The Securities and Exchange Commission and Wells Fargo are in a dispute regarding due diligence reports relating to almost $60.0 billion in non-agency mortgage-backed securities issued by Wells between September 2006 and early 2008. The SEC last week filed a subpoena enforcement action against Wells for failure to produce documents. The bank disputes the SEC’s account. The SEC said it has been seeking the documents since September. The regulator claimed that Wells agreed to produce the documents but has failed to do so. The SEC said its action relates to its investigation into whether Wells made material misrepresentations or omitted material facts on certain non-agency MBS issued by the bank ...

Iowa Attorney General Tom Miller downplayed concerns raised by investors in non-agency mortgage-backed securities regarding the pending $25.0 billion servicing settlement. “The current set of concerns aren’t particularly warranted,” he said this week during a webinar hosted by Inside Mortgage Finance Publications. The Association of Mortgage Investors has asked for a number of changes to the settlement, including a cap on the amount of principal reduction that can be completed on non-agency MBS to meet the participating servicers’ loss mitigation requirements. Miller said the AMI is the only group he is aware of that might challenge approval of the settlement by the U.S. District Court for the District of Columbia. “I think that their concerns are not going to be realized ...

Prudential Financial this week issued a $1.0 billion bond to sell vintage subprime mortgage-backed securities. Analysts described the bond as a hybrid between an MBS and a covered bond. Standard & Poor’s gave Prudential Covered Trust 2012-1 an A rating, which was based on the rating of Prudential, not of the subprime MBS being sold. The bond was sold as a private placement and Prudential has not commented on the sale. However, in its recently released annual report for 2011, Prudential said it had transferred some of its subprime MBS holdings ...

PennyMac Loan Services has some unique loss-mitigation strategies, but Moody’s Investors Service warned this week that some of the company’s approaches are risky. Among other issues, PLS can require borrowers that otherwise would not qualify for a loan modification to deed their property to the servicer if the mod does not succeed. “While this approach can improve loss mitigation performance or reduce timelines, Moody’s believes these programs could result in borrowers and regulators challenging this practice as well as headline risk to the company,” the rating service said. PLS has yet to employ the tactic. The warning from Moody’s ...

Ocwen Financial has made a number of adjustments in recent months to better compete with other nonbank servicers. Perhaps most significantly, the special servicer has started to shift to an “equity light” business model. The shift occurred at the end of February when Home Loan Servicing Solutions completed a $186.2 million initial public offering. HLSS said it will use the proceeds to purchase the rights to receive servicing and other related fees, associated servicing advances and other related assets from Ocwen. HLSS was founded by William Erbey, chairman of Ocwen ...

Bank and thrift portfolio holdings of first liens increased in the fourth quarter of 2011 compared with the previous quarter, according to the Inside Mortgage Finance Bank Mortgage Database. Loan modifications completed by the major bank and thrift servicers during that period also decreased significantly, as portfolio performance has improved. Banks and thrifts held $1.76 trillion in first liens at the end of 2011, up 1.9 percent from the third quarter of 2011. The increase in holdings suggests strong portfolio originations as some banks are allowing their mortgage portfolios to run-off and others are selling delinquent mortgages. At the same time, loan modifications offered by the major banks and thrifts declined by ... [Includes one data chart]

Fannie Mae, Freddie Mac and the FHA accounted for 41.8 percent of the $84.66 billion in lending over the $417,000 threshold in 2011, the lowest share they’ve had since emergency loan limits went into effect in 2008, according to an analysis by affiliated publication Inside Mortgage Finance. The agency share of jumbo production peaked in the second half of 2009 at 53.1 percent.The government-sponsored enterprises and Ginnie Mae financed 36.6 percent of the loans exceeding $417,000 that were originated in the fourth quarter of 2011. That was down from a 42.7 percent agency share of the jumbo market in the third quarter of 2011 ... [Includes three briefs]

The FHA’s total capital resources dipped slightly by $400 million in the last three months of 2011, but things could have been much worse had it not been for lower claims activity, according to the FHA’s quarterly report to Congress on Mutual Mortgage Insurance Fund programs. On balance, the report shows little change and nothing unexpected during the quarter, said industry participants. The much-anticipated changes will come after two FHA premium adjustments become effective on April 1 – an annual mortgage insurance premium increase of 10 basis points and a 75 bps hike in upfront premiums, they said. The upfront premium increase is expected to ...

The FHA would have more flexibility to adjust its insurance premiums and greater latitude to require lender indemnification under legislation approved by the House Financial Services Committee this week. The committee passed H.R. 4264, the FHA Emergency Fiscal Solvency Act of 2012, by voice vote on March 27, sending the measure to the House floor for consideration later this year. The bill is slightly different from the initial draft the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity passed on Feb. 7, according to the bill’s author, Rep. Judy Biggert, R-IL. Under the bill, approved lenders may ...

Perceived inaccuracies in public discussions about the FHA’s health and the way the agency manages its business have prompted Acting FHA Commissioner Carol Galante to address the issues and answer critics. In a posting on the Department of Housing and Urban Development’s official blog this week, Galante said the FHA is “moving in the right direction” and that the Mutual Mortgage Insurance Fund is in a much better shape than it was in 2009. Critics have raised concerns about FHA’s solvency, citing the current level of capital reserves, which have fallen way below the ...