Firms participating in the Public-Private Investment Program with a focus on non-agency mortgage-backed securities all took losses in the fourth quarter of 2011 compared with the previous quarter, according to an analysis by Inside Nonconforming Markets. The Oaktree PPIP Fund – which only invests in commercial MBS – was the only public-private investment fund to increase its net internal rate of return since inception in the fourth quarter of 2011, Treasury Department data show. The Treasury cautioned that it is ... [Includes one data chart]

The non-agency portion of the Home Affordable Modification Program is set for significant changes, according to an announcement last week by the Treasury Department. Investors will receive greater incentives for principal reduction mods, eligibility requirements for HAMP will be loosened and the program will be extended through the end of 2013. “Implications for agency MBS investors seem limited but are very meaningful for non-agency investors,” said analysts at Barclays Capital. Incentive payments to loan owners will triple for principal reduction HAMP mods. Previously, the payments ranged from six cents-on-the-dollar to 18 cents-on-the-dollar ...

Investors have expressed a keen interest in programs that would facilitate bulk sales of real estate-owned properties. However, few are optimistic that such a program will come to fruition. Based on cost figures provided by Carrington Holding Company, Vincent Fiorillo, a portfolio manager at DoubleLine Capital, suggested investors could easily earn returns of 9.0 percent by renting REO properties. “This is a very attractive alternative investment opportunity,” Fiorillo said at the American Securitization Forum’s ASF 2012 conference last week in Las Vegas ...

A new proposal by the Obama administration to refinance non-agency mortgages with negative equity could have a major impact on the non-agency market, though approval by Congress appears unlikely. “Borrowers with standard non-GSE loans will have access to refinancing through a new program run through the FHA,” the Obama administration said in a fact sheet released this week. “For responsible borrowers, there will be no more barriers and no more excuses.” The program would require that borrowers ...

The Department of Justice announced last week that it will increase the number of attorneys, analysts, agents and investigators looking into unlawful activities regarding mortgage-backed securities. The emphasis on MBS was directed by President Obama and is part of a new working group involving the DOJ, federal regulators and a number of state attorneys general. The DOJ, Department of Housing and Urban Development, Securities and Exchange Commission and state attorneys general led by New York AG Eric Schneiderman formed the Residential Mortgage-Backed Securities Working Group under the existing Financial Fraud Enforcement Task Force ...

A settlement involving major servicers and state attorneys general could be close, as state AGs have until Feb. 6 to agree to a potential $25 billion settlement. Negotiations on the settlement have dragged on for 15 months and were previously slated to end Feb. 3. Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo would reportedly be included in the settlement. Some $17 billion in penalties paid by the banks would go toward principal reductions, $5 billion would go toward a reserve account that would ... [Includes three briefs]

The mortgage industry is skeptical about President Obama’s proposal for low-cost, non-agency loan refinancing program, administered by the FHA for current, underwater borrowers. Some industry participants called the plan nothing but smoke and mirrors that would likely create unrealistic expectations. But deceptive or not, the proposal first announced by the president in his State of the Union address promises to be different from the earlier, huge unsuccessful FHA experiments in foreclosure prevention – Hope for Homeowners and FHA Short Refinance programs. The proposed refi plan is a combination of ...

With the recent issuance of streamlined regulations on lender indemnification, mortgagees participating in the FHA Lender Insurance program may increasingly find themselves the targets of HUD enforcement actions. Industry compliance experts anticipate an increase in agency audits and monitoring reviews because of the Department of Housing and Urban Development’s tightening of its indemnification rules. This could raise lenders’ compliance costs as well as legal costs if they find themselves the subject of an enforcement action, experts warned. “At an unprecedented time of change in the mortgage industry ...

The Department of Housing and Urban Development has announced a new regulation prohibiting lenders from using sexual orientation or gender identity as a basis for determining borrower eligibility for FHA-insured mortgage financing. The regulation specifically extends federal anti-discrimination protections to lesbians, gays, bisexuals, transgender persons and their families when applying for HUD-assisted or HUD-financed rental housing or an FHA-insured mortgage loan. The regulations will become effective 30 days after their publication in the Federal Register. HUD Secretary Shaun Donovan said the policy will ...

The National Association of Realtors recently asked the Department of Housing and Urban Development to allow investors to participate in the FHA’s property rehabilitation program. The FHA’s 203(k) Rehabilitation Mortgage Insurance Program allows homebuyers to take out a mortgage to purchase a house, including the cost of its rehabilitation. The program also allows the current owners to finance the rehabilitation of their own homes. Currently, investors and cooperative units are barred from using the 203(k) programs. Individual condominium units may be insured if ...