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...
The Federal Housing Finance Agency so far continues to bat 1.000 in court in its multiple lawsuits against non-agency mortgage-backed securities issuers for allegedly misrepresenting deals that were sold to Fannie Mae and Freddie Mac. This week, Judge Denise Cote of the U.S. District Court for the Southern District of Manhattan rejected motions to dismiss by Goldman Sachs Group Inc. and Deutsche Bank, in the defendants latest effort to make the FHFAs massive legal action go away. In separate motions, Judge Cote rejected Deutsches and Goldmans claims that the FHFAs allegations are inadequate to support the agencys claims of fraud.
The Federal Deposit Insurance Corp. recently filed a lawsuit against the auditors of Colonial Bank alleging that they could have prevented enormous losses suffered by the bank due to fraud by Colonials largest mortgage banking customer, Taylor Bean & Whitaker Mortgage. The lawsuit is the first by the FDIC post-crisis against the accountants of a failed bank. Colonial was closed in August 2009 by the Alabama State Banking Department and the FDIC was named as receiver and is now ...
Two Harbors Investment and PennyMac Mortgage Investment Trust have seen healthy returns on their previous investments in vintage non-agency mortgage-backed securities but the real estate investment trusts have recently turned to other investments. Two Harbors has concentrated on agency MBS purchases while slowly ramping up jumbo loan purchases with an eye toward issuing its own MBS. PennyMac, meanwhile, shifted away from non-agency MBS purchases to correspondent lending and investing in ...
The United States just concluded an electoral campaign season that involved the expenditure of billions of dollars and resulted in no change in the balance of power on the federal level, beyond strengthening Democrats control in the U.S. Senate. But that doesnt mean nothing important is going to happen over the next four years. Securitization industry officials, Washington insiders, political observers and policy wonks all expect hard financial realities to compel policymakers into responding to a host of issues that will significantly affect housing finance and securitization. We dont think the status-quo election, as some have called it, means status quo for residential mortgage finance, said Karen Shaw Petrou, a managing partner at Federal Financial Analytics, a Washington, DC, think tank. She thinks...