Two Harbors Investment Corp. said this week it is “impressed with the investment opportunities” in the non-agency MBS sector, particularly over the next year and beyond and is pushing forward with its plans to begin a securitization program. Thomas Siering, president and CEO of the New York-based real estate investment trust, said during a conference call to discuss the firm’s second quarter earnings that despite the “challenging” non-agency environment in June, there is tremendous opportunity to profit from non-agency MBS issuance throughout the rest of this year into 2012. “The recent pullback in the non-agency market has created...

Nationally recognized statistical rating organization Kroll Bond Rating Agency demonstrated its optimism in the non-agency market by requesting public comment this week on its rating methodology for evaluating residential MBS. “By providing complete transparency into our approach and processes, we aim to instill trust in the market and to raise the bar on ratings accuracy,” said James Nadler, Kroll’s president, in a statement. “These [publications on our proposed rating process] demonstrate our strong commitment to serving the market through a rigorous evaluation of the collateral as well as key parties in an RMBS, and combine all aspects of...

Wall Street and the Chicago City Council are at loggerheads over a revised ordinance establishing mortgage lender liability for vacant and abandoned buildings caught in the foreclosure process. Tentatively set to take effect Sept. 18, the ordinance addresses the issue of vacant and abandoned foreclosed properties for which ownership is unclear. It holds banks responsible for the upkeep and security of such properties even before they assume title to those properties. In a recent analysis, Moody’s Investors Service warned that such lender liability laws increase mortgage lending transaction costs, which will worsen if...

Issuers of ABS backed by vehicle loans urged federal regulators to adopt a pool-level approach to determine new risk-retention requirements rather than the all-or-nothing standard proposed earlier this year that featured a narrowly drawn definition of “qualified auto loans. ”Like the more widely discussed provisions on non-agency MBS securitization, the interagency proposed rule carved out an exemption from the 5 percent risk-retention requirement for auto ABS that are backed exclusively by qualified auto loans. But issuer members of the American Securitization Forum said the proposed definition of qualified auto loans features...

Major MBS issuers are concerned about the potential harm evolving risk-retention regulations could have on securitization structures, regardless of which structure issuers decide to use. In response to the interagency proposed rule on credit risk retention, Citigroup said the public interest is not served by requiring securitizers to hold positions that are designed to take losses. “For example, all deal parties, the rating agencies and the investors are fully aware that the lowest tranche, sometimes referred to as a ‘first loss’ tranche, may take losses and no representation is made that such tranche is either investment grade or will receive...

Officials testifying before a Senate Banking, Housing and Urban Affairs Committee hearing this week came out in strong opposition to eliminating a government guarantee in the MBS market of the future, claiming that such measures would have a significant impact on borrowers’ ability to obtain plain vanilla 30-year fixed-rate mortgages. “Many large investors utilize the MBS market to execute trades driven by macroeconomic views and would not utilize a market which combines credit risk with interest rate risk,” said Andrew Davidson, president of Andrew Davidson & Co., an analytics and consulting firm. “With a smaller investor base, liquidity would be...

Production of agency MBS in July slipped to its lowest monthly level since early 2009, according to a new analysis and ranking by Inside MBS & ABS. Fannie Mae, Freddie Mac and Ginnie Mae issued a total of just $70.34 billion of single-family MBS during July, down 3.4 percent from the previous month. It was the lowest one-month production level since January 2009 and left year-to-date issuance down 4.3 percent from the first seven months of 2010. Ginnie production was actually up slightly from June levels, but both Fannie and Freddie posted significant slowdowns. Freddie issuance dropped 15.5 percent from the previous month and accounted for [Includes one data chart]

Wells Fargo and Bank of America continued to pull ahead of the field, adding Ginnie Mae servicing to their portfolios faster than the overall market grew during the second quarter of 2011. A new Inside Mortgage Finance analysis found the two companies holding 54.9 percent of Ginnie servicing outstanding at the end of June. Third-place JPMorgan Chase trailed overall growth in the market, while CitiMortgage and PNC Bank actually [includes one data chart]

While many commenters support the proposed exemption for the government-sponsored enterprises from new risk-retention rules in the short-term, opinions vary as to just how long Fannie Mae and Freddie Mac should enjoy such an exemption and its long-term impact on private securitizations. Federal regulators earlier this year proposed a rule which would require issuers of mortgage-backed securities to hold a minimum 5 percent of the credit risk of the assets underlying their securities unless the deal is backed by “qualified residential mortgages.” The proposed rule would exempt ...

The Department of Housing and Urban Affairs’ Office of the Inspector General recommended that HUD obtain complete documentation to close Ginnie Mae contracts after an audit uncovered flawed procedures at the Office of the Chief Procurement Officer. The OIG called for tighter procedures after finding that the procurement office did not get documentation from Ginnie Mae to close out completed and expired Ginnie Mae contracts in a timely manner. That was a violation of HUD’s guidelines for contract closeout procedures, the internal watchdog unit said. In addition, Ginnie Mae did not follow department guidelines ...