Springleaf Financial Services is gearing up to issue its second non-agency MBS of the year, a $970.0 million deal backed by seasoned subprime mortgages. The company, formerly known as American General Finance, stopped new residential mortgage originations in January of this year. Now owned by Fortress Investment, Springleaf issued a $473.1 million MBS backed by seasoned subprime loans in early April. At the end of the first quarter, the company said it had $9.7 billion of real-estate finance receivables on its books, most of which were classified as nonprime or subprime. Springleaf Mortgage Loan Trust 2012-2 features...

Chicago, Suffolk County, NY, and Berkley, CA, have joined the ranks of local governments considering the controversial notion of using eminent domain to seize performing underwater mortgages, restructure their terms and repackage them for sale to other private investors. “Given the size of the foreclosure epidemic in Chicago, the city should explore every possible avenue to keep families in their homes and reduce the number of vacant properties that breed crime and erode the stability of our neighborhoods,” Alderman Edward Burke, chairman of the city’s finance committee, said last week. In March 2012, nearly 667,000 Chicago-area homeowners were...

Moody’s Investors Service was the most active rating service in the growing non-mortgage ABS market during the first half of 2012, but a new Inside MBS & ABS analysis shows that the company followed a somewhat unusual path to get there. Auto loan ABS has been the dominant sector in the market this year, accounting for 47.3 percent of new issuance through the first six months of 2012. But Moody’s share of auto ABS ratings has slipped from 79.0 percent in 2011 to 77.2 percent this year – although that’s still higher than any of its competitors. Moody’s also boosted its share of business loan ABS ratings, a large number of which are vehicle dealer floorplan transactions. Credit card ABS have made...[Includes two data charts]

Bank of America appears to be moving slower than some industry analysts had expected in fulfilling some of its obligations under the proposed $8.5 billion settlement over Countrywide MBS reached last year with Bank of New York Mellon as trustee for a group of institutional investors. Although the settlement is far from finalized, BofA said it would move distressed loans to subservicers regardless of the outcome. The bank has moved approximately 38,000 mortgages to Specialized Loan Servicing, Select Portfolio Servicing and Green Tree, as of June 26, 2012, according to analysts at Barclays. Of this amount, 73 percent were shipped to SLS, SPS got 21 percent, and Green Tree received 6 percent. “Of the 38,000 loans, mortgage servicing rights have been transferred...

Stop advance rates by servicers of non-agency MBS are more than double industry estimates, based on new data from CoreLogic’s LoanPerformance. Analysts at Barclays Capital said the data also allow calculation of loan-level stop advance rates on non-amortizing loans for the first time. LoanPerformance recently started reporting loan-level stop advance data on approximately 700 non-agency MBS, about 13.0 percent of active deals, according to Barclays. While CoreLogic said the trustee-submitted data will be reported without reference to the specific servicer, Barclays determined that the data are primarily limited to deals by Countrywide Financial and Washington Mutual. Stop advance rates in recent months on the Countrywide-serviced deals range...

The top priority in any effort to revamp, reform or otherwise reduce risk in the $1.8 trillion tri-party repurchase or repo market should be to clearly determine “who’s in charge from a federal perspective,” according to a top Senate Democrat. In holding this week’s hearing of the Senate Banking Subcommittee on Securities, Insurance and Investment, Chairman Jack Reed, D-RI, said the government needs to defuse potential risk to the tri-party repo credit market for funding as an act of emergency preparedness rather than allow another financial crisis, such as what crippled the market in 2008. “One of the lessons we learned...

Redwood Trust turned profits on the three non-agency jumbo mortgage-backed securities it issued thus far this year, with “strong investor demand.” Meanwhile, Springleaf Financial is set to issue another subprime MBS backed by seasoned loans. Officials at Redwood said they plan to issue another non-agency jumbo MBS before the end of the third quarter of 2012 and they are optimistic about future non-agency activity. “We are a long way from declaring victory, but we like our steady progress, the way the playing field is ... [Includes one chart]

Major investors in non-agency mortgage-backed securities said they are years away from being confident enough in the market to support a revival of non-agency MBS issuance. Damon Silvers, associate general counsel for the AFL-CIO, said significant reforms must be put into place before pension funds will feel comfortable buying non-agency MBS again. “I’m not optimistic that the kinds of moves that need to be made in terms of the banking system or the mortgage-backed securities markets are likely to be made anytime soon,” he said ...

Bank investments in vintage non-agency mortgage-backed securities have increased recently due to a number of factors specific to the sector as well as broader economic issues. However, Standard & Poor’s warned last week that some banks are increasingly relying on non-agency MBS to prop up earnings, which could lead banks to take even further risks with their non-agency investments and hedging. “If this occurs in a significant manner, we could lower our ratings on a bank that is undertaking such activity,” the rating service said ...

Another fund participating in the Public-Private Investment Program terminated its investment period, suggesting the PPIP is less useful for investors in non-agency mortgage-backed securities than investing without the help of the Troubled Asset Relief Program. The Treasury Department recently announced that the RLJ Western Public-Private Investment Fund ended its investment period on July 15. Invesco’s PPIF made a similar announcement in September and ended its participation in the PPIP in April, leaving ... [Includes one chart]