The American Securitization Forum has published an implementation guide to the due diligence requirements for securitization positions under the market risk rule issued by the federal bank regulators in August, as well as guidance the Office of the Comptroller of the Currency put out this past June. One of the primary purposes behind the rule and the guidance was to lessen industry dependence on credit ratings and to promote instead greater reliance upon proper due diligence. “With the adoption of the final rules, market participants have been working...

Ginnie Mae is beefing up its staff to handle increased securitization volume, a growing number of applications for new issuer approval, and closer monitoring of current participants in the Ginnie Mae program, according to a top agency executive. The agency plans to have 130 market professionals on staff by 2013, up from 70 in 2010, to ensure compliance of new and current participants with existing guidelines and the agency’s adaptation to a changing MBS market, said Michael Drayne, senior vice president at Ginnie Mae’s Office of Issuer and Portfolio Management. “We have been given...

New York Attorney General Eric Schneiderman said he plans to file more lawsuits against non-agency MBS issuers using the Martin Act, which allows platform-wide cases as opposed to cases focused on specific deals. “It’s not about one deal or five deals or 10 deals, it’s about the entire course of conduct,” he said last week after filing a platform-wide lawsuit against Credit Suisse Securities. The lawsuit was filed as part of the RMBS Working Group’s efforts, including a similar lawsuit Schneiderman filed in October against JPMorgan Chase. “The actions you have seen...

A three-judge federal panel this week heard a rare interlocutory appeal by one of the defendants in a series of lawsuits that the Federal Housing Finance Agency has filed in connection with non-agency MBS purchased by Fannie Mae and Freddie Mac. Lawyers for UBS Americas argued before the Second Circuit Court of Appeals that it should reverse the May ruling by Manhattan Federal Judge Denise Cote denying the bank’s motion to dismiss the FHFA’s lawsuit as time-barred under the statute of repose. The FHFA sued...

Commercial banks and savings institutions continued to increase their MBS holdings during the third quarter, despite more competition for the still-shrinking asset class. A new Inside MBS & ABS analysis of bank call report data shows that banks and thrifts held a record $1.617 trillion of residential MBS as of the end of the third quarter, up 0.5 percent from the previous quarter. All of the growth came from commercial banks, as thrift MBS holdings continued to decline, dropping 1.3 percent to $175.6 billion. Banks managed to increase...[Includes two data charts]

The Department of Housing and Urban Development warned that an extraordinarily high percentage of loans in claim status can trigger a lender monitoring review to ensure the lender’s capacity to meet indemnification requirements. A high loan defect rate may be one of several factors used to target FHA lenders for a special review to determine the amount of risk a lender might pose to the safety and soundness of the FHA’s single-family mortgage insurance program, according to Justin Burch, director of the Quality Assurance Division at FHA during a webinar hosted this week by Inside Mortgage Finance. “If you are a lender that is...

The Federal Housing Finance Agency is feeling some serious pushback from lawmakers, industry groups and even homeowners over its plan to impose a guaranty fee hike on several slow foreclosure states. The FHFA proposed to target five states – Connecticut, Florida, Illinois, New Jersey and New York – for an additional, one-shot g-fee of between 15 and 30 basis points in 2013. The fees, the FHFA contends, are intended to allow Fannie Mae and Freddie Mac to recover costs associated with foreclosures. The five states singled out are all judicial states where it is necessary to obtain court approval before foreclosure is completed. The National Association of Federal Credit Unions urged...

The recent actuarial report that showed the FHA’s insurance fund is underwater to the tune of $16.3 billion ought to sound an alarm for policymakers to refocus the agency on its original public mission, some leading policy experts say, and perhaps even motivate them to resolve Fannie Mae and Freddie Mac while they’re at it. “I think FHA’s financial condition is extremely precarious – much worse than FHA and HUD are making it out to be,” said long-time critic Edward Pinto, a resident fellow at the American Enterprise Institute, a conservative think tank in Washington, DC, and a former official at Fannie Mae. As he sees it, today’s very low interest rate environment means the economic value of FHA’s forward mortgage fund really is a far worse at a negative $31 billion. “And when you throw in the negative on the reverse [mortgage] program, you get close to $35 billion.” Compounding the problem is...

Federal Reserve Chairman Ben Bernanke late last week reiterated his view that tight underwriting standards set by lenders are hindering a broader recovery of the housing market. Lenders, meanwhile, cite concerns with repurchases and regulatory uncertainty. Bernanke noted that low home prices and historically low interest rates have not prompted the “powerful housing recovery” that has typically occurred in the past after housing problems. “Unfortunately, while some tightening of the terms of mortgage credit was certainly an appropriate response to the earlier excesses, the pendulum appears to have swung too far, restraining the pace of recovery in the housing sector,” he said. More than half of the lenders that responded to the Fed’s senior loan officer opinion survey earlier this year said...

The first-time homebuyer share of home-purchase activity and the FHA share of home-purchase financing have each fallen significantly since peaking in 2010, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The trends appear to be tied to lender underwriting requirements and the cost of FHA loans. In May 2010, first-time homebuyers accounted for 45.8 percent of home purchases, based on the three-month moving average. In October 2012, the share fell to 34.7 percent. Similarly, the FHA share of home-purchase financing fell during that time from 36.7 percent to 26.3 percent. “Financing of first-time homebuyers with low downpayments threatens...