Private mortgage insurers provided primary coverage on $41.59 billion of mortgages originated during the fourth quarter of 2013, according to a new Inside Mortgage Finance ranking and analysis. While that was down 29.6 percent from the third quarter, it also represented the deepest private MI penetration of new originations in five years. Private MI coverage – including existing insurance transferred to new loans originated under the Home Affordable Refinance Program – accounted for 13.6 percent of new mortgages produced in the fourth quarter. That was the highest private MI share of new originations since the first quarter of 2008, when it was 14.7 percent. HARP continued...[Includes three data charts]

Investors of all different stripes have been increasing their stakes in several publicly traded mortgage insurance firms of late, betting that this recovering corner of the residential finance industry has more gas in the fuel tank. Among those buying into MI stocks is Paulson & Co., the legendary hedge fund that made $15 billion by shorting publicly traded subprime firms via the ABX Index in the run-up to the housing bust. Paulson & Co. recently increased...

Issuance of agency and non-agency commercial MBS increased 13.5 percent in 2013, according to a new analysis by Inside MBS & ABS, although production dropped sharply in the fourth quarter. Industry participants expect that volume will continue to grow as investor demand for commercial MBS remains strong despite some loosening of underwriting standards. Ken Cheng, a managing director at Morningstar Credit Ratings, said...[Includes one data chart]

Issuers of non-agency MBS and agency mortgage sellers have addressed most of the legacy representation and warranty issues that have bedeviled the market for the past few years, according to industry analysts. However, repurchase and buyback issues haven’t been completely resolved as investors and regulators make last grasps at recoveries. Analysts at Compass Point Analytics & Trading estimated that the total losses incurred for rep-and-warrant claims from Fannie Mae, Freddie Mac, the Federal Housing Finance Agency, the FHA and non-agency MBS investors by publicly traded U.S. originators still in existence will total $89.0 billion. The analysts said lenders have charged off or reserved $88.0 billion for such losses. Compass Point said...

A policy shift at the Securities and Exchange Commission requiring admission of guilt in certain cases may encourage wrongdoers in the securities market to litigate rather than settle, resulting in fewer SEC settlements, according to some compliance attorneys. Fear of possible criminal prosecution and the lasting impact of an admission of guilt could compel accused companies and individuals to take their cases to trial rather than negotiate a settlement, warned Philip Stein and Jeremy Sahn, partners in the Miami-based law firm of Bilzin Sumberg. Starting in June 2013, the SEC began requiring...

Federal Reserve Chair Janet Yellen stuck close to the script of her predecessor on the subject of the Fed’s “quantitative easing” exit strategy during her first Humphrey-Hawkins appearance before Congress this week, reaffirming that the central bank’s pull-back from its asset-purchase program is likely to continue, barring a dramatic surprise. “Let me emphasize that I expect a great deal of continuity in the Fed Open Market Committee’s approach to monetary policy,” Yellen told the House Financial Services Committee on Tuesday. “I served on the committee as we formulated our current policy strategy and I strongly support that strategy, which is designed to fulfill the Federal Reserve’s statutory mandate of maximum employment and price stability.” The new Fed chief reminded...

Freddie Mac last week announced a $1 billion offering of its Structured Agency Credit Risk debt notes, the government-sponsored enterprise’s first risk-sharing transaction of 2014 and its third such deal since the company rolled out the STACR series last year. The deal is backed by a pool of $32.4 billion 30-year fixed-rate mortgages acquired by Freddie in the second quarter of 2013. More than 65 investors participated in Freddie’s latest STACR deal, and more than 20 of those investors were newcomers, according to Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie. “We’ve introduced...

The jumbo mortgage-backed security market was dormant for over two months, but within the past 14 days, Credit Suisse issued a $287.42 million deal and JPMorgan Chase started shopping a $356.39 million issuance. That’s not to say the jumbo MBS market is back to full strength. The two deals have some unique characteristics, and banks still maintain their dominance over nonbank aggregators of jumbos. Officials at American Capital Mortgage Investment said jumbo MBS issuance has plenty of potential ...

FHA-approved lenders should make sure they leave no stones unturned to ensure that loans submitted for endorsement meet FHA’s strict underwriting criteria. It is the responsibility of direct endorsement lenders to scrutinize every loan for compliance with FHA lending guidelines, including income verification, credit analysis and property appraisals. JPMorgan Chase admitted it failed to do all of the above. Last week, the bank acknowledged it violated the False Claims Act and agreed to pay $614 million in cash to settle government charges it improperly certified poorly underwritten loans for FHA and VA guarantees. The defective loans later ...

The whistleblower whose investigative efforts led to the landmark $25 billion national mortgage settlement between the federal government, 49 state attorneys general and five of the largest mortgage servicers is at it again. This time, Lynn Szymoniak is suing 22 companies for using fraud to obtain FHA insurance – in some instances, VA guaranties – for defective loans that later were securitized through Ginnie Mae and sold to investors. Szymoniak, who is suing under the False Claims Act, gained notoriety from a 2011 interview on “60 Minutes” in which she ...