Investors interested in buying new non-agency mortgage-backed securities suggest that the wide variety seen in the pooling and servicing agreements and reporting of vintage non-agency MBS is insufficient. Many investors at the recent ABS East conference in Miami sponsored by Information Management Network called for standardization. “Investors clearly welcome standardization,” said Dapeng Hu, a managing director at BlackRock, which manages more than $150.0 billion in MBS investments ...

The Securities and Exchange Commission has been quietly meeting with investors in non-agency mortgage-backed securities looking for leads to bring regulatory actions. Reaction from investors to the SEC’s outreach has been decidedly mixed, though Reid Muoio, a deputy for the SEC’s structured and new products unit, said the SEC is working to improve regulation on behalf of investors. Speaking at the recent ABS East conference sponsored by Information Management Network in Miami, Muoio detailed an SEC outreach program that was apparently previously undisclosed. He said that a ...

A final rule from the Consumer Financial Protection Bureau defining “qualified mortgages” could come as soon as this month. Participants in the non-agency mortgage market appear to be anxiously awaiting the QM rule that will establish ability to repay standards and the related qualified-residential mortgage rule on risk retention for securitized mortgages. “At least tell us what the rules of the road are, then we can react,” Eric Kaplan, a managing director at Shellpoint Partners, said at the recent ABS East ...

After winning multiple bids to acquire mortgage servicing rights and subservicing on nonprime loans and agency mortgages, nonbank servicers were outbid last week for the latest major agency MSR acquisition. Industry analysts suggest that the somewhat unexpected competition from banks could hinder planned expansion by Ocwen Financial, Nationstar Mortgage and Walter Investment Management. JPMorgan Chase Bank is set to acquire $70.0 billion in agency MSRs from MetLife. “The acquisition of this ...

“The return of non-agency MBS for prime loans is a lot further along than market observers might think,” officials at Redwood Trust said last week. The company said its goal is to issue $900 million or more in non-agency MBS each quarter within the next 12-to-18 months and eventually finance mortgages for prime borrowers “who do not fit into today’s tight credit box.” Through 10 months in 2012, Redwood averaged $498.31 million in quarterly non-agency MBS issuance, according to the Inside Mortgage Finance ...

Complicating the post-election process of regulatory implementation is the expectation that a number of top officials at key agencies are likely to move on during President Obama’s second term. For the mortgage finance industry, perhaps the most notable potential departure among administration officials is that of Treasury Secretary Tim Geithner. Geithner has dropped hints more than once this past year that he wants to move on. Treasury officials did not respond to requests for confirmation of that as of press time. Other key officials on the industry’s departure watch list include...

The ACLU is calling for changes to federal anti-discrimination statutes to deter secondary mortgage market participants from engaging in business practices that might have a discriminatory impact on certain protected classes of borrowers. In a recent analysis of mortgage foreclosures, the ACLU said the origination and securitization of subprime and other high-risk mortgage products have hurt minority families and caused the loss of 3.5 million homes to foreclosure. The ACLU believes...

A task force of state insurance regulators has agreed to require insurers to set aside additional capital to cover risks tied to residential and commercial MBS in an effort to buffer the industry from losses in the event of a severe downturn. The National Association of Insurance Commissioners’ Valuation of Securities Task Force voted 11-2 to support a proposed increase in the NAIC’s capital requirements for U.S. life insurers. The change in capital requirements is driven by year-end NAIC modeling assumptions related to RMBS and CMBS. The change raises...

Redwood Trust late last week reported net income of $40.0 million for the third quarter of 2012, including $3.0 million in net gains on the $372.0 million of non-agency MBS issuance and whole loan sales the real estate investment trust completed during the period. Redwood officials said the company is well-positioned for growth in non-agency MBS issuance, commercial MBS issuance and soon agency origination activity. In a quarterly review, company officials noted that some have called the REIT “crazy” for resuming issuance of non-agency MBS after the financial crisis of 2007. Redwood has issued eight non-agency MBS since April 2010 totaling $2.6 billion. The REIT said...

Fannie Mae and Freddie Mac continued to trim their retained holdings of MBS and unsecuritized mortgages during the third quarter, but at a slower pace than in previous periods, according to an analysis by Inside MBS & ABS of earnings reports released this week by the two government-sponsored enterprises. One of the conditions of the conservatorships the GSEs entered four years ago was that they would reduce their retained mortgage portfolios by 10 percent a year. Those terms were revised in August to include a 15 percent annual wind-down, which would take each GSE’s investment portfolio down to $250 billion by the beginning of 2018, four years sooner than under the previous arrangement. As Freddie noted...[Includes one data chart]