Rising interest rates and increased volatility helped slow new issuance of non-mortgage ABS during the second quarter of 2013, with declines posted in most asset classes. A total of $38.96 billion of non-mortgage ABS were issued during the second quarter, down 17.3 percent from the first three months of the year, according to a new Inside MBS & ABS ranking and analysis. At the midway point in 2013, ABS issuance was off 3.7 percent from the first six months of last year, which included heavy volume in the second quarter of 2012. Even with the second-quarter softening, ABS issuance in 2013 is...[Includes two data charts]
Federal prosecutors and members of the Justice Department’s Residential MBS Working Group are reportedly considering a new strategy for criminally charging Wall Street bankers for alleged fraud in their packaging and sale of MBS backed by subprime mortgages at the peak of the housing frenzy. According to Reuters, the members of the working group are eye-balling a shift in strategy that would involve moving away from the more widely used securities fraud charges to the less common offense of bank fraud. “Perpetrators of bank fraud can be charged up to 10 years after their crimes, compared with the five-year statute of limitations on securities fraud, which has already run out on most events leading up to the 2008 financial crisis,” Reuters reported. “A bank fraud conviction carries up to $1 million in fines and a maximum prison sentence of 30 years.” Laurence Platt, financial services practice leader in the Washington, DC, office of the K&L Gates law firm, said...
Freddie Mac this week issued the first in a series of planned transactions from the government-sponsored enterprises to share risk with the non-agency market. Industry analysts suggest that while the transaction represents a good value for investors, the audience for the transactions structured like a synthetic collateralized debt obligation is limited. The Structured Agency Credit Risk Debt Notes 2013-DN1 included a total of $500 million in two non-guaranteed tranches sold to investors with 10-year terms, according to non-agency market participants. The STACR reference pool consists...
Federal regulators will make their next move on risk retention and defining qualified residential mortgages in September, according to the Federal Reserve. Meanwhile, the Securities and Exchange Commission is working on a number of long-pending MBS rules, including the so-called Reg AB2. The Fed expects to take “further action” on risk retention in September, according to its latest regulatory agenda. The SEC, which is jointly working on the risk-retention rule with the Fed and other agencies, was vague, stating that the next action date was “undetermined.” Regulators have received...
UBS, one of the first of the 18 big banks named in lawsuits brought by the Federal Housing Finance Agency two years ago in connection with non-agency MBS purchased by Fannie Mae and Freddie Mac, announced this week that it is seeking to settle with the FHFA following an adverse federal appeals court ruling against the Swiss and other defendants. In announcing its preliminary second quarter 2013 results, UBS said it has reached “an agreement in principle” with the FHFA to settle claims against its subsidiary UBS Americas related to residential MBS offerings between 2004 and 2007. UBS did not specify...
The Financial Industry Regulatory Authority will begin disseminating information for so-called specified-pool MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae, as well as securities backed by loans with Small Business Administration guarantees. The move is aimed at increasing transparency in specified pools, which represent an estimated 3,500 trades, totaling $18 billion in par value, on an average daily basis. It follows a similar effort by FINRA last year in the to-be-announced market for agency MBS. Transaction data will be circulated...
Even though Ginnie Mae has already approved more new MBS issuers this year than last – with two months still left in the government’s fiscal year – it has another problem on its hands: few of these firms are actually using the program. “There have been fairly significant holes in participation,” said Gregory Keith, senior vice president and chief risk officer for the agency. In an interview with Inside MBS & ABS, Keith said Ginnie is...
Industry groups are lauding a House Republican’s move last week to re-file a legislative countermeasure against municipalities seeking to use eminent-domain powers to acquire performing but underwater mortgage loans as a warning against localities still entertaining such a course of action. The Defending American Taxpayers from Abusive Government Takings Act, H.R. 2733, by Rep. John Campbell, R-CA, would prevent the “reckless” seizure of distressed home loans by local governments, a move that’s both legally questionable and that represents “a complete abrogation of private property rights.” “The federal government and the American taxpayer would be forced...
Small lenders have accounted for a growing share of contributions to non-agency jumbo mortgage-backed securities. Some deals have included more than 70 lenders, with most of the lenders contributing less than 5 percent of the volume of mortgages included in a security. While the lenders’ individual contributions to a particular jumbo MBS are small, they add up to significant market share, particularly when issuers don’t identify the lenders in prospectus documents filed with the Securities ... [Includes two data charts]
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