Investors in vintage non-agency MBS could take $7.8 billion in losses due to previously undisclosed principal forbearance on top of the $1.0 billion in losses uncovered this month. However, a survey suggests that servicers don’t intend to pass the losses through to investors. The losses recognized in May were reported after Ocwen Financial took over servicing from Homeward Residential. Analysts warned that other servicing transfers could prompt similar losses. Bank of America Merrill Lynch said...
Japan became the biggest overseas investor in U.S. MBS and ABS markets last year, moving past mainland China to head the ranking, according to final Treasury Department data. Japanese investors held $199.7 billion of U.S. MBS and ABS as of the midway point in 2012, the one time a year when Treasury releases detailed foreign holdings of U.S. long-term securities. That was up 21.3 percent from June 2011, when Japan held just $164.7 billion of MBS and ABS. The Japanese increased...[Includes one data chart]
Secondary market reform legislation formally introduced in the Senate this week provides more detail on key elements of an ambitious proposal to replace Fannie Mae and Freddie Mac with a new government MBS program, but it’s still widely seen as a starting point in a long process. The Housing Finance Reform and Taxpayer Protection Act of 2013, introduced by Sens. Bob Corker, R-TN, and Mark Warner, D-VA, includes a new section that would protect investors in MBS that carry guaranties from the Federal Mortgage Insurance Corp. from civil liability under federal and state law. Under the bill, S. 1217, the FMIC would sell...
The recent rapid rise in interest rates has some market participants talking about margin calls on MBS investors, but so far all the chatter appears to be speculative – although there still could be red ink out there, somewhere. At press time, the yield on the benchmark 10-year Treasury had stabilized at 2.54 percent. In mid-May the rate was 1.70 percent. That’s a run-up of 84 basis points. One secondary market official told...
The Securities and Exchange Commission and defendants in civil lawsuits will have to face the harsher realities of an open-ended policy change requiring defendants in certain civil lawsuits to admit guilt as a condition for settlement, say legal experts. There is apparently a consensus among industry attorneys that it will be difficult for the SEC to determine when to apply the new policy and to which cases. In addition, there is also the question of whether the SEC will have the discipline to reject a huge settlement and avoid the expense and uncertainty of a drawn-out trial, just so it could get an admission of guilt by a corporate defendant. According to global law firm DLA Piper, SEC Chairman Mary Jo White recently notified...
Over the past two weeks, mortgage lenders have seen their application volumes and origination pipelines get whipsawed by rising interest rates. But it’s not the run-up in rates, per se, that set off alarm bells in the industry. It’s how fast rates climbed. As Inside Mortgage Finance went to press this week, the yield on the benchmark 10-year Treasury was at roughly 2.60 percent. On a historical basis, that’s an attractive rate – and as many lenders have pointed out: consumers can still obtain a 30-year fixed-rate conventional loan at 4 percent, depending on the points paid. But a month ago, the 10-year Treasury was...
The revised ranking for the first quarter shows that the top retail lender, Wells Fargo, produced $60.4 billion through this channel, or 12 percent of total originations for the period.
The Department of Housing and Urban Development is seeking additional authority from Congress to transfer FHA mortgage servicing in order to facilitate loss mitigation. The change would allow the FHA to require specific actions when a servicer is underperforming or has a low score on HUD’s Tiered Ranking System, including the transfer of servicing to an FHA-designated special servicer or requiring a servicer to enter into a sub-servicing agreement. With expanded powers, the FHA also may require a servicer to engage a third-party to assist in loss mitigation services. Such authority would enable the FHA to better avoid losses due to poor servicing and, thus, protect the MMI Fund, HUD said. Testifying before a Senate appropriations subcommittee, FHA Commissioner Carol Galante noted...
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