About a month after risk-retention requirements took effect for newly issued non-agency MBS, industry participants continue to work on complying with the standards set by the Dodd-Frank Act. Non-agency MBS issued on Dec. 24, 2015, and beyond are subject to risk-retention standards. The standards will apply to other MBS and ABS asset types for deals issued on and after Dec. 24 of this year. The first jumbo MBS subject to risk-retention requirements is scheduled...

Issuers of MBS and ABS continue to address compliance issues with the Securities and Exchange Commission’s so-called Regulation AB2. Meanwhile, the Structured Finance Industry Group has urged the SEC to continue to delay further action on disclosure proposals that remain outstanding. In August 2014, the SEC published a final rule setting a variety of disclosure requirements for the structured finance market. Issuers of publicly registered MBS and ABS were required to comply with rules, forms and disclosures established by Reg AB2 by Nov. 23, 2015. Asset-level disclosure requirements will take effect Nov. 23 of this year. During a webinar hosted by the law firm of Mayer Brown late last week, Stuart Litwin, a partner at the law firm, said...

Goldman Sachs last week announced it has agreed to a $5.1 billion settlement, the largest regulatory penalty in the firm’s history, concluding an investigation brought by the Residential MBS Working Group of the U.S. Financial Fraud Enforcement Task Force. The agreement in principle is poised to resolve actual and potential civil claims by the U.S. Department of Justice, the New York and Illinois attorneys general, the National Credit Union Administration (as conservator for several failed credit unions) and the Federal Home Loan Banks of Chicago and Seattle. At issue are...

MBS backed by multifamily mortgage loans would be exempt from a proposed rule that would establish margining requirements for multifamily agency finance. Had it been implemented as originally proposed, the rule would have amended the Financial Industry Regulatory Authority’s Rule 4210 to establish margin requirements in the single-family “to-be-announced” (TBA) market. At the same time, it would have also scoped in the multifamily housing programs of Fannie Mae and FHA/Ginnie Mae, according to the Mortgage Bankers Association. FINRA filed...

The first security backed by proceeds from properties that have “rent-to-own” agreements has caused some divergence among rating services. Home Partners of America is preparing to issue a $508.88 million deal, which received preliminary AAA ratings from two firms. Moody’s Investors Service and Morningstar Credit Ratings issued presale reports on Home Partners of America 2016-1 last week. Kroll Bond Rating Agency followed with a warning that rent-to-own deals present more risks than single-family rental securitizations. The collateral for the security is...

There is also a school of thought that going forward, loan officers won’t be needed as much because of new origination technologies...

Nonbanks gained more ground in Fannie/Freddie mortgage servicing during the fourth quarter of 2015, according to a new Inside The GSEs analysis of agency mortgage-backed securities disclosures.Non-depository institutions provided the servicing for some $1.327 trillion of Fannie and Freddie single-family MBS outstanding as of the end of last year. That was up 3.8 percent from the third quarter and represented a hefty 10.1 percent gain from the end of 2014. Banks, thrifts and credit unions were still the dominant GSE servicers, accounting for 67.9 percent of the market at the end of December 2015. But their $2.803 trillion of Fannie/Freddie servicing was down 1.2 percent from...

The final rule issued last week banning captive insurance companies from joining the Federal Home Loan Banks ruffled feathers in the mortgage industry and has some pointing to Congress for future guidance on the issue. FHLBank members that joined the system by way of their captive insurers before the Federal Housing Finance Agency’s proposed rule issued in September 2014 have five years to relinquish their membership. Many are real estate investment trusts that would otherwise be ineligible for membership if it weren’t for finding a loophole in the system. Captive insurance members that obtained membership after the FHFA announced the proposed rule have a year to exit the system and unwind their advances.

Redwood Trust, which a few years back branched out into buying GSE loans, announced this week that it was throwing in the towel on that business, cutting 25 percent of its workforce in the process.Although it will no longer buy Fannie Mae and Freddie Mac mortgages from correspondent originators, it will remain a buyer of jumbo product. As one source close to the company noted: Redwood “just couldn’t make the math work” in that line of business. At Sept. 30, the publicly traded real estate investment trust employed 221 full-time workers. The layoff will claim roughly 54 jobs, most of them in Denver where its GSE acquisition initiative was based.

Trade groups concerned about privacy violations in the proposed collection of data in the National Survey of Existing Mortgage Borrowers voiced their concerns to the Federal Housing Finance Agency last week. The FHFA has been seeking comments on the proposed voluntary survey of borrowers who have a first mortgage loan secured by a single-family home. Everything from the borrower’s name and address to financial records, mortgage and credit card information and race and household composition will be addressed in the approximately 80-question survey. While the 10 trade groups, including the American Bankers Association, Housing Policy Council, Independent Bankers of America and Mortgage Bankers Association, agree with...