Federal regulators are almost finished writing a new risk-retention rule including a definition for “qualified residential mortgages,” according to Federal Reserve Governor Daniel Tarullo. The agencies appear to be considering looser standards for QRMs than those initially proposed in 2011, perhaps using the same “qualified mortgage” definition as in the recently finalized ability-to-repay rule. Tarullo said federal regulators had completed most of the risk-retention rulewriting and were waiting for the Consumer Financial Protection Bureau to finalize QM and ability-to-repay requirements, which the CFPB completed in January. “It really was having...

The state of Oregon this week inked a deal with the Treasury Department to use Troubled Asset Relief Program funds to help refinance underwater non-agency mortgages in what’s believed to be the first such initiative under the Obama administration’s Hardest Hit Fund program. The program, which will be tested in Multnomah County, OR, will roughly parallel the Home Affordable Refinance Program for underwater Fannie Mae and Freddie Mac mortgages. It’s also similar to a proposal developed by Sen. Jeff Merkley, D-OR, that would create a new federal agency to refinance underwater non-agency mortgages using funds generated through a new bond program. Many observers see...

Securitization of nonperforming loans has increased significantly since 2009, with ever greater issuance expected this year. However, industry participants warn that requirements in the Securities and Exchange Commission’s proposed revision Reg AB will effectively extinguish the market for NPL securitization. Ryan Stark, a director at Deutsche Bank Securities, noted that since the collapse of the non-agency market, issuance involving nonperforming loans has far outpaced issuance of new non-agency MBS. He said about 30 nonperforming loan deals were completed from 2010 through the end of 2012, most without ratings. Issuance of NPL securities started...

JPMorgan Chase is working on what’s been described by some market participants as a “test” jumbo MBS deal, but isn’t quite ready to bring the bond to auction. According to traders and jumbo executives who are familiar with JPM’s activities, the security was set to come out earlier this week, but has been delayed. The bank, on the other hand, isn’t giving much guidance on the situation. It’s also possible that JPM might keep...

A record number of investors are participating in the vehicle ABS sector and competition is increasing among issuers, prompting issuance and pricing close to pre-crisis levels. However, there are concerns that the strong performance by recent vintages of vehicle ABS will not last as underwriting standards loosen. Robert McDonald, a vice president at Goldman Sachs, said a vehicle ABS with 40 investors was previously considered to be a broadly distributed transaction. He said recent deals have had 60 investors. “We’re at an all-time high in terms of the number of unique investors for a transaction,” McDonald said at the American Securitization Forum’s ASF 2013 conference. Some $61.00 billion in ABS backed...

Moody’s Investor Services ranked as the top rating service in non-mortgage ABS ratings during 2012, according to a new Inside MBS & ABS ranking. DBRS was the leader in rating non-agency MBS transactions last year. In a market that grew by 15.9 percent in 2012, Moody’s increased the volume of ABS deals it rated by just 6.9 percent over its activity back in 2011. Still, the company edged past Fitch Ratings with a 64.9 percent market share even though it mostly sat out the booming credit card sector. Moody’s had its highest penetration rates in business loan ABS and was well represented in student loan and vehicle finance securitizations. Fitch had...[Includes two data charts]

Three of the nation’s major credit rating agencies are the subject of a mortgage securities-related probe by New York’s top prosecutor, following the issuance of a subpoena and other requests for information on certain rated pre-financial crisis deals. New York Attorney General Eric Schneiderman quietly launched his own investigation last week into allegations that Standard & Poor’s, Moody’s Investors Service and Fitch Ratings issued favorable ratings to certain MBS leading up to the financial crisis to drum up more business. Schneiderman issued...

Add this to the mortgage banker worry-list: the FHFA is once again toying with the idea of changing the minimum servicing fee on Fannie Mae and Freddie Mac loans.

It was thought that after the financial shellacking it took by purchasing GMAC Mortgage, that hedge fund giant Cerberus might avoid the residential finance industry entirely. But perish the thought. Cerberus this month filed with the Securities and Exchange Commission for an initial public offering for Cerberus Mortgage Capital, a real estate investment trust that hopes to raise at least $150 million. Its goal: to use the money to buy a “broad range” of residential-related assets including ...

Real estate investment trusts focused on investing in agency mortgage-backed securities were called out last week by Federal Reserve Governor Jeremy Stein. Industry participants acknowledge the Fed’s concerns and suggest that agency REIT investment strategies will naturally shift as yields on the products have declined, among other factors. Stein warned of “overheating” markets and pointed to agency-focused mortgage REITs. “When I say that the market for a particular class of credit instruments ...