Redwood Trust issued a $320.34 million non-agency jumbo mortgage-backed security last week, its fifth of the year. With the latest transaction, the company has produced $1.67 billion in non-agency jumbo MBS in 2012. Grant Bailey, a managing director at Fitch Ratings, said Redwood’s post-bust securities are “the best transactions ever done in non-agency MBS history.” Sequoia Mortgage Trust 2012-5 received AAA ratings from Fitch, Kroll Bond Rating Agency and Moody’s Investors Service, with 7.30 percent ...

Shellpoint Partners filed a shelf registration statement with the Securities and Exchange Commission last week with plans to issue new non-agency mortgage-backed securities. Officials at the company have stressed that the MBS will be even more investor-friendly than the high-quality jumbo MBS issued by Redwood Trust. “Investors should know that what they are buying is a clean loan,” Eric Kaplan, a managing director at Shellpoint, said this week at the ABS East conference sponsored by Information Management ...

Competing special servicers Ocwen Financial and Walter Investment Management worked together this week to outbid Nationstar Mortgage to acquire Residential Capital’s mortgage servicing rights and origination platform at a bankruptcy auction. And Berkshire Hathaway won a separate auction for ResCap’s whole-loan portfolio. After approval by the bankruptcy court, Ocwen would handle 86.5 percent of the $374.0 billion ResCap MSRs with Walter acquiring $50.4 billion in Fannie Mae MSRs along with ResCap’s ...

Republicans in the House will approve a package of legislation to reform the government-sponsored enterprises next year, according to the chief of staff for Rep. David Schweikert, R-AZ. The Arizona lawmaker is also working on a bipartisan bill to establish a framework for the non-agency mortgage-backed security market. Speaking at the ABS East conference sponsored by Information Management Network this week in Miami, Matthew Tully, chief of staff for Schweikert, said GSE reform is a top agenda item for House ...

With the help of consumer advocates, five borrowers filed a class-action lawsuit last week against Morgan Stanley alleging racial discrimination tied to the issuance of subprime mortgage-backed securities. The case appears to be the first to connect securitization and racial discrimination and the first class-action by borrowers against an investment bank. “It literally is the first case of Main Street holding Wall Street accountable for the abuses that happened and the aftermath in the Great Recession,” ...

The federal government this week filed a lawsuit against Bank of America regarding stated income mortgages originated by Countrywide Financial’s former subprime unit and sold to the government-sponsored enterprises in 2007 through 2009. The lawsuit is the first of its kind, though some legal analysts question the strength of the claims. U.S. v. BofA was filed by the U.S. Attorney for the Southern District of New York, the Inspector General of the Federal Housing Finance Agency and the Special Inspector General ...

Two more funds started to exit the Public-Private Investment Program in the third quarter of 2012. Returns from the program – which largely focuses on investing in vintage non-agency mortgage-backed securities – remain strong and the Public-Private Investment Funds can manage their holdings for at least the next five years, but four of the original nine PPIFs have now exited the PPIP. In July, RLJ Western terminated its PPIF’s investment period four months ahead of schedule. The notification occurred shortly after ...

Prices on vintage non-agency mortgage-backed securities have increased significantly in the past three months and are expected to remain elevated. The strong returns are being driven by improvements in home prices and loan performance along with decreased supply. “The numerous positive developments in the non-agency space should continue to benefit the non-agency market in the fourth quarter,” said analysts at Bank of America Merrill Lynch. “We see the sector as fundamentally undervalued at current levels.” ...

Morgan Keegan and Regions Financial reached a $68.0 million settlement this month with mutual fund investors relating to a lawsuit alleging breaches of fiduciary duty in connection with their alleged mismanagement of the funds and their assets. The companies were accused of fraudulently overstating the values of non-agency mortgage-backed security investments and reporting false net asset values per share, resulting in significant losses to investors in four closed-end mutual funds ... [Includes three briefs]

FHA loan originations, driven largely by streamline refinancing, increased 5.3 percent to $60.9 billion in the third quarter of this year, the highest level it has been in almost two years, according to Inside FHA Lending’s latest analysis of FHA data. The third-quarter volume reflected an upward trend that began in the first quarter with nearly $48.5 billion in total FHA single-family production and which later rose to $57.8 billion in the second quarter. The last highest point in FHA production was in the fourth quarter of 2010 when ... (2 charts)