last week by U.S. District Judge Denise Cote in Manhattan federal court. The decision could also be applied to the other 16 lawsuits the FHFA filed against non-agency MBS issuers. Among other issues, the ruling refuted claims ... [Includes two briefs]

Option One Mortgage Corp. this week agreed to pay $28.2 million to settle charges brought by the Securities and Exchange Commission over the former subprime lender’s MBS disclosures regarding its ability to cover repurchase demands. Much of the litigation over failed non-agency MBS has focused on alleged misrepresentation about the quality of the loans delivered to securitization trusts, the servicing of those loan pools and the performance of trustees. The Option One settlement stems from the SEC’s contention that the company, one of the leading subprime lenders and securitizers during the heyday of...

Moody’s Investors Service has not rated a non-agency MBS since the end of 2010, but the company has made up for it by taking a lead role in the non-mortgage ABS market, according to a new ranking and analysis by Inside MBS & ABS. Moody’s rated 37 non-mortgage ABS issued during the first quarter of 2012, a total of $33.85 billion in new issuance. That represented 84.5 percent of the market by dollar volume, an increase from the 70.4 percent market share the company garnered for all of 2011. Its deepest penetration was in the business loan category, which includes dealer...(Includes one data chart)

Invesco liquidated its fund in the Public-Private Investment Program this month, earning a strong 18.2 percent cumulative net internal rate of return on $2.3 billion in capital. “The PPIP program has resuscitated the private-label mortgage-backed securities market and, at least in our case, resulted in a handsome profit to the Treasury Department,” said Wilbur Ross, chairman of the Investment Committee of the fund and chairman and CEO of WL Ross & Co. “We are proud to have participated in it.” Among the seven non-agency public-private investment funds that were participating in the PPIP ... [Includes one data chart]

Repurchase requests on mortgages in non-agency mortgage-backed securities increased for major banks during the first quarter of 2012 compared with the end of 2011, according to a new analysis by Inside Nonconforming Markets. However, the lenders have challenged the vast majority of the claims and a significant court decision appears to be heading toward ...

Continuing financial problems at Ally Financial’s Residential Capital have prompted speculation among industry analysts that Ally will agree to sell at least a portion of ResCap’s $10.9 billion legacy portfolio within the next two months. Nationstar Mortgage has been mentioned as a front-runner to acquire ResCap’s non-agency mortgage servicing rights, although other servicers have also considered the acquisition. “In light of ResCap’s liquidity and capital needs combined with volatile conditions in the marketplace, there is substantial doubt about ...

The company formerly known as Option One reached a $28.2 million settlement with the Securities and Exchange Commission this week regarding issuance of subprime mortgage-backed securities in early 2007. The SEC said Option One’s MBS “operated as a fraud or deceit” against non-agency MBS investors. “The offering documents misled investors about Option One’s precarious financial condition and, hence, its inability to fulfill its obligations on its own to repurchase ...

Short sales on mortgages included in non-agency mortgage-backed securities have increased sharply in the past year, as a percentage of total distress property dispositions, according to analysts at Deutsche Bank Securities. The loss mitigation technique is seen as beneficial for borrowers, portfolio servicers and non-agency MBS investors, especially compared with foreclosure costs and timelines. “Short sales typically result in faster resolution and significantly higher principal recovery,” the analysts said. Short sales accounted for about ...