Reforms seen in the new era of non-agency jumbo MBS issuance arent enough to prompt significant investor participation, according to John Gidman, president of the Association of Institutional Investors. At a hearing this week by the Senate Committee on Banking, Housing and Urban Affairs, Gidman and others called for a number of changes to the non-agency market. The fundamental structural and process weaknesses for non-agency residential MBS securitization have not been fixed in the current private-label securities market, Gidman said. The issuance process itself is very opaque. Ratings continue to be shopped, issuers are still incentivized to water down representations and warranties, and continued variability in structures and documentation make the market more challenging for investors and raise the costs of funding. He acknowledged...
With some federal agencies effectively downsized by the government shutdown, Ginnie Mae continues to guarantee MBS, but its unclear how long it can go on with limited staff and commitment authority. Under the shutdown contingency plan drafted by the Department of Housing and Urban Development, Ginnie has limited its operations to key functions fulfill its obligations to issuers and investors. The agency said MBS guaranties would be honored during the shutdown. While the rest of the workforce is on furlough, some 44 essential salaried employees will continue...
The secondary market for residential servicing rights returned to health this year, spurring new hopes that it could lead to securitizations of excess MSRs. But getting there could prove difficult. Mark Garland, president of MountainView Servicing Group, said mortgage firms that have amassed large holdings of MSRs would like to unlock the value imbedded in this esoteric asset. One way to do that is through securitization transactions. According to Garland, large banks including Wells Fargo have been quietly selling...
Non-agency MBS investors are still unhappy with how negotiations for the $25 billion national servicing settlement were handled and are concerned that the federal government will pull a similar move in settlement negotiations with JPMorgan Chase. John Gidman, president of the Association of Institutional Investors, said non-agency MBS investors werent involved in negotiations for the national servicing settlement and havent been involved in ongoing discussions regarding Chase. He said using funds from non-agency MBS to remedy allegations of inappropriate, unlawful or illegal behavior on behalf of an issuer or servicer makes it harder for investors to price risk. This consequently makes...
Jumbo mortgage-backed security structures used by Redwood Trust, PennyMac Corp., and others pose risks for investors, according to Moodys Investors Service, although the rating service said bonds will only incur losses in low-probability scenarios. Moodys raised concerns about features that go beyond the simple senior-subordinate structures that have been most common since the restart of the non-agency MBS market. Those features include...
Higher-priced mortgages accounted for a scant 1.0 percent of loan sales in 2012, according to an Inside Nonconforming Markets analysis of data from the Home Mortgage Disclosure Act. Originations of higher-priced mortgages increased slightly compared with 2011 but the growth didnt keep up with the increase in overall originations. Higher-priced first liens have an annual percentage rate at least 1.5 percentage points above the average prime offer rate. Federal regulators use the metric as a proxy for subprime mortgages. Some $15.80 billion in higher-priced mortgages were sold...[Includes one data chart]
The FHA was still able to endorse single-family mortgage loans during the first week of the partial government shutdown, although no FHA staff were available to underwrite and approve loans. A significant delay in the processing of new FHA insurance applications might have occurred this week because only 64 employees are still at work in HUDs Office of Housing, which includes the FHA. HUD said it might need more essential employees per day, on an intermittent basis, to perform key activities. The department expects these calls for reinforcement to ...
The Department of Housing and Urban Developments Mortgagee Review Board has collected $1.9 million from Oct. 1, 2012, through June 30, 2013, from actions taken against FHA lenders. The MRB actions involved 30 lenders, of whom 15 agreed to settle and seven agreed to indemnify HUD for its losses, according to the boards latest data. The indemnification agreement covered 166 FHA-insured loans, and 11 lenders lost their authority to participate in the FHA single-family mortgage program. Cases heard by the MRB involved infractions, such as failure to implement and maintain a quality control plan and to review early payment default loans, which resulted in ...
Wells Fargo claimed partial victory after a Manhattan federal district court judge dismissed certain claims against it in a government lawsuit alleging the bank lied about the quality of defaulted mortgages insured by the FHA. District Court Judge Jesse Furman ruled that legal injury claims based on events that happened prior to June 2009 were time-barred and that the government had waited too long to file a lawsuit. He also threw out claims of negligence and unjust enrichment. On the other hand, Furman let stand claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which the ...
HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...