A number of structured-finance products outside of new non-agency MBS rebounded from the financial crisis, offering stronger returns than new non-agency MBS, and often with less risk. Among the myriad of products investors at the ABS Vegas conference last week said they prefer to new non-agency MBS were collateralized-debt obligations backed by trust-preferred securities, collateralized-loan obligations, commercial MBS, rail car ABS and container ABS. “There’s...
Although the Fannie Mae/Freddie Mac common securitization platform is now legally incorporated, has a signed lease for office space in suburban Maryland and is growing staff, it still doesn’t have a chief executive and chairman – two essentials to be taken seriously by the market. “It’s pretty much turned into the mess I suspected it would a year ago,” said one former candidate for the CEO job, who spoke under the condition his name not be used. Discussing the chairman position, he added...
DOJ’s initial penalty calculation was based on the gross loss to Fannie and Freddie from the default of the loans, but now the government says the court should use gross gain, instead of net gain to set the maximum allowable penalty.
Federal prosecutors have been successful in defending their use of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 in pursuing mortgage-related securities fraud and will continue to use the statute aggressively in enforcement actions barring any adverse court action, according to industry compliance experts. Only a handful of FIRREA cases were filed in the first 20 years after enactment of the statute, mostly simple fraud cases. In the last two years, however, the government has aggressively used FIRREA and the False Claims Act to target financial institutions for activities related to the origination, rating, securitization and servicing of residential mortgages. Of the two statutes, the government has pushed...
A Manhattan federal bankruptcy court this week approved Lehman Brother’s proposed $2 billion-plus settlement that would end an $18.9 billion claim filed against the defunct investment bank by Fannie Mae over soured mortgage securities. Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York, signed off on the settlement agreement between Lehman Brothers Holdings Inc. and the government-sponsored enterprise, as well as Lehman’s wholly owned subsidiaries Aurora Commercial Group and Aurora Loan Services. ALS was a large Alt A lender/servicer. The deal grants...
President Obama’s scant mention of housing finance reform or mortgage policy during this week’s State of the Union address was not entirely a surprise, say industry observers, but an administration official’s remarks last week on the Home Affordable Refinance Program’s outlook were more encouraging. Obama spoke of housing exactly twice during his prime time speech: first to describe the housing market as “rebounding” and again to demand from Congress “legislation that protects the taxpayers from footing the bill for a housing crisis ever again.” Fannie Mae or Freddie Mac were mentioned...
At deadline we got wind of a former Wall Street investment banker who is setting up a fund to help independent mortgage firms (nonbanks) raise capital.
Issuance of non-agency mortgage-backed securities is expected to remain constrained until a number of issues are sorted out, from reform of the government-sponsored enterprises to an increase in demand from investors. “The non-agency MBS market is stuck somewhat in limbo until we know where the GSEs are going,” said Steven Abrahams, head of securitization and MBS research in the U.S. at Deutsche Bank Securities, during last week’s ABS Vegas conference. More than 5,600 people registered ...
The Treasury Department and the Structured Finance Industry Group announced separate initiatives last week aimed at increasing activity in the non-agency market. Both efforts plan to round up a variety of industry participants to work through issues that have prevented significant issuance of new non-agency mortgage-backed securities. “In the absence of an apparent leader, Treasury plans to coordinate a series of conversations with relevant regulators, market participants and other stakeholders to help ...
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