As part of its RMBS 3.0 initiative, the Structured Finance Industry Group this week released the second installment of its recommended best practices for the non-agency MBS market. New and revised material was released for each of the three major “work streams” in the project, which broadly cover: representation-and-warranty issues and repurchases; due diligence, data and disclosure; and the roles of transaction parties and bondholder communications. The 54 new pages released this week bring the cumulative work to about 125 pages, including appendices. In the reps-and-warranties section, new provisions cover...
A top Obama administration official told secondary market participants this week that the concept of a “benchmark transaction” could help the non-agency RMBS market overcome its feeble condition. Used in conjunction with the industry’s RMBS 3.0 project, such a mechanism could help clear away the rubble from the market’s collapse and attract big institutional investors that have largely refused to come back in from the sidelines. “The now widely recognized structural deficiencies in the legacy private-label securitizations that came to light during the financial crisis truly shattered the trust of market participants, with the result that almost seven years now after the collapse, this market is barely clinging to life,” said Michael Stegman, special counselor to the U.S Treasury for housing finance policy. “Concrete reforms are clearly needed to rebuild confidence and establish a resilient, sustainable architecture to bring back significant private capital to the U.S. housing market.” Stegman delivered...
Some publicly traded nonbanks are facing possible class-action lawsuits from angry investors who’ve seen billions of dollars in stock equity evaporate over the past year.
One key point that much of the mortgage lending industry is contesting in the Consumer Financial Protection Bureau’s proposed amendments to its integrated disclosure final rule is the timing requirement for re-disclosing the loan estimate. The proposal would amend a final rule to integrate disclosures required by the Truth in Lending Act and the Real Estate Settlement Procedures Act that itself won’t be implemented until August 2015. The CFPB tried to make the so-called TRID more workable by giving lenders more time to revise loan estimate disclosures. Revisions based only on changes in rates would have to be made by the next business day after the rate locks, instead of on the same day, which is the current requirement. A number of lender representatives told...
Income documentation and other standards that have been in place since Fannie Mae entered conservatorship in 2008 will apply to the company’s new 3 percent downpayment product, and loan assessment by a private mortgage insurer will be crucial, according to a company spokesman. The spokesman said details will be announced shortly. Fannie Mae is working with the Federal Housing Finance Agency to design the government-sponsored enterprise’s revamped 97 percent loan-to-value product. Sources said previous requirements for a standard 97 LTV product, which Fannie offered until November 2013, are being considered. The FHFA announced...
Although Fannie Mae and Freddie Mac reported combined comprehensive income of $6.8 billion in the third quarter of 2014 – thanks in no small part to strong guaranty fee revenue – the two government-sponsored enterprises both said they’re keeping a wary eye on the precarious financial condition of private mortgage insurers. Fannie noted in its 10-Q filing with the Securities and Exchange Commission that although the financial condition of its primary MI counterparties approved to write new business has improved, there is still risk that they may fail to honor the GSE’s insurance claims. “If we determine that it is probable that we will not collect all of our claims from one or more of these mortgage insurer counterparties, or if we have already made that determination but our estimate of the shortfall increases, it could result...
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