A new report from Fitch Ratings finds that risk appetite is returning to the U.S. triparty repo market, thanks in part to deeply discounted collateral, much of which is in the form of Alt A and subprime residential MBS and collateralized debt obligations. Fitch’s study of the market is based on repo transaction information drawn from a sample of the 10 largest U.S. prime money market funds’ financial statements. Fitch’s sample encompasses about $90 billion in repo transactions as of the end of August 2011, which represents slightly more than 5 percent of the $1.6 trillion U.S. triparty repo market...

The Federal Reserve Bank of New York ended a week of speculation in the non-agency MBS market with the sale, through competitive bidding, of $6.2 billion of MBS linked to the taxpayer bail-out of mega-insurer AIG. The winning bid came from Goldman Sachs, one of five firms the Fed invited to submit bids on the multibillion-dollar Maiden Lane II (ML II) portfolio of subprime MBS held by the agency. The other bidders included the securities arms of Morgan Stanley, Royal Bank of Scotland, Barclays and Credit Suisse. This week’s transaction followed a $7.0 billion MBS sale on Jan. 19 to Credit Suisse from the same...

Moody’s Investor Services ranked as the most active rating service in the non-mortgage ABS market last year, but finished 2011, as the least involved in non-agency MBS activity, according to a new Inside MBS & ABS ranking and analysis. Moody’s rated a total of $89.3 billion of non-mortgage ABS last year, or 70.4 percent of total issuance. That was up from a 53.7 percent share in 2010, when Moody’s rated some $58.9 billion and finished second to Standard & Poor’s. Moody’s strengths in 2011 were in the credit card, vehicle finance and business loan sectors, capturing over 70.0 percent of each of those...

A week after federal and state enforcement agencies launched a residential MBS investigative effort, reports have surfaced that Ally Financial, Bank of America, Citigroup, Deutsche Bank and Goldman Sachs are about to be sued by the Securities and Exchange Commission for allegedly misrepresenting the quality of mortgages they packaged and sold to investors. Officials at the SEC, which never confirms specific Wells Notices of impending legal action, declined to comment on the investigation, as did spokesmen for Ally, Citi and Goldman. Representatives from Bank of America and Deutsche Bank did not...

Housing economists challenged the Federal Housing Finance Agency’s controversial stance against permitting Fannie Mae and Freddie Mac to allow principal forgiveness in loan modifications, telling U.S. senators this week that mortgage loan writedowns would go a long way to cure the ongoing housing crash and foreclosure crisis. Testifying before the Senate Committee on Banking, Housing and Urban Affairs, Moody’s Analytics Chief Economist Mark Zandi told lawmakers that government policy encouraging more mortgage modifications, particularly those involving “substantial principle writedowns” would...

Consumer Financial Protection Bureau Director Richard Cordray gave no indication which way his agency may be leaning in terms of the kind of legal protection the CFPB may provide related to “qualified mortgages” and lender liability when the agency releases its ability-to-repay final rule under the Truth in Lending Act later this year. Appearing before the Senate Banking, Housing and Urban Affairs Committee last week, Cordray said, “One of the things we’ve heard most about from institutions is they would like to see this rule – whatever the criteria are – that there be some sort of safe ...

New York Attorney General Eric Schneiderman filed a lawsuit late last week against Bank of America, JPMorgan Chase and Wells Fargo, claiming that their use of MERSCorp’s Mortgage Electronic Registry System resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. Among its specific accusations, the NY AG’s office says that, out of the 13,000-plus foreclosure actions against New York homeowners in which MERS listed itself as the plaintiff, “in many ...

Days after Consumer Financial Protection Bureau chief Richard Cordray appeared reluctant to commit to publishing a formal regulatory agenda before a key House committee, the bureau turned around last week and quietly issued just such a document, albeit an iteration that did not list key projects under the CFPB’s newly expanded powers it acquired with an appointed director. That suggests the agenda was put together prior to Cordray’s recess appointment and perhaps without his awareness, some observers suggest; otherwise, surely he would have mentioned it when he was ...

The Consumer Financial Protection Bureau has released for public comment the eighth iteration of its consumer mortgage disclosure prototype forms, dubbed “hemlock” and “butternut,” specifically asking for input as to how the prototypes work with the CFPB’s current application disclosure prototype. “These prototypes use a format for closing costs that’s similar to the format on the initial disclosure to enable the two forms to work well together,” the CFPB said. “Consumers should be able to see if their final loan terms and costs are different from the numbers they were originally offered ...

State attorneys general reportedly have until today to agree to a potential $25 billion settlement with big mortgage lender/servicers – namely Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo. Under the latest iteration being voted on, about $17 billion of that amount would consist of penalties paid by the banks, which would be used for principal reductions. Another $5 billion would go toward a reserve account that would be used to pay $1,800 checks to homeowners affected by deceptive foreclosure practices, with $2 billion to $3 billion to go toward helping ...