Institutional investors are creating a rental market out of real estate owned properties without a mortgage-backed security structure in place, though industry participants anticipate that a REO rental securitization market will eventually develop. Some $8.0 billion has been raised by institutional investors to purchase REOs and rent them, according to Oliver Chang, founder and managing director of Sylvan Road Capital, which itself expects to invest $1.0 billion in the market in the next two years ...

Potential violations to a servicing agreement Ocwen Financial signed in 2011 with the New York State Department of Financial Services have stalled Ocwen’s efforts to close its acquisition of Homeward Residential and servicing from Residential Capital. Benjamin Lawsky, superintendent of the DFS, said he would not approve Ocwen’s latest acquisitions until a monitor was established to oversee Ocwen’s compliance with the September 2011 agreement. This week, Ronald Faris, president and CEO of Ocwen ...

Originations of non-agency jumbo mortgages through three quarters in 2012 increased by 23.3 percent compared with the same period in 2011. While 12 non-agency jumbo mortgage-backed securities have been issued this year, jumbo originations are largely being held in portfolio by banks competing for high-quality borrowers. An estimated $148.0 billion in non-agency jumbos were originated through the first nine months of 2012, including an estimated $52.0 billion in ... [Includes one data chart]

To effect the types of changes required in order to bring private capital back to the housing finance market, a “collaborative effort” among market participants, regulators and policymakers will be necessary, noted the head of the Federal Housing Finance Agency. FHFA Acting Director Edward DeMarco told attendees of a Securities Industry and Financial Markets Association conference in New York City late this week that the existing secondary market infrastructure is “broken” and it will take agreement among market participants to decide the changes necessary in order to mend it better than ever. “As we think about building a new infrastructure for the secondary mortgage market, we know...

A federal appeals court has agreed to hear Credit Suisse’s appeal of a lower court ruling which gave the go-ahead for a group of investors in an IndyMac Bank MBS to proceed as a class in its suit against the lender. The U.S. Court of Appeals for the Second Circuit said last week it would hear Credit Suisse’s appeal of a Manhattan federal judge’s ruling in June which granted a December 2010 request for class certification to investors as they allege Credit Suisse misled them about the quality of toxic loans underlying a $642 million MBS offering in 2006. The plaintiffs claim...

New issuance of agency MBS jumped dramatically in November, hitting its highest monthly production volume in over three years, according to a new Inside MBS & ABS ranking and analysis. Fannie Mae, Freddie Mac and Ginnie Mae combined for a whopping $199.34 billion in new single-family MBS during November, a 46.4 percent jump from the previous month. It was the highest monthly agency MBS output since June 2009, when $232.13 billion of MBS were issued. The November surge may reflect...[Includes one data chart]

MBS industry groups generally support the Federal Housing Finance Agency’s plan to develop a single securitization platform and model pooling and servicing agreements for Fannie Mae and Freddie Mac. But they question whether a standardized system will for the non-agency MBS market or risk-sharing arrangements envisioned for the government-sponsored enterprises. The FHFA has been pushing the two GSEs to standardize their securitization operations in recent years, including uniform data delivery requirements, consistent servicing rules and, most recently, a new framework for seller representations and warranties that will go into effect in January. The agency wants...

Department of Housing and Urban Development Secretary Shaun Donovan said this week HUD is considering additional steps to improve the financial health of the FHA single-family program, including raising FICO score requirements and supporting legislation that would take the FHA loan limits back to pre-crisis levels. The HUD secretary found himself in the hot seat before the Senate Committee on Banking, Housing and Urban Development, explaining the results of a recent actuarial audit that placed the FHA’s Mutual Mortgage Insurance Fund capital reserve ratio below zero at negative 1.44 percent, representing a negative economic value of $16.3 billion. Sen. Richard Shelby, R-AL, ranking minority member of the committee, raised...

The Federal Housing Finance Agency has perhaps overreached in its efforts to develop a post-Fannie Mae and Freddie Mac secondary mortgage market infrastructure as industry groups say the agency’s proposal is “laudable” but rife with unintended consequences. In September, the FHFA in a white paper proposed a framework for both a common securitization platform and a model pooling and servicing agreement with a request for public comment. The proposed infrastructure has...

Banks that have successfully increased their market share of mortgage originations have leveraged existing customer relationships and focused on mortgage processing, according to industry analysts. Cost is an important factor for borrowers, but service and product offerings also play a role. “Lenders must align account-opening channel preferences to customer needs to increase loan applications and achieve their revenue growth and retention goals,” Craig Focardi, a senior research director at Corporate Executive Board TowerGroup, said during a recent webinar hosted by his firm. In the past year, significant gains in market share have been posted...