When a lender like Wells Fargo – the top lender and servicer in the industry – describes a lengthy list of “pain points” in the new loan originator compensation rule issued by the Consumer Financial Protection Bureau, it’s fair to conclude the rule presents a huge challenge for mere mortals. During an Inside Mortgage Finance webinar last week on the bureau’s final rule, Amy Thoreson Long, senior counsel in the consumer lending division of Wells’ law department in Minneapolis, started with one of the most visceral issues for lenders: the human impact. “One of the big key things here is...
The Mortgage Bankers Association urged the Consumer Financial Protection Bureau to give all FHA loans a “conclusive presumption of compliance” with qualified mortgage requirements and to revise the QM annual percentage rate/average prime offer rate (APR/APOR) threshold for FHA loans at least until the agency issues its own QM rule. Failure to make the adjustments could severely restrict the availability of FHA loans to lower-income first-time homebuyers, which is the FHA’s traditional market, the trade group said. In comments on the CFPB’s final ability-to-repay rule, the MBA said...
It’s far from over, but the years-old plague of mortgage buybacks may be slowly winding down. A new Inside Mortgage Finance analysis of bank call reports reveals that banks and thrifts repurchased “only” $2.97 billion during the fourth quarter of 2012. That was down 2.1 percent from the third quarter, but it marked the fifth straight quarterly decline and it was the lowest level since the second quarter of 2009. It brought total repurchases on single-family mortgages, which include indemnifications, to $13.97 billion for all of 2012, a decline of 33.3 percent from the previous year. It was the lowest annual repurchase volume since 2008. An earlier Inside Mortgage Finance analysis of repurchase disclosures made by Fannie Mae and Freddie Mac showed...
New issuance of agency single-family MBS fell 3.1 percent from January to February, according to a new Inside MBS & ABS analysis and ranking. On a combined basis, Fannie Mae, Freddie Mac and Ginnie Mae issued $153.4 billion in new single-family MBS last month. That was up 31.6 percent from February 2012 and compared favorably with the $138.5 billion monthly average issuance for all of last year. All of the decline came...[Includes one data chart]
Credit Suisse has adjusted the representations and warranties included in each of its recent non-agency MBS deals, reacting to criticism from investors that the reps and warrants do not meet models set by the American Securitization Forum. While the new jumbo MBS issued by Credit Suisse last week made some improvements on reps and warrants compared with its previous deals, the issuer continues to experiment with somewhat looser standards. “Credit Suisse has introduced several new elements to the rep and warrant structure in recent securitizations which has caused some diverging opinions in the securitization community,” according to analysts at Bank of America Merrill Lynch. “While the ASF has provided a starting point with their model reps, it will likely take the market some time to find the right balance between investors and originators.” Issuance from Redwood Trust has been seen...
The majority of the American Securitization Forum’s board of directors resigned recently and a number of significant members have quit the trade group due to concerns about governance of the ASF and bonuses paid to Tom Deutsch, the group’s executive director. The problems stem from the ASF’s abrupt separation from the Securities Industry and Financial Markets Association in early 2010. “The separation and related negotiations from SIFMA have frankly been messier and more difficult than anyone expected,” Deutsch said this week, indicating that while the groups separated in 2010 and appeared to operate independently, the split was never quite finished. “We look forward to concluding those negotiations with SIFMA in short order and keeping our focus on the key tasks of meeting the looming implementation challenges of the Dodd-Frank Act.” SIFMA officials refused...
An investor in Alt A MBS originally issued by Residential Capital Corp. filed suit this week to block Nationstar Mortgage from auctioning nonperforming loans from the MBS pools. Nationstar in mid February began auctioning NPLs on auction.com, according to the complaint filed in the Supreme Court of New York State this week. There are currently two additional auctions totaling some $750 million of NPLs listed on the internet auction site, both believed to be related to Nationstar. The company is...
MBS investors can expect fewer scratches and dents in non-agency MBS portfolios, according to a new analysis from Moody’s Investors Service that says houses are less likely to lose value in a recovering market and modified loan recoveries are increasing as borrowers make more payments before re-defaulting. Part of the story is that the market is seeing higher recoveries for defaulted modified mortgages than for unmodified defaulted loans. “Even though modifications on loans that were eventually liquidated in 2010 and 2011 exposed the properties to further price depreciation by delaying their liquidation, those modified loans on average still realized higher recoveries than did defaulted unmodified loans,” analysts at Moody’s said. “This is because loan modifications, even failed ones, usually enable...
A federal appeals court last week revived a previously dismissed class-action lawsuit against four financial institutions brought by investors that purchased a $1.32 billion offering of MBS that later turned sour. The U.S. Court of Appeals for the Second Circuit vacated and reversed a lower court’s decision to dismiss the case two years ago against the Royal Bank of Scotland Group, Deutsche Bank AG, Wells Fargo Advisors and NovaStar Mortgage. The New Jersey Carpenters Health Fund was lead plaintiff. In 2007, the New Jersey fund sued...
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