Declining interest rates forced mortgage bankers to lower the fair market value of their mortgage servicing rights during the second quarter, according to a new analysis of bank call-report data by Inside Mortgage Trends. Banks reported a total of $5.607 trillion of mortgage servicing for others as of the end of June, a 3.1 percent decline from the previous quarter. That represented about 81.8 percent of the total mortgage servicing outstanding that was tied to agency and non-agency ... [Includes one data chart]

The Federal Reserve’s decision to keep interest rates low until the U.S. economy creates a significant increase in employment will help banks continue to enjoy solid earnings from their mortgage banking activities, according to analysts at Credit Suisse. The Fed is increasing its already huge portfolio of agency mortgage-backed securities by $40 billion a month. Along with the $25 billion a month the central bank has been buying to replace principal paydown, the Fed’s total MBS acquisitions ...

The question whether the mortgage interest deduction is worth keeping elicited mixed reactions from economists and housing market experts during a recent discussion about how to bring private capital back into the mortgage market. Participants in a panel discussion hosted by the Progressive Policy Institute and the American Action Forum took up the issue after Republican presidential candidate Mitt Romney, the day before, suggested cutting the mortgage interest deduction as part of an overall plan to equalize tax ...

Single-family mortgage securitization by Fannie Mae and Freddie Mac increased sharply during the third quarter of 2012, according to a new Inside Mortgage Finance ranking and analysis. New production of mortgage-backed securities by the two government-sponsored enterprises rose 22.4 percent from the second quarter, driven by a hefty 19.4 percent increase in refinance business. Refinance loans accounted for 76.9 percent of GSE securitization during the period, and the dollar volume of refi loan sales rose 19.4 percent from the second quarter. Fannie posted...[Includes three data charts]

Gibbs & Bruns, the law firm representing non-agency MBS investors that reached a precedent-setting settlement with Bank of America, is now targeting Wells Fargo and Morgan Stanley. The law firm’s clients issued Wells and Morgan Stanley a notice of non-performance last week identifying covenants in pooling and servicing agreements that the servicers have allegedly failed to perform. “The holders’ notice alleges that each of these failures has materially affected the rights of the certificate holders and constitutes an ongoing event of default in the servicer’s performance under the relevant PSAs,” the law firm said. Bank of America received...

The Federal Reserve is launching its aggressive new campaign to boost economic growth by gobbling up the lion’s share of new agency MBS production in a stagnant market. The volume of outstanding single-family agency MBS grew by just $651 million during the second quarter of 2012, according to a new Inside MBS & ABS analysis. At $5.382 trillion, the agency MBS market at the end of June was down 0.5 percent from the same point in 2011. Because the non-agency MBS market is...[Includes two data charts]

The third and latest round of quantitative easing rolled out earlier this month by the Federal Reserve will sweeten MBS demand far above supply, but it will ultimately provide only a negligible boost to mortgage refinance activity, analysts say. The Federal Open Market Committee announced QE3 on Sept. 13, making a commitment to buy an additional $40 billion in agency MBS a month and saying that it would continue buying “if the outlook for the labor market does not improve substantially.” The New York Fed has been buying about $27.9 billion of agency MBS per month since October 2011 in an effort to reinvest principal payments from its MBS holdings back into the mortgage securities market. An analysis by Bank of America Merrill Lynch this week found...

A presidential task force created to investigate the pooling, sale and securitization of residential mortgages is now ready to pursue action against those whose business practices contributed to the financial crisis, according to New York Attorney General Eric Schneiderman. Certain financial institutions have contacted outside counsel after Schneiderman, chairman of the Residential MBS Working Group, told reporters the group is ready to take legal action “sooner rather than later.” A spokesman for the New York AG’s office declined to provide details but confirmed that there are ongoing investigations and that there would be upcoming announcements. “We are looking at conduct that led...

Researchers with the Federal Reserve Bank of New York have found additional evidence to support New York Fed President William Dudley’s call for an increase in streamlined refinances for current borrowers with agency mortgages. They suggest that further changes to the Home Affordable Refinance Program to prompt refis and prepayments are not a “zero sum game” between borrowers and agency MBS investors. In January, Dudley said obstacles have prevented...

Wells Fargo and Morgan Stanley last week received notices from non-agency mortgage-backed security investors represented by the law firm of Gibbs & Bruns, which helped negotiate the pending $8.5 billion non-agency MBS settlement with Bank of America. Industry analysts suggest that the notices of non-performance could prompt settlements from Wells and Morgan Stanley, though the circumstances differ from the BofA case. The notices identify covenants in pooling and servicing agreements that the servicers ...