A Manhattan federal judge last week approved a proposed settlement by bankrupt Residential Capital with the Federal Housing Finance Agency to resolve billions of dollars in claims tied to toxic MBS sold to Fannie Mae and Freddie Mac during the run-up to the financial crisis. Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved the agreement, which is tied to a settlement the FHFA reached with Ally Financial, ResCap’s former parent, in late October. Under the agreement, the FHFA will receive...

Underwriting standards for loans in commercial MBS are loosening due to competition among issuers for volume, according to industry analysts. Issuers have also removed loans from two recent commercial MBS transactions due to pressure to come to the market quickly. “Increasing competition among commercial MBS loan originators raises the risk that they will further lower underwriting standards from the more stringent practices used in early second-generation commercial MBS 2.0 deals,” said Tad Philipp, director of commercial real estate research at Moody’s Investors Service. Analysts at Fitch Ratings said...

With Rep. Mel Watt, D-NC, expected to be officially installed as the permanent director of the Federal Housing Finance Agency as soon as next week, the change could slow the use of risk-sharing deals at the government-sponsored enterprises and progress on the common securitization platform. Of particular concern to investors in the risk-sharing deals is the role mortgage insurance companies play in the transactions. According to industry observers, current FHFA Acting Director Edward DeMarco would like...

Earlier this week, the Consumer Financial Protection Bureau issued a final rule that allows the bureau to supervise for the first time the nonbank servicers of private and federal student loans that qualify as “larger participants” in the student-loan servicing market. With an emphasis on supervision, the rule is not expected to have much of an initial effect upon the secondary market for student loans. But the CFPB’s expanding role into the sector could change that, especially if there is a crisis in student-loan lending. The bureau’s new rule defines...

The Financial Industry Regulatory Authority, an internal cop for the U.S. securities industry, has proposed a narrower definition of “asset-backed security” to facilitate the reporting of certain transactions, including Rule 144A ABS transactions, to the group’s disclosure system. The new redefined ABS category would apply to a broad group of securities, including ABS pools backed by credit-card receivables, student loans, auto loans and other products and instruments that currently fall under the ABS umbrella. The proposed changes concern required reporting to FINRA’s Trade Reporting and Compliance Engine. Under FINRA’s proposal, ABS is...

The agencies securitized just $35.46 billion of refinance loans during November, down 15 percent from the previous month, and refinances accounted for 44 percent of total issuance.

Kroll Bond Rating Agency late this week released proposed criteria for rating non-QMs, making it the second rating service to formally seek comments on such criteria.

“Our estimate of legal and rep and warrant reserves for the largest banks is a total of roughly $60 billion,” S&P writes in a new report. “We estimate that the largest banks may need to pay out an additional $55 billion to $105 billion to settle mortgage-related issues, some of which is already accounted for in these reserves.”

Ed DeMarco might possibly name a chairman for the CSP platform and let Mel Watt have the final say on the CEO slot. Two mortgage executives interviewed for the CEO job include Peter Carroll and Luke Hayden.

A Manhattan federal court this week approved a proposed settlement between Residential Capital and the Federal Housing Finance Agency that both clears the way for the former conduit to exit bankruptcy and brings the FHFA one step closer to completing its massive legal action against some of the nation’s top financial institutions.Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved the agreement, which is tied to a settlement the FHFA reached with Ally Financial, ResCap’s former parent, in late October.