Issuance of non-agency mortgage-backed securities supported by newly originated mortgages will remain muted in 2012, according to industry analysts. A number of factors have combined to limit non-agency MBS issuance, including economic issues, regulatory issues and uncertainty regarding reform of the government-sponsored enterprises. Only two non-agency securities backed by new loans were issued last year – a total of $665.2 million in jumbo MBS from Redwood Trust. “The trickle of deals should continue into 2012,” according to analysts ...

MBS issued or guaranteed by the U.S. government will continue to maintain a zero-risk weighting under the Federal Reserve’s proposed supervisory rules for large bank holding companies, but that won’t necessarily include Fannie Mae or Freddie Mac MBS. The Fed proposal includes a wide range of issues such as capital, liquidity, credit exposure, stress testing, risk management and early remediation. It applies to bank holding companies with assets of $50 billion or more and non-bank institutions that could pose systemic risk to the financial system. The proposal reflects substantially all of the...

Gibbs & Brun, the Houston-based law firm that spearheaded a massive investor lawsuit against Bank of America, has drawn a bead on Wells Fargo. The company announced this week that its non-agency MBS investor clients have asked two trustees – U.S. Bank and HSBC – to investigate whether ineligible mortgages were pooled in some $19 billion of Alt A and jumbo MBS issued by Wells Fargo between 2005 and 2007. Some 48 securitization trusts are covered by the action, and Gibbs & Brun said it represented investors who collectively held over a quarter of the voting rights in those trusts. “Clients...

The mortgage securitization and servicing industries say proposed changes to the servicing compensation model for Fannie Mae and Freddie Mac securities would have a negative effect on liquidity in the to-be-announced market, hurt investors in agency MBS and increase the cost of mortgage credit for borrowers. The Federal Housing Finance Agency released a discussion paper last fall that outlined two potential new approaches to servicing compensation: a fee-for-service approach favored by the two government-sponsored enterprises, and a reserve account approach developed by lender...

The Federal Housing Finance Agency’s announcement last week that Fannie Mae and Freddie Mac will increase their guarantee fees on new single-family MBS is likely just the first step in a progression of fee hikes over the next two years, MBS analysts predict. The across-the-board 10 basis point increase in guarantee fees for single-family MBS will take effect April 1, according to announcements by the two government-sponsored enterprises this week. The fee hike implements provisions in the Temporary Payroll Tax Cut Continuation Act of 2011, H.R. 3765, passed by Congress and signed by...

The securitization market produced $1.182 trillion of new residential MBS in 2011, a sharp 16.6 percent decline from the year before, according to a new Inside MBS & ABS analysis. Despite a strong finish in the fourth quarter, when MBS production rose 33.8 percent from the previous three-month period, mortgage securitization activity fell for the second year in a row and reached the lowest annual output in over a decade. The non-mortgage ABS market was relatively stronger. Total issuance for the year came to $126.8 billion, a 15.7 percent increase over 2010. Most of the...(Includes one data chart)

The MGIC Investment Corp. has announced a $200 million capital contribution to its principal mortgage insurance provider, Mortgage Guaranty Insurance Corp., to enable it to continue writing new business and meet statutory capital requirements. The cash infusion was made as Fannie Mae’s approval of the MGIC Indemnity Corp. (MIC) as an eligible mortgage insurer expired on Dec. 31. A regulatory waiver of capital requirements issued by the Wisconsin Office of the Commissioner of Insurance (OCI) two years ago also lapsed on the same date. The MIC and the regulatory waivers are part of a strategy to...

Bank of America reached a landmark $335 million agreement with the Department of Justice to settle allegations that Countrywide systematically discriminated against African-American and Hispanic borrowers during the housing boom, manipulating them into taking subprime loans when they were qualified for prime financing. It’s the largest settlement ever for a residential fair lending claim. The case also marks the first time the Justice Department has alleged and obtained relief for borrowers who were steered into mortgages on the basis of their race or national origin, a practice that placed...

There’s a very good chance the final disposition of securities fraud charges leveled by the Securities and Exchange Commission against six former Fannie Mae and Freddie Mac top executives could be determined at trial rather than by a pre-trial settlement, thanks in part to a recent adverse SEC court decision, according to one legal expert. On Dec. 16, the SEC filed suit in the U.S. District Court for the Southern District of New York, alleging that former Fannie and Freddie executives made material misstatements to the public, investors and the media about the two government-sponsored...

Fannie Mae, Freddie Mac and their federal regulator do not appear to have made much headway in convincing the mortgage industry to support a switch to a fee-for-service approach to servicing government-sponsored enterprise single-family mortgages. The vast majority of comments filed with the Federal Housing Finance Agency in response to its white paper on servicing compensation were from small and mid-sized lenders. The FHFA outlined two possible approaches, including its plan to pay servicers a flat fee of as little as $10 a month to service performing loans, with additional payments for...