Statutes of limitation will soon force undecided non-agency mortgage-backed security investors into action, according to industry attorneys. Josh Silverman, counsel at Pomerantz Haudek Grossman & Gross, noted that many investors will lose buyback claims if they do not act shortly. In May, Option One Mortgage was the latest non-agency MBS issuer to be hit with repurchase requests. A group of investor clients organized by Talcott Franklin claimed that Option One improperly...

Risk-retention rules proposed by federal regulators could limit a popular form of non-prime risk retention, perhaps unintentionally. The treatment of excess spread on non-agency jumbo mortgage-backed securities is also a concern. Tom Deutsch, executive director of the American Securitization Forum, warned that excess spread retained by a deal’s sponsor would not count as risk retention under the qualified residential mortgage proposed rule. In securitizations of non-prime loans, the excess spread typically would be treated as the...

The future size and form of the non-agency market continue to be debated even as a number of market participants take significant steps toward reviving issuance of non-agency mortgage-backed securities. One thing is certain: Redwood Trust is no longer alone in its efforts to revive the non-agency market.Goldman Sachs has reportedly acquired more than $1.0 billion in jumbo mortgages via the conduit it established last year. The investment bank is reportedly paying a premium for the loans and plans to issue a non-agency MBS this year. This week, Shellpoint Partners, a specialty finance company, acquired...

Mortgage investors are calling on federal policymakers to bring more transparency into the securitization process along with a host of other best practices in order to attract sorely needed private capital back into the mortgage marketplace. “Today, mortgage investors face enormous challenges in the capital markets due to opacity, an asymmetry of information, poor underwriting, conflicts-of-interests among key parties in the securitization process, as well as the inability to enforce...

A revival in the non-agency MBS market may still be years away because of competing and seemingly contradictory government objectives for housing finance, according to a new analysis from Standard & Poor’s. The government is doing many things all at once to resuscitate the housing market and hasten economic recovery, but those efforts may actually place recovery on a slow track, said Erkan Erturk, an S&P research analyst and author of the report. Erturk concludes that the housing downturn drove the securitization market away from...

Fannie Mae this week nearly doubled the total output of the non-agency MBS market in 2011 with a new REMIC backed by FHA home-equity conversion mortgages. The government-sponsored enterprise provided a guaranty wrap on Mortgage Equity Conversion Asset Trust 2011-1, a $9.26 billion transaction backed by HECM loans originated and serviced by Bank of America. Through the first four months of the year, total non-agency MBS production came to just $9.98 billion – most of which were re-securitizations. Fannie said it intends to...

New issuance in the agency MBS market declined again in May, falling to the lowest monthly production level since the depths of the global liquidity crisis over two years ago. According to a new Inside MBS & ABS analysis and ranking, Fannie Mae, Freddie Mac and Gin-nie Mae issued a combined total of $71.05 billion of new single-family MBS last month, a decline of 7.7 percent from April’s production. May marked the fifth consecutive decline in monthly agency MBS volume since last year’s refinance boom peaked in December. It was also the lowest monthly production level since... [Includes one data chart]

The Financial Industry Regulatory Authority last week fined Credit Suisse Securities and Merrill Lynch for alleged misrepresentation of delinquency data and inadequate supervision of subprime residential MBS that ended up misleading investors about the performance of pool assets. “FINRA found that in 2006, Credit Suisse misrepresented the historical delinquency rates for 21 subprime RMBS it underwrote and sold,” the independent regulator said in a statement. “Although Credit Suisse knew...

The chairman of the House Budget Committee said this week that a full and transparent accounting of the cost to taxpayers of the federal takeover of Fannie Mae and Freddie Mac is the first, best step to determine how to wind down the two government-sponsored enterprises.During a hearing on taxpayer exposure in the housing markets relating to Fannie, Freddie and the FHA, Rep. Paul Ryan, R-WI, took aim at the White House’s plan for a post-GSE mortgage market. “While the Treasury Department has put forward a ‘framework for reform,’ the Obama administration still...

The Department of Justice has stepped up its fair lending enforcement initiatives and more cases are anticipated in the future, but with them comes a dilemma, according to industry sources. The DOJ currently has five lawsuits pending against lenders and several investigations, a DOJ insider said. The official said cases involve redlining, wholesale pricing, product steering and retail pricing. Wholesale issues and broker fee cases are likely to continue popping up, the source said. “The other big development for 2011 is going to be the...