Bank of America won a favorable ruling this week on its proposed $8.5 billion settlement with a group of non-agency mortgage-backed securities investors. With the settlement likely to be decided in state court, analysts suggest that the deal will serve as a model for other non-agency MBS disputes. Baupost Group, a distressed debt fund that has challenged the settlement under the name “Walnut Place,” succeeded in October in having the settlement moved to federal court. However, the Second Circuit Court of Appeals determined this week that the settlement should be overseen by the Manhattan State Supreme Court ...

With the economics of non-agency securitization uncertain, Redwood Trust announced this week that it is considering bulk sales of newly originated non-agency jumbo loans in lieu of securitization. The real estate investment trust said it plans to issue four to six mortgage-backed securities this year – including the one completed in January – depending on whether the REIT sells a portion of its whole loans on a bulk basis. The business decision to either securitize or sell whole loans will be based on balancing ...

Fannie Mae and Freddie Mac could be used to help establish a functioning non-agency market, according to a strategic plan released last week by the Federal Housing Finance Agency. The conservator of the government-sponsored enterprises said it is working on various initiatives to gradually reduce the GSEs’ roles in housing finance. “The strategic goals and performance objectives set forth here provide an outline for the next chapter of the story, one that focuses in earnest on building a secondary mortgage market infrastructure that will live beyond the enterprises,” said Edward DeMarco, acting director of the FHFA, in testimony this week before the Senate Committee on Banking, Housing, and Urban Affairs ...

The largest private-owned nonbank mortgage company is trying to launch an initial public offering for an affiliated business that will use the capital to amass an investment portfolio in non-agency jumbo mortgages. Provident Mortgage Capital Associates was created by Provident Funding Associates, a privately held mortgage banker that ranked 12th in loan originations in 2011, the second largest nonbank lender in the industry. While PFA will remain privately held, it will manage operations at the publicly traded PMCA and ...

At least five firms revealed recently that their non-agency mortgage-backed security activity is under investigation by the Securities and Exchange Commission and/or the Department of Justice. The firms are Ally Financial, Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo. The companies revealed little about the topic of the investigations, though some are related to mortgage securitization and disclosures while others relate to potential origination or underwriting fraud ... [Includes four briefs]

State housing finance agencies are returning to Ginnie Mae as investors’ appetite for state mortgage revenue bonds continue to wane and the government-sponsored enterprises are no longer major purchasers. With funding severely constrained, HFAs have turned increasingly to FHA-insured mortgage loans and Ginnie Mae securitization to finance their long-term, fixed-rate mortgage revenue bonds. The MRBs enable the state agencies to continue to offer mortgage products at affordable rates to lower-income and first-time homebuyers. President Obama’s FY 2013 budget noted that, among the new issuers, numerous HFAs have gone ...

Ginnie Mae will publish, in advance, the CUSIP and pool information for multiple issuer pools (MIP) on its website for the current month, plus the upcoming three months of issuance. The information will be published by pool term, pool type and security interest rate. This enhancement applies to all securities with an April 1, 2012, issue date and thereafter. According to Ginnie Mae, publishing the CUSIP and pool numbers will improve issuers’ ability to manage their loan pipelines and MIP loan package submissions before the pool is finalized. Both the finalized CUSIP and pool numbers as well as the future CUSIP and pool numbers for MIPs will be ...

Fannie Mae and Freddie Mac buyback demands on Countrywide mortgages were more than double the amount sought on any other lender, but the key reason is that Countrywide securitized a lot more loans than anyone else from 2006 through 2008. A new Inside Mortgage Finance analysis of representation and warranties disclosures made by the two government-sponsored enterprises shows that some $16.22 billion of Countrywide mortgages were subject to buyback demands, both before and after the company was acquired by Bank of America in 2008. In a distant second place was Wells Fargo...(Includes one data chart)

Most securitizers in the non-agency MBS market have filed relatively few repurchase demands with loan originators, and only a small portion of these demands resulted in a buyback. A new Inside MBS & ABS analysis of representations and warranties disclosures now required by the Securities and Exchange Commission revealed that non-agency MBS securitizers sought just $7.45 billion in repurchases over the three years ending in 2011. That represented just 1.1 percent of the total issuance reported by securitizers. The new reps and warranties disclosures – which were mandated by the...(Includes one data chart)

The Federal Housing Finance Agency wants to use parts of the existing MBS programs at Fannie Mae and Freddie Mac to build a new mortgage securitization platform that could be used by a variety of issuers under a new plan to wind down the government-sponsored enterprises. The FHFA this week submitted to Congress a strategic plan to “update and extend the goals and directions” of the GSEs, which have been under government conservatorship since September 2008 with “no near-term resolution in sight.” Many of the initiatives are already underway. “This plan envisions actions by the enterprises that will...