Moodys Investors Service has come up with a monitoring approach to evaluating tail risk in non-agency MBS that pay scheduled principal and prepayments to the securities on a pro-rata basis and assessing the adequacy of the credit enhancement available to the rated securities. Tail risk is what might be described as the end of life risk of a disproportionately large loss (based on current balance of the pool) on the underlying pool at the end of a transactions term when few loans remain in the pool and credit enhancements, although high in percentage terms, may be very low in dollar terms. The proposed change in approach at Moodys will mostly affect...
The commercial MBS market is starting to catch fire. Moreover, a new report from Fitch notes that commercial delinquencies continued to fall last year, a trend that will continue.
Fannie Maes plan to unload, potentially, billions of dollars of non-performing residential loans has been delayed and may be killed, according to industry officials whove been tracking the project. Its going nowhere, but its not like theres a requirement for them to say so publicly, said one advisor who is a vendor to Fannie. The GSE, to date, has declined to discuss the issue along with its regulator, the Federal Housing Finance Agency. Fannie has been working on an NPL sale for close to a year, and even hired an investment banker, Milestone Advisors LLC, to guide it through the auction process. Initially, it had hoped to offer a package of $250 million of delinquent home mortgages for sale to the highest bidder.
The Federal Home Loan Bank of Cincinnati says a unit of Lehman Brothers Holdings is not entitled to a multimillion dollar payday because the FHLBank did not short change the firm when it closed out swaps and options transactions ahead of Lehmans 2008 bankruptcy. Last week, Lehman filed a breach of contract lawsuit in Manhattan federal court connected to 87 derivative transactions or interest-rate swaps with the FHLBank that fell apart when Lehman entered bankruptcy on Sept. 15, 2008, at the height of the financial crisis.According to its lawsuit, Lehman says the Cincinnati Bank violated its agreement by paying only $13.7 million when the transactions were terminated due to the firms Chapter 11 filing.
One week after UBS Americas failed in its bid to shutter a lawsuit brought by the Federal Housing Finance Agency in connection with non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac, the federal judge overseeing the case has ordered UBS to hand over internal documents to the FHFA the company argued were privileged. U.S. District Court Judge Denise Cote ruled last week that parts of memoranda from UBS outside counsel to the company which contained factual summaries of meetings held with third-party mortgage originators are not protected by attorney-client privilege and must be disclosed to the FHFA. Even if it is true, as UBS argues, that the memoranda at issue were created for the predominant purpose of rendering legal advice, that does not relieve UBS of the obligation to show that the entirety of each document is privileged, wrote Judge Cote in her ruling.
For years, Union Bank of San Francisco has made a name for itself as a top-ranked portfolio lender of jumbo mortgages but all that could soon change. No, Union Bank isnt leaving the space not by a long shot but the $94 billion asset commercial bank is in the midst of making a major push into conventional lending where its footprint has been quite small. Its...
The Financial Stability Oversight Council issued a warning this week regarding the prolonged period of low interest rates, singling out real estate investment trusts that invest in agency mortgage-backed securities. Agency REITs, a sector that how grown considerably in recent years, are highly exposed to a rise in interest rates, said Trent Reasons, a senior policy advisor at the Treasury Department. An analysis of 16 REITs by Inside MBS & ABS, an affiliated publication, determined...
Owner-occupants are driving increases in home prices and purchase activity, not institutional investors, according to Oliver Chang. The somewhat surprising conclusions from the founder and managing director of Sylvan Road Capital suggest that institutional investors are along for the ride, not propelling the current housing recovery. The housing recovery appears to be broad-based and here to stay, although not because of the entrance of institutional investors into the space, Chang said. He completed...
Nationwide, mortgage originations fell by 4.8 percent during the first quarter of 2013, but a lot of that decline took place at the industrys biggest lender, Wells Fargo, according to a new market analysis and ranking by Inside Mortgage Finance. Mortgage originations totaled an estimated $500.0 billion during the first three months of the year, down from $525.0 billion during the fourth quarter of 2012. It still ranked as the fourth strongest quarter in new loan production since the mortgage market tanked back in 2008, and originations in early 2013 were up 19.0 percent from the same period last year. But most of the indicators are...[Includes two data charts]