A federal judge in New York has cleared the way for investors to proceed with a $10 billion class-action suit against JPMorgan in relation to the 2007 sale of non-agency MBS. Judge Paul Oetken of the U.S. District Court for the Southern District of New York, however, limited the scope of the class-action suit to JPMorgan’s liability but did not certify as to damage. Explaining his decision to narrow the scope of the suit, Oetken said...

Supporters of using eminent domain to resolve underwater but performing non-agency mortgages succeeded in placing their proposal back on the front burner in California this week. On Tuesday, the San Francisco Board of Supervisors unanimously voted to convene in closed session later this month with the city attorney’s office for advice on “anticipated litigation relating to the potential negotiation or adoption of a joint powers agreement with the city of Richmond [CA] to establish a homeownership stabilization authority to assist homeowners with troubled mortgages.” The board opted...

A shift from refinances to purchase mortgages has helped push combined loan-to-value ratios on jumbo mortgage-backed securities to the highest levels since the financial crisis. The higher LTV ratios are prompting an increase in credit enhancement requirements. JPMorgan Chase this week issued a $355.64 million jumbo MBS with an average combined LTV ratio of 74.0 percent. And WinWater Home Mortgage is preparing a $276.91 million jumbo MBS with an average combined LTV ratio of ...

A number of participants in the non-agency market are working to address the risks posed by second liens taken out by borrowers after the origination of the first mortgage. Some potential investors in non-agency mortgage-backed securities have balked at buying into new issuance due to concerns about borrower leverage and equity positions. “That’s a big problem for insurance companies and institutional investors, that debt can morph over time,” Fred Matera, a managing director at Redwood Trust ...

Issuers of non-agency mortgage-backed securities appear likely to continue working in the private 144A market as opposed to issuing deals in the public market, according to industry participants. Redwood Trust was issuing jumbo MBS in the public market, but it switched to the 144A market even before new requirements from the Securities and Exchange Commission made private issuance more attractive. Most other jumbo MBS issuers in recent years have also stuck with offering their deals in ...

Ginnie Mae issuance for the first nine months of 2014 totaled $207.5 billion as government-backed purchase-mortgage activity picked up in the third quarter, according to an analysis of agency data. New issuances rose 19.8 percent from the second quarter. FHA loans accounted for $116.9 billion of new Ginnie Mae issuances while VA and the Rural Housing Development funneled $75.9 billion and $14.2 billion, respectively, of new loans into Ginnie Mae pools. Mortgage securities backed by home-equity conversion mortgages are not included. Purchase mortgages totaling $140.6 billion comprised the bulk of new issuances over the nine-month period while the share of refinances totaled $49.8 billion. Modified loans accounted for $17.1 billion. Most of the FHA and VA loans originated during the first nine months came through the ... [ 2 charts ]

MountainView, a firm known mostly for the market it makes in mortgage servicing rights, is branching out into non-QM lending, but company officials cautioned that its effort will start small. Moreover, a spokesman for the firm clarified that loans acquired through its new “Peak Program” will meet the ability-to-repay rule requirements, including the non-QM loans. “We expect...

The agency single-family MBS market posted its best quarter in a year as total issuance climbed to $267.33 billion during the third quarter of 2014, according to a new Inside MBS & ABS analysis and ranking. The combined MBS issuance of Fannie Mae, Freddie Mac and Ginnie Mae rose 6.6 percent from the second quarter of 2014, hitting its strongest level since the third quarter of last year. On a year-to-date basis, agency MBS remained 48.7 percent below the pace set in the first nine months of 2013. Even the long-suffering non-agency MBS market showed...[Includes two data charts]

“Rating shopping is alive and well,” Calvin Wong, chief credit officer at Morningstar Credit Ratings, said last week at the ABS East conference in Miami Beach. The Securities and Exchange Commission recently released a rule setting new requirements for the rating services, but Wong warned that the SEC hasn’t done enough to address the issue. He said...

The market for non-agency MBS backed by nonperforming and re-performing home loans has grown exponentially in recent years. However, the sector remains relatively small and regulatory concerns persist regarding servicing practices. At the ABS East conference produced by Information Management Network last week in Miami Beach, Susan Valenti, a director at Wells Fargo Securities, said $1.0 billion of non-agency MBS backed by nonperforming loans and re-performing loans was issued in 2011, followed by $2.0 billion of such issuance in 2012, $5.7 billion in issuance in 2013 and $5.2 billion in issuance thus far in 2014. Most of the deals aren’t...