Collateralized loan obligations and the securitization of esoteric ABS are gaining momentum in a market that is still missing one of the key ingredients of the boom years – non-agency residential mortgages – according to experts at the American Securitization Forum annual meeting this week. When Sara Bonesteel, managing director and head of alternative investments at Prudential Fixed Income, described the appeal of CLOs, she may as well have been outlining the antithesis of the current RMBS market. The CLO sector has fewer regulatory issues, relatively strong performance in the underlying asset and the...

Most of the non-mortgage securitization market seems to be approaching the more normal levels that were seen prior to the financial crisis, according to market participants, analysts and observers gathered for the annual meeting of the American Securitization Forum this week in Washington, DC. “We’ve come a pretty long way, if you think about 2008, pre-2008 and post-crisis,” said Bob Behal, principal with The Vanguard Group. He noted that there have been healthy pricing levels in auto loan and credit card ABS and more active student loan and container sectors, as well as some interesting niche products and...

A costly difference of interpretation between the Mortgage Guaranty Insurance Corp. and Freddie Mac over a pool insurance dispute has prompted the mortgage insurer to file suit against the government-sponsored enterprise and its regulator, the Federal Housing Finance Agency. Filed earlier this month in the U.S. District Court of Milwaukee, where the company is based, the legal dispute concerns differing readings of the “aggregate loss limit” for insurance policies MGIC provides on 11 pools of Freddie loans. The aggregate loss limit is about $535 million higher under Freddie’s...

Even as the Federal Housing Finance Agency deliberates writedowns of Fannie Mae and Freddie Mac mortgages, the agency has agreed to allow the government-sponsored enterprises to participate in a California program that applies principal reduction in modifying distressed loans. The FHFA has confirmed Fannie and Freddie’s participation in the California Housing Finance Agency’s Keep Your Home California Program, a $2 billion foreclosure prevention effort established under the U.S. Treasury’s Hardest Hit Fund. Earlier this month, state officials announced they are dropping the requirement from the...

Congress may be no closer to solving the problem of Fannie Mae and Freddie Mac than it was when the two government-sponsored enterprises were put in conservatorship in 2008, but many observers say the capabilities of the two GSEs should be preserved and improved. “Energy spent trying to get rid of Fannie Mae and Freddie Mac is a waste,” said Sean Dobson, the CEO of Amherst Securities Group, at the American Securitization Forum Annual Meeting this week in Washington. The GSEs still have sizable infrastructure for effective securitization, and “it would be a shame to take all of that and throw it away,” he...

One of the trickiest challenges presented to the Consumer Financial Protection Bureau as part of its project to harmonize the mortgage disclosures consumers receive will be the settlement disclosure, a top official at the CFPB indicated recently. The settlement disclosure “is where we’re in a bit of a difficult situation, because Congress, al-though they directed us to combine the Truth in Lending Act and Real Estate Settlement Procedures Act disclosures, did not amend the underlying statutes,” said Benjamin Olson, managing counsel in the office of regulations at the CFPB, during a webinar sponsored last...

Freddie Mac announced this week that investors in certain of its mortgage-backed securities would see an unexpected increase in prepayment speeds after the government-sponsored enterprise resolved “certain contractual matters” with one of its seller/servicers. Bank of America was the issuer of the $1.29 billion of affected MBS pools, which were issued between July 2009 and June 2011, according to an Inside Mortgage Finance analysis. Freddie Mac said the total amount to be repurchased is $330 million, which would represent a small fraction of the $8.1 billion in outstanding...(Includes one data chart)

Wholesale correspondent programs remained a major ingredient in mortgage originations during early 2012 despite the high-profile exit of two of the sector’s top players, according to a new ranking and analysis by Inside Mortgage Finance. Correspondents accounted for 30.9 percent of new mortgage originations during the first quarter of this year, generating an estimated $119.0 billion in new production. That was down 9.2 percent from the fourth quarter of 2011, but it was actually up from the first three months of last year. It was, how-ever, the lowest share of overall...(Includes four data charts)

With banks under increased pressure to manage their exposure to risks related to mortgage-backed securities and whole loans, Moody’s Analytics has updated its risk and capital allocation tool so clients can run their mortgage portfolio under various stressed scenarios and get a better handle on potential losses. The latest iteration of the Mortgage Portfolio Analyzer features an enhanced framework for modeling stressed macroeconomic scenarios, defaults, prepayments and severities. The tool that the firm has put together can “simultaneously benefit institutions that have portfolios of not...

Mortgage buybacks may have declined significantly during the first quarter of 2012, but a new Inside Mortgage Trends analysis shows that the volume of unresolved repurchase demands continued to set new record highs. Bank call-report data show that financial institutions reported a total of $4.12 billion in mortgage repurchases and indemnifications during the first quarter of this year. That was down 23.0 percent from the fourth quarter of 2011 and the lowest quarterly volume since the beginning of last year. It is particularly encouraging since the first-quarter data...(Includes two data charts)