Freddie Mac saw a substantial increase in its single-family MBS program from December to January, but overall agency MBS production declined for the month, according to a new ranking and analysis by Inside MBS & ABS. The three agencies generated a total of $114.02 billion in new single-family MBS last month, down 4.0 percent from December. The total was also off 16.4 percent from January 2011 issuance. Agency MBS production had increased steadily over the last five months of 2011 after hitting a low spot of $70.34 billion in July. But issuance at Freddie jumped a whopping 45.8 percent from...

New regulations are re-shaping the non-agency MBS market, but economic issues, the ratings process and shifting investor appetite may have more to do with the stalled recovery in the sector, experts said during the American Securitization Forum conference last week in Las Vegas. John Arnholz, a partner at Bingham McCutchen LLP, suggested that the regulators will end up issuing a new proposed rule on risk retention, given the widespread opposition to the original proposal. The proposed premium capture recovery fund idea “came out of nowhere,” he said, adding that there is a good deal of dissent among the six...

Federal and state enforcement agencies late last week launched a broad new initiative to investigate and develop litigation on fraud and misconduct in the non-agency MBS market, issuing civil subpoenas to 11 financial companies. The RMBS Working Group is being co-chaired by five officials: two assistant attorneys general in the Justice Department, the head of enforcement at the Securities and Exchange Commission and state attorneys general from New York and Colorado. Some 55 DOJ officials are participating, including 15 attorneys and 10 Federal Bureau of Investigation agents, with 30 more attorneys...

MBS trustees are facing challenges on a number of fronts, according to panelists at the American Securitization Forum’s ASF 2012 conference last week in Las Vegas. Issuers are counting on trustees to provide new information required by the Securities and Exchange Commission, communications with the rating services have become strained, and municipalities are looking to require property maintenance on abandoned homes. Under the Dodd-Frank Act, the SEC now requires ABS issuers to disclose the three-year history of the repurchase requests they’ve received – including those withdrawn and those disputed...

Both the Federal Housing Finance Agency and Freddie Mac are refuting a published report suggesting that a mortgage finance vehicle at one time employed by the government-sponsored enterprise was designed to profit the company by preventing homeowners from refinancing. An article published this week by ProPublica and National Public Radio contended that Freddie stood to profit from hedging investments known as inverse floaters that would pay higher returns if interest rates rose and more homeowners remained in mortgages with high interest rates. According to ProPublica, Freddie purchased inverse floaters...

The fixed-rate mortgage accounts for nine of every 10 loans originated, and it’s easy to see why. Locking into historically low rates makes a lot of financial sense. So who is choosing to buy volatility instead? Who are the 10 percent who still borrow adjustable-rate mortgages? “For some consumers, it’s a better product,” said Frank Nothaft, chief economist at Freddie Mac. “If, for some reason, you know you’ll be leaving your home soon, a 5/1 hybrid ARM is a very fitting instrument. Choosing an ARM could be a matter of timing.” The hybrid ARM is the most common adjustable-rate product...

Ginnie Mae said it may begin assigning alphanumeric pool numbers for MBS pools as soon as next month because it is fast running out of available pool numbers. The agency said fixed-rate pool types will be the first recipients of the alphanumeric pool numbers. Issuers should make sure that all their remaining assigned pool numbers are used before using the newly assigned alphanumeric IDs. Issuers were advised in 2009 to have their systems ready to accept alphanumeric IDs by March 1, 2010. In another development, MountainView Servicing Group has announced its offering of a $129 million portfolio of Ginnie...

Analysts have mixed expectations for residential mortgage servicing in 2012, with some seeing it as a year of foreclosure-prevention reforms and others anticipating a higher level of vigilance in new deals and loan quality. Although issuance of non-agency MBS will be modest again in 2012, new deals will have more comprehensive reviews of originators, more reliable and better-quality loan-level data, and stronger enforcement of breaches of representations and warranties, according to Moody’s Investors Service. New deals will better address legal issues relating to foreclosure challenges. Some of the deals...

Officials at the Federal Reserve signaled this week the bank will maintain its current level of market support for Fannie Mae, Freddie Mac and Ginnie Mae debt and MBS to help keep long-term interest rates for mortgages and other products at historic lows. The housing market remains mired in a lackluster recovery, shackled by massive foreclosures and a huge overhang of unsold inventory, despite all the unconventional support the Fed has bent over backwards to provide. During its meeting this week, the Federal Open Market Committee decided to maintain its “highly accommodative stance for monetary...

New issuance of non-mortgage ABS increased by 15.8 percent from 2010 to 2011, according to a new Inside MBS & ABS ranking and analysis. But it was a rebound from a record low level, and the market is less than half the amount typically produced before the financial market collapse in 2008. A total of $126.8 billion of non-mortgage ABS were issued in the U.S. last year, and over half of that amount was in the auto ABS sector. Securities backed by loans and leases to vehicle users rose 22.4 percent from 2010 levels, although the sector was down slightly in the fourth quarter. Overall...(Includes two data charts)