Issuers of ABS backed by vehicle loans urged federal regulators to adopt a pool-level approach to determine new risk-retention requirements rather than the all-or-nothing standard proposed earlier this year that featured a narrowly drawn definition of “qualified auto loans. ”Like the more widely discussed provisions on non-agency MBS securitization, the interagency proposed rule carved out an exemption from the 5 percent risk-retention requirement for auto ABS that are backed exclusively by qualified auto loans. But issuer members of the American Securitization Forum said the proposed definition of qualified auto loans features...

Major MBS issuers are concerned about the potential harm evolving risk-retention regulations could have on securitization structures, regardless of which structure issuers decide to use. In response to the interagency proposed rule on credit risk retention, Citigroup said the public interest is not served by requiring securitizers to hold positions that are designed to take losses. “For example, all deal parties, the rating agencies and the investors are fully aware that the lowest tranche, sometimes referred to as a ‘first loss’ tranche, may take losses and no representation is made that such tranche is either investment grade or will receive...

Officials testifying before a Senate Banking, Housing and Urban Affairs Committee hearing this week came out in strong opposition to eliminating a government guarantee in the MBS market of the future, claiming that such measures would have a significant impact on borrowers’ ability to obtain plain vanilla 30-year fixed-rate mortgages. “Many large investors utilize the MBS market to execute trades driven by macroeconomic views and would not utilize a market which combines credit risk with interest rate risk,” said Andrew Davidson, president of Andrew Davidson & Co., an analytics and consulting firm. “With a smaller investor base, liquidity would be...

Production of agency MBS in July slipped to its lowest monthly level since early 2009, according to a new analysis and ranking by Inside MBS & ABS. Fannie Mae, Freddie Mac and Ginnie Mae issued a total of just $70.34 billion of single-family MBS during July, down 3.4 percent from the previous month. It was the lowest one-month production level since January 2009 and left year-to-date issuance down 4.3 percent from the first seven months of 2010. Ginnie production was actually up slightly from June levels, but both Fannie and Freddie posted significant slowdowns. Freddie issuance dropped 15.5 percent from the previous month and accounted for [Includes one data chart]

Wells Fargo and Bank of America continued to pull ahead of the field, adding Ginnie Mae servicing to their portfolios faster than the overall market grew during the second quarter of 2011. A new Inside Mortgage Finance analysis found the two companies holding 54.9 percent of Ginnie servicing outstanding at the end of June. Third-place JPMorgan Chase trailed overall growth in the market, while CitiMortgage and PNC Bank actually [includes one data chart]

Faced with the daunting task of identifying $1.5 trillion in budget savings, lawmakers on Capitol Hill are likely to take a close look at sacred cows like the home mortgage interest tax deduction. The mortgage interest deduction is projected to cost the U.S. just shy of $100 billion this year, does little to incentivize buying homes and is in need of reform, according to experts on a panel sponsored by the Urban Institute and Brookings Institution. “The mortgage interest reduction is one of the very, very biggest and certainly the most ...

While many commenters support the proposed exemption for the government-sponsored enterprises from new risk-retention rules in the short-term, opinions vary as to just how long Fannie Mae and Freddie Mac should enjoy such an exemption and its long-term impact on private securitizations. Federal regulators earlier this year proposed a rule which would require issuers of mortgage-backed securities to hold a minimum 5 percent of the credit risk of the assets underlying their securities unless the deal is backed by “qualified residential mortgages.” The proposed rule would exempt ...

A number of distressed mortgage insurance companies with special covenants with state regulators and the government-sponsored enterprises are in danger of losing their ability to write new insurance as continued losses prevent them from meeting financial eligibility requirements. With credit trends further weakening in the second quarter, certain mortgage insurers, including Mortgage Guaranty Insurance Corp. and PMI Mortgage Insurance Co., could slip below minimum re-serve and surplus requirements, observers say. Already on capital-requirement waivers, the MIs could be ordered to stop ...

Community bankers are lobbying for an exemption from national mortgage servicing standards that are evolving from federal rule-makers and secondary-market investors, arguing that they could drive smaller companies out of the servicing business. Jack Hopkins, CEO of CorTrust Bank in Sioux Falls, SD, urged the Senate Banking, Housing and Urban Affairs Committee this week to exempt small banks from new guidelines being drafted by banking and consumer protection regulators. Representing the Independent Community Bankers of America, Hopkins said the increased attention on mortgage servicing is raising ...

Four of the top five mortgage servicers continued to gradually pare down their portfolios during the second quarter of 2011, while Wells Fargo inched further toward the top of the industry, according to a new ranking and analysis by Inside Mortgage Finance. Absent any blockbuster mergers or servicing acquisitions over the past few years, the major trend in the servicing business has been the winding down of distressed subprime and Alt A portfolios. Bank of America, still the largest servicer in the industry, has seen its portfolio shrink steadily since ... [includes one data chart]