Government regulators continue to wrestle with the controversial risk-retention rule mandated by the Dodd-Frank Act that is widely seen as one key to the prospects for reviving the non-agency MBS market. Officials from one of the agencies involved in the rulemaking told attendees at this week’s annual meeting of the American Securitization Forum that regulators are still studying the landslide of comment letters that came in response to a proposed rule published in April 2011. The extended comment period closed in August. “It is in the nature of the rulemaking process that an advanced notice of proposed...

The U.S. residential housing market used to provide the lion’s share of business for non-agency asset securitization, but experts at this week’s American Securitization Forum say it will take years for the sorely damaged housing market to recover and the nationalized mortgage finance system to be overhauled. Supply and demand fundamentals in the housing market are severely broken, said Laurie Goodman, senior managing director at Amherst Securities Group. There are some 2.9 million borrowers in foreclosure or more than 12 months delinquent, plus another 400,000 units of real estate-owned properties. With...

New issuance of non-mortgage ABS increased by 15.8 percent from 2010 to 2011, according to a new Inside MBS & ABS ranking and analysis. But it was a rebound from a record low level, and the market is less than half the amount typically produced before the financial market collapse in 2008. A total of $126.8 billion of non-mortgage ABS were issued in the U.S. last year, and over half of that amount was in the auto ABS sector. Securities backed by loans and leases to vehicle users rose 22.4 percent from 2010 levels, although the sector was down slightly in the fourth quarter. Overall...(Includes two data charts)

Officials at the Federal Reserve signaled this week the bank will maintain its current level of market support for Fannie Mae, Freddie Mac and Ginnie Mae debt and MBS to help keep long-term interest rates for mortgages and other products at historic lows. The housing market remains mired in a lackluster recovery, shackled by massive foreclosures and a huge overhang of unsold inventory, despite all the unconventional support the Fed has bent over backwards to provide. During its meeting this week, the Federal Open Market Committee decided to maintain its “highly accommodative stance for monetary...

Analysts have mixed expectations for residential mortgage servicing in 2012, with some seeing it as a year of foreclosure-prevention reforms and others anticipating a higher level of vigilance in new deals and loan quality. Although issuance of non-agency MBS will be modest again in 2012, new deals will have more comprehensive reviews of originators, more reliable and better-quality loan-level data, and stronger enforcement of breaches of representations and warranties, according to Moody’s Investors Service. New deals will better address legal issues relating to foreclosure challenges. Some of the deals...

Ginnie Mae said it may begin assigning alphanumeric pool numbers for MBS pools as soon as next month because it is fast running out of available pool numbers. The agency said fixed-rate pool types will be the first recipients of the alphanumeric pool numbers. Issuers should make sure that all their remaining assigned pool numbers are used before using the newly assigned alphanumeric IDs. Issuers were advised in 2009 to have their systems ready to accept alphanumeric IDs by March 1, 2010. In another development, MountainView Servicing Group has announced its offering of a $129 million portfolio of Ginnie...

Expect the run up to the fall elections to curb any meaningful results in terms of a legislative overhaul of Fannie Mae and Freddie Mac. However, industry insiders say it’s quite likely that lawmakers will work through the year to tweak various GSE reform proposals for the next Congress to take up in 2013.As Congress resumed this week following the holiday break, members returned to some 14 bills in the House advancing their way through committee – though only a couple are considered “comprehensive” reform legislation. Meanwhile, two bills filed at the end of last year in the Senate got the other chamber of Congress into the GSE reform debate after a long dormancy.

The Federal Home Loan Bank of Chicago is in the midst of crafting an “unusual” plan to supplement the Bank’s current affordable housing and community investment programs with $50 million in additional funds to be used to promote housing and economic development throughout its district.According to a filing the Chicago Bank made with the Securities and Exchange Commission late last month, the three-year initiative will be in addition to the Bank’s current Affordable Housing Program (AHP) grant process and is part of an agreement with the FHLBank regulator, the Federal Housing Finance Agency.“We are in the process of developing the framework for the use of these funds which will be deployed by the end of 2014,” explained the Bank in its Dec. 27 SEC filing. “This program will be in addition to our other community investment programs in 2012, 2013 and 2014.”

The Federal Home Loan Bank of Cincinnati last week announced a changing of the guard among top management as the Bank’s president and CEO will step down this summer to retire.David Hehman will step down effective June 1 after 35 years at the Bank, including nine years as its president and CEO. Hehman, 63, is credited with leading the FHLBank of Cincinnati through the 2008 financial crisis when banks of all sizes were forced to turn to the Cincinnati FHLBank for liquidity.The FHLBank’s board appointed Andrew Howell to replace Hehman. Howell joined the FHLBank of Cincinnati in 1989 and is currently its executive vice president and chief operating officer.

Despite the Federal Housing Finance Agency’s release of a long awaited study justifying its position against the writedown of underwater GSE mortgages, principal-reduction proponents, including House Democrats, appear poised to redouble their efforts to pressure the FHFA to see things their way.This week, the Finance Agency released its analysis of taxpayer losses to explain the FHFA’s policy decision to exclude principal forgiveness as a policy in favor of principal forbearance, the alternative that the GSEs currently apply to their underwater loans.As of June 30, 2011, Fannie Mae and Freddie Mac had nearly 3 million first-lien mortgages with outstanding balances in which the borrower owed more than the loan on the home was worth.