Sellers of jumbo whole loans into the secondary market are getting prices of up to 103 – and in some cases more – which on paper might throw a monkey wrench into the economics of trying to create a new MBS, but it’s not turning out that way. According to loan traders and industry consultants, MBS spreads to Treasuries have tightened over the past several weeks, making the economics of issuing a security better, even though the price for the underlying product might look a bit rich for potential issuers. “The cost of funds are going down,” said one trader. According to Craig Cole, a principal in Emerald Consulting LLC, the price paid...
Potential issuers of new non-agency MBS are looking to establish representations and warranties that provide less protection for MBS investors, according to Fitch Ratings. The rating service said it will take a negative view on deals with reps and warrants that vary from the rating service’s standards, which largely mirror guidelines established by the American Securitization Forum. In a report released this week, Fitch said firms looking to issue non-agency MBS have been shopping deals with reps and warrants weaker than the new framework established by the Federal Housing Finance Authority for repurchase requests from the government-sponsored enterprises. The FHFA’s framework, which went into effect in January, includes a sunset for underwriting reps and most fraud reps if a borrower makes 36 consecutive timely payments, which Fitch said would not necessarily unduly expose MBS investors to greater losses. Rui Pereira, a managing director and head of U.S. residential MBS ratings at Fitch, said...
The Department of Justice and the Securities and Exchange Commission are likely to pursue more mortgage-related lawsuits due to pressure from Congress, according to former federal attorneys. “The fact that the attorney general now speaks of financial fraud enforcement as one of the top three priorities of the Department of Justice, just after terrorism and keeping people safe in their communities, trickles down to the lowest levels of the department and elsewhere in terms of the dedication of resources, the coordination, the training, the case referrals,” said Andrew Schilling, a partner at the law firm of BuckleySandler and a former chief of the civil division of the U.S. Attorney’s Office for the Southern District of New York. The latest pressure came...
Commercial banks and savings institutions reported a modest decline in their aggregate investment in residential MBS during the fourth quarter of 2012, according to a new Inside MBS & ABS analysis of call report data. Banks and thrifts held $1.579 trillion of residential MBS at the end of last year, down 2.4 percent from the close of the third quarter. It was the industry’s lowest aggregate position since the end of 2011, but banks still held an historically high 25.0 percent of total MBS outstanding. Compared to the end of 2011, bank MBS holdings were...[Includes two data charts]
Fiscal 2012 turned out to be a stellar year for the Department of Veterans Affairs Home Loan Guaranty program with $119.23 billion in total loan volume, thanks largely to surging streamlined VA refinancing as well as conversions from FHA and conventional loans. A total of 539,884 new single-family mortgage loans with a VA guaranty were originated in 2012, up 59.12 percent from the prior fiscal year, according to the latest VA data. VA originations have been trending upward since 2010, when the agency reported $65.05 billion in new originations. Volume was largely driven...
Look for the Senate Banking, Housing and Urban Affairs Committee under a Democrat majority to focus over the next two years on assuring a smooth implementation of the Dodd-Frank Act, stabilizing the housing market and building a “bipartisan consensus” on housing finance reform, according to the committee’s chairman. “From protecting consumers and taxpayers from Wall Street abuses, to providing the Federal Housing Administration with additional tools to manage its finances while continuing to serve American families, I believe we can find common ground,” said Sen. Tim Johnson, D-SD, chairman. The committee will continue...
The planned relocation later this year of the Mortgage Bankers Association’s headquarters in downtown Washington, DC – the third move in the past six years – will be the last for a while as the group’s head says it has recovered its balance following a massive staff downsizing at the advent of the economic downturn. On Sept. 30, executives and staff at the Mortgage Bankers Association will vacate their current rented offices across three floors at 1717 Rhode Island Ave. NW, to occupy a slightly smaller single-floor rental office space three blocks away at 1919 M St, NW. MBA President and CEO David Stevens said...
In 2010 and 2011, the government-sponsored enterprises purchased billions of dollars of delinquent mortgages out of mortgage-backed securities trusts to save money. Now it appears that Fannie Mae, followed by Freddie Mac, will test the waters to see how much they can get for their nonperforming loans in the secondary market. Investment bankers and loan sale advisors familiar with the matter told Inside Mortgage Finance that Fannie could come to market with a multi-million package of residential NPLs before the end of the first quarter. Fannie, two sources confirmed, has hired...
A year ago mortgage servicers – especially small- to medium-sized shops – breathed a collective sigh of relief after the Federal Housing Finance Agency shelved a proposal to radically alter servicing compensation for Fannie Mae and Freddie Mac mortgages. The agency had toyed with the idea of replacing the 25 basis point minimum fee with a flat “fee for service” payment, perhaps as low as $10 per month for performing loans. But there are new concerns that the “fee for service” (FFS) model could be revisited if and when the agency gets a new permanent director. Executives at servicing advisory and investment banking firms say...
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