The attorneys general of New York and Delaware are now free to argue on behalf of absent investors against a proposed $8.5 billion settlement involving Bank of America, securities trustee Bank of New York Mellon and a group of investors to resolve the claims of other non-participating investors in non-agency MBS issued by Countrywide. A New York state judge last week granted a motion by NY Attorney General Eric Schneiderman and DE Attorney General Beau Biden to intervene in the litigation. At issue in this complicated case is whether the trustee acted legally and appropriately in entering into the...

The outstanding volume of single-family agency MBS continued to grow during the first quarter of 2012, accounting for a slightly larger share of the overall mortgage market. Total agency MBS edged up 0.6 percent from the end of 2012 to reach $5.381 trillion – still slightly below the record of $5.430 trillion set at the end of 2009. The agency MBS market declined in early 2010 as Fannie Mae and Freddie Mac began buying distressed home loans out of MBS pools. While the agency MBS market was up in the first quarter, the amount of home mortgage debt outstanding continued to decline, dropping...(Includes one data chart)

Berkshire Hathaway and other new bidders are circling around the assets of Residential Capital, setting the stage for a showdown at the Southern District of New York Bankruptcy Court after the court approved the current way the mortgage unit is operating in bankruptcy. In a turn of events that has shaken the stability of ResCap’s initial bankruptcy plan that includes $8.7 billion to settle MBS investor lawsuits, Berkshire Hathaway objected to the current sale procedures in place, which have yet to be approved in court, in lieu of its own offer. The Nebraska-based conglomerate set the wheels in motion...

The booming market for rental housing and efforts to resolve the massive foreclosure inventories of Fannie Mae, Freddie Mac and the FHA has sparked investor interest in single-family rental securitization, according to credit rating agencies. Credit rating agencies have begun looking at real estate owned conversions to rental properties and the potential for securitizing cash flows from REO-to-rent securitizations. Based on initial assessments, the rating services see a promising, emerging asset class. REO-to-rent securitizations could take a number of forms, any of which can offer advantages to...

A handful of critical lawsuits stemming from the mortgage market collapse may yield meaningful legal precedents for the securitization markets as 2012 unfolds, according to a legal observer. “We’re finally getting to the point where there can be meaningful precedent established,” said Isaac Gradman, a managing partner at IMG Enterprises. “For the last three or four years, there has been a wide gap in the claims banks have made and the claims monolines and investors have made as to the merits of these suits.” What comes from the courts will become the standards by which the new MBS market...

The Federal Housing Finance Agency this week said it is still deliberating writedowns on Fannie Mae and Freddie Mac mortgages as industry insiders aren’t sure what to make of the agency’s recent thumbs up to GSE participation in two state principal reduction programs. Last month, the GSEs – with the FHFA’s blessing – opted to participate in principal reduction programs in California and Nevada. Both programs will use part of the $7.6 billion Hardest Hit Fund to pay down the loans Fannie and Freddie own or guarantee. The FHFA noted that critical directives issued by the GSEs last year cleared the way for participation in such programs as long as the servicers or the GSEs would not have to match those funds.

Fannie Mae demonstrated measurable progress during 2011 while conditions at Freddie Mac neither worsened nor improved significantly but both GSEs have ample room for improvement, according to a report issued this week by the Federal Housing Finance Agency. The FHFA’s fourth annual Report to Congress deemed the two GSEs “critical supervisory concerns” last year with “continuing credit losses” coming primarily from loans originated during the years 2005 to 2007. The report identified “key challenges facing each company, including the ongoing stress in the nation’s housing markets, the challenging economic environment and the uncertain future facing the enterprises,” noted the FHFA. “However, management and the boards were responsive throughout 2011 to FHFA’s findings and challenges and took appropriate steps to begin resolving identified issues.”

The Federal Housing Finance Agency has announced a new senior officer tasked to be the Finance Agency’s point person regarding its strategic plan for Fannie Mae and Freddie Mac. FHFA Acting Director Edward DeMarco two weeks ago appointed Wanda DeLeo as deputy director leading the agency’s newly created Office of Strategic Innovations. The new division will oversee and coordinate the FHFA’s strategic plan for GSE conservatorships. Unveiled in February, the FHFA’s plan outlines the next phase of Fannie and Freddie conservatorships.

Fannie Mae and Freddie Mac should remain intact, albeit smaller, as a hedge against future market uncertainty and to ensure further destabilization does not occur, according to a white paper issued last week by the Community Mortgage Lenders of America. The CMLA, the first industry trade group to unambiguously endorse retaining the GSEs, made its recommendation in a letter sent to Federal Housing Finance Agency Acting Director Edward DeMarco and Treasury Secretary Timothy Geithner as well as to senior Congressional Democrats and Republicans. “The CMLA believes that the housing industry and the public at large are best served through sensible and calculated reformation of the enterprises that reduces their footprint in the industry while at the same time allowing them to serve their historically critical functions,” said the letter.

As expected, Fannie Mae, in consultation with the Federal Housing Finance Agency, announced last week it appointed Timothy Mayopoulos as president and CEO and a member of the board amid concern expressed by lawmakers of “excessive compensation” at both GSEs. Mayopoulos, 53, currently serves as executive vice president, chief administrative officer and general counsel, but has served in a number of other critical capacities since joining Fannie in April 2009.When he assumes the corner office on June 18, Mayopoulos will become the company’s third CEO in four years, succeeding Michael Williams, who announced he would step down in January.