Mortgage industry executives should be aware and expect continued – and perhaps even more muscular – use of a 1989 federal law by government prosecutors to pursue mortgage-related claims. At the direction of Attorney General Eric Holder, the Department of Justice embraced the use of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) in MBS lawsuits. Despite Holder’s announcement late last month that he is stepping down after six years as AG, there is...

The Consumer Financial Protection Bureau was critical this week of aspects of the student loan securitization process as well as servicer performance as it issued its latest annual report on private student-loan borrowing. The report analyzed more than 5,300 private student loan complaints between Oct. 1, 2013, and Sept. 30, 2014, an increase of 38 percent over the previous year. “Lending practices in the private student-loan market in the years preceding the financial crisis shared...

Investors have bid up the value of MBS the past two weeks, with agency product hitting new 52-week highs. This development benefits investors as long as interest rates don’t fall dramatically enough to spark prepayment concerns. In particular, analysts are paying close attention to publicly traded mortgage real estate investment trusts that hold agency MBS. According to figures compiled by Inside MBS & ABS, REITs held $286.3 billion of MBS at the end of June after increasing their holdings by 9.7 percent during the second quarter. Now, those bets are paying off...

The substantial increase in federal support of the single-family housing finance system, as well as weaknesses uncovered in the wake of the mortgage market meltdown, have led to a U.S. finance system that warrants reform, according to the Government Accountability Office. The GAO focused considerable attention on the much-reported fact that government programs have accounted for a huge share of the mortgage and MBS market since the financial crisis. The congressional watchdog views the federal role in housing finance as a “high-risk area.” “Developments in mortgage markets since 2000 have challenged...

Bill Dallas, who runs Skyline Lending, told us he believes the “new” non-agency movement is beginning right now. “Today, we‘re doing 90 percent agency,” he said. “In 2017 the ratio will be 60 percent agency.”

GSE shareholder advocates remain undeterred following a federal judge’s decision late this week to deny a former Fannie Mae executive access to confidential evidence unearthed as part of the discovery process in an investors’ lawsuit against the government. Earlier this year, Fairholme Funds hired former Fannie Chief Financial Officer Timothy Howard as a consultant to assist its law firm Coopers and Kirk. Lawyers for the government want to deny Howard access to some 800,000 pieces of discovery in investors’ litigation challenging Uncle Sam’s “net-worth sweep” of GSE profits.

In October of last year Pershing Square, the hedge fund controlled by uber investor Bill Ackman, began gobbling up huge blocks of common stock in Fannie Mae and Freddie Mac at prices ranging from $1.54 to $2.27 a share. Today, a small portion of those positions is underwater, but thanks to a recent rebound in the stocks, whatever “paper” losses Pershing Square incurred have just about been wiped out. In trading Thursday, Fannie common was selling for $2.14, Freddie a few pennies below that.

The Federal Housing Finance Agency’s proposed single security for the GSEs met with conflicting views as the comment period ended this week. In August, the FHFA proposed a single-security structure to allow Fannie Mae and Freddie Mac to issue a common MBS to serve the single-family market. The proposal is aimed at eliminating Freddie’s pricing disadvantage and improving liquidity in the to-be-announced market.

After a year of searching for a chief executive to lead Common Securitization Solutions, the Federal Housing Finance Agency is still looking, but it continues to hire staff. “The search continues,” said a government official close to the matter. “We even have a search firm.”Although the FHFA is keeping a tight lid on information regarding CSS, it’s now common knowledge that the search firm in question is the Washington-based Spencer Stuart, which bills itself as “one of the world’s leading global executive search and leadership consulting firms.”