Most observers have focused on the impact the proposed risk-retention rule would have on non-agency MBS, but key industry groups say the proposed rule attempts to “fix” what isn’t broken – the relatively trouble-free non-mortgage ABS market. “If the risk-retention rules are not appropriately designed to accommodate existing market prac-tices, we risk an immediate and significant reduction in the availability of auto loans, student loans, credit cards and business credit throughout our country without gaining...

With fears that too few qualified residential mortgages will be originated to support a strong securitization market, the American Securitization Forum proposed that mortgage-backed securities should be allowed to include a blend of QRMs and non-QRMs. MBS issuers also called for loosened underwriting requirements for certain non-QRMs.The proposal was included in the ASF’s comment letter to federal regulators regarding proposed risk-retention rules. Comments were initially due last week but federal regulators recently extended...

Stated-income lending, once a staple of the non-agency market, has not disappeared completely. A few portfolio lenders currently offer the loans, largely to wealthy borrowers looking for jumbo mortgages.In 2006, 54.6 percent of mortgages in non-agency mortgage-backed securities were originated based on alternative, stated or no documentation, according to the Inside Mortgage Finance MBS Database. The mortgages generally performed extremely poorly as borrower income was often overstated. However, private wealth lenders – including California-based...

The Federal Reserve’s continued sale of non-agency mortgage-backed securities from the $31.2 billion Maiden Lane II portfolio is decreasing prices on subprime MBS, according to industry analysts. Investors are being urged to buy vintage subprime MBS now as prices on the assets appear to be hitting bottom. Prices on subprime MBS have dropped by as much as 21.0 percent since mid-February, according to the ABX index. The bulk of the decline has occurred since early April, largely for 2006 and 2007 vintages. “There are some reasons to believe we are at or approaching the...

Ginnie Mae has raised the servicing fee compensation for its Home Equity Conversion Mortgage-Backed Securities (HMBS) program. Currently issuers receive either a flat 6-to-75 basis points monthly servicing fee or a 25-75 bps servicing fee based on a portion of the mortgage interest rate. Effective for HMBS with an issue date on or after July 1, 2011, issuers must select a servicing fee margin of at least 36 bps and not exceeding ...

Although federal regulators this week gave the industry more time to comment on their controversial proposal on risk retention in non-agency MBS and ABS transactions, some industry experts have already suggested that the concept fails to address its fundamental purpose of strengthening deal quality by aligning the interests of securitizers and investors. Risk retention is an intellectually appealing idea, but it’s not clear that it provides...

The mortgage securitization rate hit a record 94.6 percent during the first quarter of 2011 due to huge fluctuations in primary market production trends over the past six months, according to a new analysis by Inside MBS & ABS. The first-quarter securitization rate was up sharply from 84.9 percent for all of 2010, and the rate topped 100.0 percent in the agency mortgage markets. The huge securitization rate numbers stemmed...[Includes one data chart]

Ocwen Financial Corp. is poised to significantly expand its mortgage servicing business with the acquisition of Litton Loan Servicing from Goldman Sachs Group for approximately $264 million. The sale price does not reflect certain assets that Goldman will retain, the investment bank said in a June 6 statement announcing the deal. The bank did not specify which assets would be excluded from the transaction. The planned sale will end...

The federal government will likely turn a profit on the Fannie Mae and Freddie Mac MBS purchased by the Treasury Department in the wake of the collapse of the two government-sponsored enterprises in September 2008. Treasury said it received an additional $12.9 billion during the month of May in proceeds from its agency MBS investment, through sales with a market value of $10.5 billion ($10.0 billion principal value) and principal and interest payments of $2.4 billion. Through the end of May 2011, taxpayers have received...

Bank executives expect it will be a tall order for their firms to address the various tax implications of the Dodd-Frank Act, as well as the Basel III liquidity standards, particularly with regard to securitizations, according to a recent survey by audit, tax and advisory firm KPMG. KPMG reported that 48 percent of respondents said their firms were still trying to figure out the tax implications of Dodd-Frank and Basel III, while 49 percent said...