Despite a rare new issue backed by current production jumbo loans, the non-agency MBS market hit a record low in the third quarter of 2011. Just $1.86 billion of new non-agency MBS came to market in the third quarter, a significantly lower number than the previous low reached at the height of the financial crisis in the third quarter of 2008, when $2.15 billion of securities were issued. There was a huge fall-off in resecuritization activity. Just $301 million of these deals were issued in the third quarter, less than a tenth the volume in the previous three-month period. In addition to the...(Includes three data charts)

Federal regulators ran into such a buzz saw of opposition on their proposed implementation of Dodd-Frank Act risk-retention rules for securitization that they may start over again with a new proposed rule, according to industry experts at the ABS East conference sponsored by Information Management Network. The market would be better off if regulators abandoned the risk-retention rule altogether, said Steven Kudenholdt, co-chair of capital markets practice at SNR Denton. He doubts that regulators can get it right, and the proposal has been a “distraction” for a market that’s still in distress. Throwing in...

The status quo in the MBS market – suffocating domination by Fannie Mae, Freddie Mac and Ginnie Mae – isn’t likely to change for the next five years, or longer, according to industry experts at this week’s ABS East conference in Miami sponsored by Information Management Network. Although a number of industry groups have offered proposals similar to the third option outlined by the Treasury Department in its reform white paper – a more competitive market of issuers backed by private capital that issue MBS with backstop guarantees from the government – those proposals are far from uniform, said Laurie Goodman, senior managing director at...

Not much has changed since the 2010 edition of the ABS East Conference, and the outlook for 2012 is hardly encouraging, but conference sponsor Information Management Network drew about 30 percent more participants to its annual industry gathering in Miami Beach this week. As one attendee put it, everybody at the conference was down on the market, yet nobody is buying and nobody is selling. Regulatory uncertainty continues to stymie securitization activity. The federal government still dominates the U.S. mortgage market, with little change in sight. Tepid economic growth is generating lackluster demand for...

Last week, GMAC Mortgage announced implementation of the Responsible Homeowner Reward Program to provide monetary incentives to underwater VA loan borrowers who continue making payments on their loans. The RHRP was designed by the Loan Value Group as a way to address negative equity without necessitating additional documents or new underwriting. Homeowners build up their reward each month for a fixed period of time, so long as they are current. The size of the reward is consistent with the negative equity and severity of the loan. If the borrowers meet all of the payment milestones on time, GMAC Mortgage will...

Flood insurance reform legislation in the Senate would result in higher net income to the National Flood Insurance Program and more federal revenues than the House version, according to a cost estimate by the Congressional Budget Office. The Senate Committee on Banking, Housing and Urban Affairs approved the bill, the Flood Insurance Reform and Modernization Act, on Sept. 8 by unanimous voice vote. The bill is awaiting Senate floor action. The House passed its bill, H.R. 1309, the Flood Insurance Reform Act of 2011, before the August recess by a vote of 406-22. Like its House counterpart, the Senate bill would reauthorize...

MetLife announced last week that it wants to sell its mortgage banking business, but regulatory and legal issues that are partly driving the firm’s retreat may also make it hard to find a buyer. Nowadays, starting from scratch may make more sense than buying someone else’s problems. MetLife explained in a press release that the decision was prompted by an “uncertain marketplace and regulatory environment [that requires] a tremendous amount of resources – both in terms of people and capital – to effectively compete in and profitably grow the forward mortgage business. Doing so would divert these resources away from...

Long-term investor involvement is the industry’s best bet and “only realistic alternative” to boost housing demand and allow government housing agencies to meaningfully discharge their backlog of real estate owned properties, according to a report by Amherst Securities Group. However, Amherst notes that private investors will require more financing options and better access to bulk portfolios of homes, perhaps through a government program, in order to absorb and convert dormant distressed properties into active, income-producing rentals. “The massive housing market overhang is a clear danger to the U.S. economy – it creates...

The U.S. Supreme Court recently agreed to review a dispute over closing fees in a move that may resolve a potentially entrenched circuit court conflict over the scope of the Real Estate Settlement Practices Act prohibition against unearned fees. At issue is RESPA Section 8(b), which provides that “[n]o person shall give and no person shall accept any portion, split or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.” As the U.S. government...

Mortgage servicing shops should soon expect extra-special scrutiny from the Consumer Financial Protection Bureau and perhaps even a visit by bureau examiners as part of a servicer supervision strategy announced late last week. “Mortgage servicing has a huge impact on consumers and is a priority for the CFPB,” said Raj Date, special advisor to the Secretary of the Treasury for the CFPB. “The mortgage servicing market has been bogged down by widespread reports of pervasive and profound consumer protection problems. We are going to take a close and measured look at whether servicers are following the law.” The CFPB has indicated that...