The securitization industry has successfully shot down high-profile attempts in San Bernardino County, CA, and in Chicago to use eminent domain to seize underwater, performing mortgages, write them down to fair market value and repackage them for sale to other investors. However, they’re not letting their guard down, as similar efforts continue in a number of other local jurisdictions throughout the country – most notably Brockton, MA, and Salinas, CA. In Brockton, the City Council recently voted 9-2 in favor of setting up a working group to further explore the concept. It also voted to invite a handful of local community activists and city officials, as well as a representative from Mortgage Resolution Partners – the architect of the proposal – to appear before the finance committee. The issue on their agenda is...

The presence of the “to-be-announced” market provides greater liquidity to the agency MBS sector, according to a recent study by the Federal Reserve Bank of New York. The study, “TBA Trading and Liquidity in the Agency MBS Market,” presents evidence on the liquidity of the TBA market during the financial crisis period. Its analysis also yields preliminary evidence that the liquidity of the TBA market raises MBS prices and lowers mortgage interest rates. Authors James Vickery and Joshua Wright said...

Stonegate Mortgage Corp. this month launched a new jumbo conduit, hiring Eric Schlotz, a 15-year veteran from GMAC-RFC in Minneapolis, to manage the operation. As for when the conduit might actually securitize loans, that’s a different matter. Schlotz told Inside MBS & ABS that securitization is not on the immediate drawing board, but will be an option for the future. “We anticipate whole loan sales and private deals,” Schlotz said. Asked whether he feels...

The Department of Justice filed a civil action in Los Angeles this week against Standard & Poor’s Rating Services and its parent the McGraw-Hill companies for $5 billion, accusing S&P of defrauding investors by falsely representing that its ratings on certain collateralized debt obligations were “objective, independent and unencumbered by any conflicts of interest.” The Justice Department’s complaint alleges that S&P “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors” in its ratings of “trillions of dollars” of residential MBS and CDOs between 2004 and 2007. DOJ contends...

New issuance of agency single-family MBS jumped 25 percent from December to January, according to a new Inside MBS & ABS ranking and analysis. The most likely explanation for the sudden jump in agency MBS issuance may be that new, more seller-friendly repurchase policies at Fannie Mae and Freddie Mac went into effect for loans sold after Jan. 1, 2013. The revamped policies generally provide that the government-sponsored enterprises will not seek repurchase or indemnification for loans that perform for the first three years after origination. In the case of Home Affordable Refinance Program loans, repurchases will be waived...[Includes one data chart]

Federal regulators suggest that a number of changes are under consideration for risk-retention requirements initially proposed in 2011. Two changes under consideration include a revision of the qualified residential mortgage definition and a possible alternative to the controversial proposed premium capture cash reserve account. Katherine Hsu, chief of the office of structured finance in the division of corporation finance at the Securities and Exchange Commission, said federal regulators are considering changing the proposed definition for QRMs due to the recent ability-to-repay rule from the Consumer Financial Protection Bureau that set requirements for “qualified mortgages.” The QRM standards cannot be any more broad than the QM standards. Speaking at the American Securitization Forum’s ASF 2013 conference last week in Las Vegas, Hsu also stressed...

Officials at the federal agency that proposed a significant overhaul of securitization disclosures three years ago are concerned about uncertainty caused by the pending rule and it’s unclear when, or even if, a final rule will be issued. Troy Paredes, a commissioner at the Securities and Exchange Commission, would not comment on when the so-called Reg AB2 rule would be finalized. “It may or may not get done,” he said last week at the American Securitization Forum’s ASF 2013 conference in Las Vegas. The SEC initially proposed...

Fannie Mae and Freddie Mac lenders will be allowed to offer certain additional incentives to encourage more borrowers, particularly those underwater, to refinance under the Home Affordable Refinance Program, according to guidance issued by the two government-sponsored enterprises. The GSEs announced last week that lenders will be allowed to offer a “refinancing incentive” to underwater borrowers so they may obtain a lower payment or move to a more stable product or a shorter term. “As a result of lender inquiries, the Federal Housing Finance Agency has led...

HARP 3.0 Status Update: Democrats in both the Senate and the White House are warming up efforts to expand government-backed refinance programs in order to assist underwater homeowners whose mortgages are packaged into non-agency securities. Repurposed refi proposals from last year are poised to be re-introduced in the 113th Congress with the active and vocal support of the Treasury Department, which may enact its own initiative if lawmakers can’t or won’t pass a measure. “We must expand...

Although mortgage bankers are enjoying their strongest profit margins in years, smaller nonbank shops continue to live in fear that Fannie Mae and Freddie Mac – under the auspices of their regulator – may soon unveil higher net-worth minimums. Officially, the net-worth minimum is set at $2.5 million for both government-sponsored enterprises, although Fannie Mae has imposed volume limits on some newly approved seller/servicers that have posted big increases in their sales to the GSE. Several industry executives and their outside advisors fully expect...