Credit Suisse recently filed notice with the Securities and Exchange Commission, stating that it now owns 5.4 percent of Chimera Investment Corp., a real estate investment trust whose forte is buying residential MBS. However, the investment comes at a time when a cloud is hanging over the REIT sector, especially MBS investing firms such as Chimera. Moreover, Chimera’s stock has been stuck at about $3 a share the past 16 months, mostly because it’s still wading through earnings restatements and has not been a timely filer of quarterly and annual reports with the SEC. As the company noted in one regulatory filing: “Our failure to be...

The number of distressed residential loans backing non-agency mortgage securities dropped by 5 percent in the third quarter of 2013 and by 20 percent from the prior year. This trend, however, could lose some steam in the months ahead. According to the latest report from Morningstar Credit Ratings, clearing the distressed inventory in the non-agency MBS market might take a little longer because the pace of decline has slowed significantly. The number of liquidations has dropped by 39 percent, with approximately 891,000 properties with distressed mortgages still in inventory, it added. In addition, total distressed liquidation as a percentage of total paid-off loans continues...

A Manhattan federal judge last week ruled that Bank of New York Mellon may proceed with repurchase claims against a General Electric unit in connection with a $900 million non-agency MBS. BNYM, in its capacity as trustee for a pool of loans known as GE-WMC Mortgage Securities Trust 2006-1, filed suit against GE Mortgage Holdings and WMC Mortgage LLC in New York state court in 2012, where the defendants promptly moved the legal action to federal court to dismiss it. Following the court’s denial of the defendant’s motions to dismiss, GE Mortgage filed...

Who at the GSEs (or at the Federal Housing Finance Agency) was responsible for telling Fannie and Freddie to set aside so much money for loan losses and were those assumptions way off base?

Three House Democrats have added their own proposal to the growing list of legislative housing finance reforms that, in time, could pave the way for the government to sell off Fannie Mae and Freddie Mac while giving new purpose to the Federal Housing Finance Agency. The reform proposal by Reps. John Delaney (MD), John Carney (DE) and Jim Himes (CT) would establish a system of government reinsurance for eligible mortgage-backed securities. The idea is to leverage the government’s capacity and the market’s ability to price risk, they said.

Fannie Mae and Freddie Mac should revise their seller/servicer guidelines to allow use of credit scores from more than one provider in order to “foster competition,” according to a bipartisan quartet of House Financial Services Committee members. In a letter sent to Federal Housing Finance Agency Director Mel Watt, Reps. Ed Royce, R-CA; Spencer Bachus, R-AL; James Himes, D-CT; and Carolyn Maloney, D-NY, said that the GSEs should not be restricted to relying on credit scores provided solely by the Fair Isaac Corp.

A steady decline in GSE refinances throughout 2013 coupled with faltering purchase mortgage activity during the final third of the year helped contribute to an overall dip in the volume of single-family mortgages securitized by Fannie Mae and Freddie Mac both on a month-to-month and year-end basis, according to a new Inside The GSEs analysis. Fannie and Freddie issued $55.8 billion in single-family mortgage-backed securities in December, a 4.9 percent decline from November.

Fannie Mae and Freddie Mac combined did less business in single-family mortgage-backed securities in 2013 than the previous year while a growing share of business came from small and mid-sized lenders, according to an Inside The GSEs analysis. For the year, the two GSEs produced $1.161 trillion in single-family MBS, down 8.4 percent from their overall production in 2012.

A key factor in the upswing in private MI share of Fannie/Freddie business was the relatively steadier volume in purchase-mortgage securitization compared to refinance loans.

The non-agency MBS market is stuck in "limbo until we know where the GSEs are going,” said Steve Abrahams, head of securitization and MBS research at Deutsche Bank Securities.