SCOTUS Watch: We’re still waiting for the Supreme Court to issue its disparate-impact ruling in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. The central issue here is whether disparate-impact claims are cognizable under the Fair Housing Act. A decision could come any day, so stay tuned… …
The outstanding supply of single-family MBS declined 0.7 percent during the first quarter of 2015, according to a new Inside MBS & ABS market analysis. But that didn’t stop commercial banks from continuing to increase their holdings. Banks increased their aggregate MBS holdings by 3.1 percent from the fourth quarter, pushing their share of the MBS market to 22.9 percent. The only other investor group that managed to increase its stake was the credit union industry, which posted a 1.6 percent increase from the previous quarter. The Federal Reserve finally loosened...
There was widespread expectation that the latest round of seller-friendly changes to the government-sponsored enterprises’ representation-and-warranty framework would encourage lenders to liberalize their credit overlays. So far in 2015, the data aren’t showing it. In fact, the case could be made that credit trends are going the other way. The average credit score for purchase mortgages securitized by Fannie Mae and Freddie Mac was...[Includes one data table]
A ruling late last week by the New York Court of Appeals will likely help provide certainty to non-agency MBS issuers regarding liability from breaches of representations and warranties while limiting claims from investors. The appeals court confirmed a lower court’s ruling in ACE Securities v. DB Structured Products, determining that the statute of limitations for claims of breaches of representations and warranties starts when a deal is closed – not when a potential breach is discovered. “Representations and warranties concern...
Most participants on the Federal Open Market Committee anticipate an increase in interest rates sometime later this year, and not delaying until 2016, the FOMC indicated after its two-day meeting concluded Wednesday afternoon. Meanwhile, the Fed’s support of the housing market through reinvesting in MBS continues as it has, with no change in the U.S. central bank’s thinking when it comes to the management of its balance sheet. “The committee reaffirmed...
Redwood Trust is preparing to issue its second consecutive jumbo MBS that includes a new stop-advance feature. While officials at the real estate investment trust said the feature has been well received by AAA investors, Fitch Ratings warned late last week that it introduces some risks to deals. The stop-advance feature being used by Redwood prevents servicers from providing advances of principal and interest on loans that are 120+ days delinquent. The feature was first used on the $356.45 million deal Redwood issued in April and is set to be included in a pending $343.21 million jumbo MBS from the issuer. Fitch didn’t rate...
Ginnie Mae this week announced plans to reform its document-custody policies as part of a long-term effort to modernize the way it manages documents in order to minimize agency risks. Michael Drayne, Ginnie’s senior vice president of issuer and portfolio management, said the updates and improvements will apply to loan documents that serve as collateral for securitized pools of mortgages. Ginnie will follow...
The Federal Housing Finance Agency settled $10.3 billion in legal claims in 2014 stemming from 11 non-agency MBS issues that go as far back as 10 years ago, noted the FHFA’s annual report to Congress released this week. These lawsuits were filed in 2011 against financial institutions along with some of their executive management including officers and directors. The suits alleged violations of federal securities laws and state laws in the sale of the non-agency MBS to Fannie Mae and Freddie Mac that took place in a two-year period during the housing downturn between 2005 and 2007. A number of issues contributed...[Includes one data table]
An estimated $95.9 billion of mortgages bigger than the traditional agency loan limit were produced during the first quarter of 2015, a new Inside Mortgage Finance analysis reveals. Jumbo production – all single-unit mortgages with loan amounts exceeding $417,000 – was up 7.9 percent from the fourth quarter. That was slightly off the pace set in overall mortgage originations, which rose 12.9 percent from the previous quarter. Conforming-jumbo production was...[Includes three data tables]
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