JPMorgan Securities and Credit Suisse Securities have agreed to pay more than $400 million combined to settle government charges that they misled investors in offerings of non-agency MBS from 2005 to 2010, according to the Securities and Exchange Commission. The SEC, working with the federal-state Residential MBS Working Group, reached separate settlement agreements with the two financial institutions after filing a complaint and issuing a cease-and-desist order. Neither JPMorgan nor Credit Suisse admitted to or denied the findings against them or any of their affiliates. The SEC alleged...
The Consumer Financial Protection Bureau announced this week that the implementation date for certain mortgage disclosures will be delayed beyond Jan. 21 to allow for coordination with the pending integrated Real Estate Settlement Procedures Act and Truth in Lending Act disclosures. Chimera Investment announced last week that it will miss reporting deadlines for its quarterly report for the third quarter of 2012. The real estate investment trust said the report required by the ... [Includes two briefs]
Investors in non-agency MBS raised concerns about principal forgiveness required by the $25 billion national servicing settlement agreed to earlier this year by five banks. While most of the banks claimed they would focus the efforts on their own portfolio holdings, MBS investor concerns appeared to have been realized as Bank of America said about half of the principal it has forgiven was tied to mortgages in non-agency MBS. However, Shaun Donovan, secretary of the Department of Housing and Urban Development, noted this week that investors in Bank of Americas non-agency MBS agreed to allow principal reductions on their holdings. We knew from the beginning, that because Bank of America had...
Ginnie Mae is in sound financial health and poised to potentially absorb any FHA losses, if required, but the enduring fallout from Taylor, Bean & Whitakers collapse three years ago continues to plague the agency, according to an independent audit commissioned by the Department of Housing and Urban Development Inspector General. The report by CliftonLarsonAllen disclosed no material weaknesses in Ginnies internal controls over financial reporting and no instance of legal or regulatory noncompliance during fiscal years 2012 and 2011. Ginnies loss reserves for its MBS program declined to $357.4 million in fiscal 2012, from $395.8 million at the end of fiscal 2011. Ginnie Mae believes...
Legislation drafted by Senate Democrats to expand the Home Affordable Refinance Program has made the short list of items to be considered during the lame-duck session of the 112th Congress, insiders say, but industry analysts see only marginal impact if the bill becomes law. The Responsible Homeowner Refinancing Act, S. 3522, sponsored by Senate Democrats Robert Menendez (NJ) and Barbara Boxer (CA), would provide equal access to streamlined refinancing under HARP, waive loan-to-value ratio requirements and prohibit the government-sponsored enterprises from charging upfront fees to refinance any loan they guaranty. A legislative staffer said...
Federal regulators revealed this week that they are considering changing proposed Basel III capital requirements for available-for-sale securities. Banks have raised concerns about the proposed treatment of available-for-sale securities, which could cause capital volatility and force sales of debt tied to the government-sponsored enterprises and the Treasury Department. In June, federal regulators proposed changes to the treatment of accumulated other comprehensive income that would require unrealized gains and losses on available-for-sale securities to flow through to regulatory capital as opposed to the current treatment, where unrealized losses generally do not affect a banks regulatory capital. At a Senate Banking, Housing and Urban Affairs Committee hearing this week, Michael Gibson, director of the Federal Reserves division of banking supervision and regulation, indicated...
The Federal Reserve appears likely to continue to maintain an arguably oversized footprint in the secondary mortgage market in its effort to foster the gradually improving housing market, analysts say. Our view is that the Fed continues its purchase of agency MBS at least to the end of 2013, said Ankur Mehta, an MBS analyst with Citigroup. The fact that the market is now talking about QE 4 and Treasury space, you can say that further argues theyre going to stay the course in the mortgage space because theyre still looking to ease their monetary policy. The Feds actions have improved...
The latest planned non-agency jumbo MBS from Redwood Trust will have lower credit enhancement levels than other recent deals issued by the real estate investment trust, according to presale reports released this week. The AAA tranche on Redwoods sixth non-agency MBS issuance of the year will have credit enhancement of 7.05 percent, down from 7.30 percent on the three previous deals issued by Redwood. Officials at Redwood along with others interested in non-agency MBS have suggested that credit enhancement levels required by the rating services have been too high. The credit enhancement for Sequoia Mortgage Trust 2012-6 will be the lowest on a non-agency MBS backed by new loans since the MBS issued by Redwood in 2010 had 6.50 percent credit enhancement on the AAA tranche. Fitch Ratings, Kroll Bond Rating Agency and Moodys Investors Service are set...
Recent procedural rulings in Federal Housing Finance Agency lawsuits against non-agency MBS issuers and underwriters again favored the conservator of the government-sponsored enterprises, prompting some to speculate that issuers will move to settle the lawsuits. Meanwhile, a number of other MBS-related litigation developments continue to pile up. U.S. District Judge Denise Cote is overseeing 16 cases filed by the FHFA against non-agency MBS issuers and underwriters regarding non-agency MBS purchased by the GSEs between 2005 and 2007. The FHFA alleges misrepresentations by the issuers and underwriters on the MBS. Last week, Cote dismissed...
Participants in collateralized loan obligation deals remain optimistic about the future of the market although they caution that macroeconomic issues might still derail the products slow return. In a panel discussion hosted by Standard & Poors last week, CLO market executives maintained a positive outlook for CLO performance as the market experienced a resurgence early this year. The market collapsed after the financial crisis but has apparently been resuscitated by investors hungry for high-risk, high-return securities. CLOs acquire...