Issuance of securities backed by servicer advance receivables has increased significantly recently and is expected to continue to grow, fueled by nonbank servicers and demand from investors. However, analysts at Standard & Poor’s warn that servicers are increasing their use of unconventional features and product types, which could increase risks for investors. S&P rated $7.8 billion in servicer advance securities from the second quarter of 2012 through the end of the first quarter of 2013, up from $7.7 billion from the two-year period ending in the first quarter of 2012. S&P said issuance is expected to increase as more and more servicing assets trade hands and servicers use securitization to fund their collateral acquisitions. Recent issuance has been driven...
Standard & Poor’s, along with Moody’s Investors Service, last week settled a lawsuit involving their pre-financial crisis securities ratings before it got to a jury trial, but S&P suffered a setback with another ratings challenge lawsuit brought by Connecticut state officials. Experts predict a pickup in MBS litigation ahead of pending filing deadlines for legal challenges. S&P and Moody’s reached the confidential settlement with a group of 14 plantiffs led by Abu Dhabi Commercial Bank and King County, WA. Abu Dhabi and the over investors filed suit in 2008 and 2009 in Manhattan federal court claiming that the defendants misled them by allegedly inflating ratings on two structured investment vehicles they purchased. By settling the investors’ lawsuit, which claimed $638 million in losses, S&P and Moody’s were able...
So far a “broad cross-section” of industry participants and other stakeholders support the steps the Federal Housing Finance Agency has taken to establish a new securitization platform for residential MBS, the agency said in a progress report issued this week. “In light of the importance of this initiative to the housing finance system, and reinforced by the comments received from the public, FHFA has directed the enterprises to move forward on the development of the [common securitization platform],” the agency noted. In early March, FHFA Acting Director Edward DeMarco said...
Fannie Mae is discouraging some of its newly minted seller/servicers from issuing MBS through swap transactions and is instead pushing them toward its “cash window,” according to lenders and advisors familiar with the issue. “Fannie has increased its due diligence on lenders to ensure they are meeting, or are able to meet, the terms and conditions of an MBS issuance,” said Tim Rood, managing partner in The Collingwood Group, a Washington-based advisory firm. Rood, a former Fannie executive, told...
Fannie Mae, Freddie Mac and Ginnie Mae pumped out a respectable $152.3 billion in new single-family MBS in April, according to a new Inside MBS & ABS market analysis and ranking. April’s issuance level was up 2.6 percent from March and reversed, at least temporarily, a two-month downturn in new production. The cyclical peak for the agency MBS market came back in November 2012, when a whopping $199.4 billion in new securities were issued. Although the market couldn’t sustain...[Includes one data chart]
Although a number of major correspondent lenders pulled back from that market in 2013, a hefty 29.1 percent of home mortgages were funded by one company and then sold, servicing released, to a larger aggregator and, typically, securitized by Fannie Mae, Freddie Mac or Ginnie Mae. That means total production figures that include correspondent lending significantly overstate the concentration in the mortgage origination sphere. Including its correspondent production, for example, Wells Fargo put its fingerprint on 27.7 percent of new mortgages originated in 2012. But the company’s direct originations – loans generated through its retail channel and funded through mortgage brokers – represented...
Encouraged by what it describes as positive public feedback, the Federal Housing Finance Agency says it is pressing forward with its proposed contractual and disclosure framework to enhance transparency and investor protections in residential mortgage-backed securities. The progress report issued this week by the FHFA addresses work that the agency and the two government-sponsored enterprises have done so far in the development of the contract and disclosure framework, or CDF, as well as on the design of a common securitization platform, or CSP. The combination of the CDF and CSP “will enable...
The Treasury Department strongly defended the Home Affordable Modification Program this week after criticism and calls for changes from the Special Inspector General for the Troubled Asset Relief Program. The Obama administration is also considering extending HAMP, which is currently set to expire at the end of this year. “Data show that the majority of homeowners who receive assistance from HAMP have a high likelihood of long-term success to avoid foreclosure, and that HAMP modifications continue to outperform private industry modifications,” said Andrea Risotto, Treasury’s spokesperson for HAMP. She was responding...
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