The booming market for rental housing and efforts to resolve the massive foreclosure inventories of Fannie Mae, Freddie Mac and the FHA has sparked investor interest in single-family rental securitization, according to credit rating agencies. Credit rating agencies have begun looking at real estate owned conversions to rental properties and the potential for securitizing cash flows from REO-to-rent securitizations. Based on initial assessments, the rating services see a promising, emerging asset class. REO-to-rent securitizations could take a number of forms, any of which can offer advantages to...

A handful of critical lawsuits stemming from the mortgage market collapse may yield meaningful legal precedents for the securitization markets as 2012 unfolds, according to a legal observer. “We’re finally getting to the point where there can be meaningful precedent established,” said Isaac Gradman, a managing partner at IMG Enterprises. “For the last three or four years, there has been a wide gap in the claims banks have made and the claims monolines and investors have made as to the merits of these suits.” What comes from the courts will become the standards by which the new MBS market...

Manhattan District Attorney Cyrus Vance has charged Abacus Federal Savings Bank and a group of its former employees in a massive mortgage fraud scheme for allegedly originating and selling fraudulent mortgage loans to Fannie Mae over a five-year period. The Manhattan-based bank, which provides loans and other banking services in New York City’s Chinatown, as well as 19 former employees, were charged with residential mortgage fraud, securities fraud, grand larceny, conspiracy and falsifying business records. Eleven of the bank’s employees were indicted in state court two weeks ago, while eight waived indictment and admitted guilt, according to the DA’s 184-page indictment.

Agency MBS issuance rebounded from a sluggish April to yield $125.4 billion in new production last month, according to a new Inside MBS & ABS ranking and analysis. May issuance was up 14.8 percent from the previous month as 2012 continued to run well ahead of the pace set last year. A total of $619.4 billion of agency single-family MBS were issued during the first five months of the year, an increase of 26.9 percent over the same period in 2011. Production last month was a solid rebound from April’s sluggish $109.2 billion in total agency MBS issuance, but it was well short of...(Includes two data charts)

Non-agency mortgage-backed security investors are hoping to influence the implementation of the recent $25 billion foreclosure settlement and ward off similar agreements in the future. They raised concerns this week at a hearing before the House Financial Services Committee’s Subcommittee on Capital Markets and Government Sponsored Enterprises. “As it stands, it will damage residential MBS markets further,” said Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, on behalf of the Association of Mortgage Investors. “By adding yet another risk premium to government intervention, it will further...

The Obama administration is on the same page as Fannie Mae and Freddie Mac’s regulator in its desire to shift some of the mortgage credit exposure the government-sponsored enterprises hold to private investors. But exactly how to develop some sort of GSE risk-sharing program continues to bedevil policymakers, a Treasury Department official noted last week. Michael Stegman, a special advisor to Treasury Secretary Timothy Geithner, explained in a speech to real estate professionals that the Treasury is “actively engaged in helping to make this [GSE risk sharing] initiative work” but the...

A federal judge in Los Angeles has dismissed a number of claims in an American International Group lawsuit against Bank of America over mortgage securities issued by Countrywide Financial, although AIG has promised to continue its legal efforts to recoup more than $10 billion in MBS losses. U.S. District Judge Mariana Pfaelzer of the Central District of California in a new ruling dismissed AIG’s federal securities-law claims because they were filed too late – more than three years after the MBS were first sold. AIG filed suit against BofA as Countrywide’s owner and Merrill Lynch in New York state court...

The settlement baked into the Residential Capital bankruptcy agreement is facing new challenges, including one from Warren Buffet’s Berkshire Hathaway and another from unsecured creditors. When ResCap announced its bankruptcy last month, it did so with a plan to sell its mortgage origination platform and servicing rights to Nationstar Mortgage, a division of Fortress Investment Group, for $4 billion and its portfolio loans to its parent company Ally Financial. Part of the deal is a release of legal liability for Ally, which will pass along some of its lingering obligations – like follow through on the...

In an effort to standardize its commercial mortgage-backed security rating criteria, Standard & Poor’s plans to establish a single, all-around framework for rating U.S. and Canadian CMBS transactions. The credit rating agency is seeking comment on proposed criteria for structuring a new CMBS rating framework, which would be used to evaluate stand-alone, large loan and conduit/fusion CMBS transactions. Based on a representative sample of CMBS deals, a modest, limited impact on ratings may be expected on 25 percent of rated CMBS tranches, S&P said. The proposed criteria generally assume a...

More than 1,800 comment letters were apparently not enough. The Consumer Financial Protection Bureau reopened the comment period last week on the pending ability-to-repay rule, with an emphasis on data relating to debt-to-income ratios. The rule will define “qualified mortgages” and the Dodd-Frank Act mandates that it be finalized by January 21, 2013. Data on agency mortgages helped prompt the request for comments, and the CFPB said it is hoping for similar data on mortgages in non-agency mortgage-backed securities ...