A federal appeals court has agreed to hear Credit Suisse’s appeal of a lower court ruling which gave the go-ahead for a group of investors in an IndyMac Bank MBS to proceed as a class in its suit against the lender. The U.S. Court of Appeals for the Second Circuit said last week it would hear Credit Suisse’s appeal of a Manhattan federal judge’s ruling in June which granted a December 2010 request for class certification to investors as they allege Credit Suisse misled them about the quality of toxic loans underlying a $642 million MBS offering in 2006. The plaintiffs claim...

To effect the types of changes required in order to bring private capital back to the housing finance market, a “collaborative effort” among market participants, regulators and policymakers will be necessary, noted the head of the Federal Housing Finance Agency. FHFA Acting Director Edward DeMarco told attendees of a Securities Industry and Financial Markets Association conference in New York City late this week that the existing secondary market infrastructure is “broken” and it will take agreement among market participants to decide the changes necessary in order to mend it better than ever. “As we think about building a new infrastructure for the secondary mortgage market, we know...

Originations of non-agency jumbo mortgages through three quarters in 2012 increased by 23.3 percent compared with the same period in 2011. While 12 non-agency jumbo mortgage-backed securities have been issued this year, jumbo originations are largely being held in portfolio by banks competing for high-quality borrowers. An estimated $148.0 billion in non-agency jumbos were originated through the first nine months of 2012, including an estimated $52.0 billion in ... [Includes one data chart]

A subsidiary of Credit Suisse Group last week issued a non-agency jumbo mortgage-backed security, its third of the year and the first that did not include mortgages from the shuttered MetLife. The loans were acquired on a flow basis by DLJ Mortgage Capital, a Credit Suisse affiliate. CSMC Trust 2012-CIM3 is backed by $329.89 million of jumbo loans originated by 15 lenders, including Quicken Loans (35.2 percent), PHH Mortgage (19.7 percent) and First Savings Mortgage (16.8 percent). The average ...

Redwood Trust could issue a seventh non-agency mortgage-backed security before the end of this year, according to officials at the real estate investment trust, and the company is ramping up to hit a pace of a new MBS every month. “In terms of the residential business, generally I would say the stars are aligning,” Martin Hughes, CEO of Redwood, said last week during a presentation to investors. He noted increased guaranty fees for the government-sponsored enterprises, a decrease in conforming loan limits ...

Participants in the non-agency mortgage-backed security market are largely opposed to the Federal Housing Finance Agency’s proposal to create a platform to issue standardized non-agency MBS. While the FHFA suggested that the platform could revive the non-agency market, industry participants suggest that many issues besides a platform are hindering non-agency MBS issuance. “Key elements of the platform that are advantages for government-sponsored enterprise securitizations, such as standardization ...

Potential violations to a servicing agreement Ocwen Financial signed in 2011 with the New York State Department of Financial Services have stalled Ocwen’s efforts to close its acquisition of Homeward Residential and servicing from Residential Capital. Benjamin Lawsky, superintendent of the DFS, said he would not approve Ocwen’s latest acquisitions until a monitor was established to oversee Ocwen’s compliance with the September 2011 agreement. This week, Ronald Faris, president and CEO of Ocwen ...

A federal court in California recently dismissed claims by the Federal Deposit Insurance Corp. related to non-agency mortgage-backed securities purchased by a bank in 2007 and 2008. According to the ruling, the FDIC should have filed the lawsuit long ago and tolling did not render the claims as timely. FDIC v Countrywide Financial relates to $62.6 million in AAA-rated Countrywide MBS purchased by Strategic Capital Bank in 2007 and 2008. The FDIC was appointed as receiver of the bank on May 22, 2009 ...

Nonprime mortgages and mortgage-backed securities caused a significant portion of the losses suffered by the government-sponsored enterprises since 2008. However, the nonprime assets that the GSEs have held on to have seen lower credit losses and even profits recently due to improving home prices and investor demand for vintage MBS. Fannie Mae and Freddie Mac have allowed their non-prime exposure to run off since 2008, rather than selling the assets. As of the end of the third quarter of 2012 ... [Includes one data chart]

Institutional investors are creating a rental market out of real estate owned properties without a mortgage-backed security structure in place, though industry participants anticipate that a REO rental securitization market will eventually develop. Some $8.0 billion has been raised by institutional investors to purchase REOs and rent them, according to Oliver Chang, founder and managing director of Sylvan Road Capital, which itself expects to invest $1.0 billion in the market in the next two years ...