Foreclosure timelines and servicers’ emphasis on loss mitigation has dampened improvements to loss severities on non-agency MBS, according to Fitch Ratings. The rating service said this week that while national average home prices have increased by 14 percent in the past year, loss severities on liquidated properties in non-agency MBS have improved by only 5 percent. In the third quarter of 2013, it took an average of 32 months to liquidate a mortgage included in a non-agency MBS, according to Fitch, more than twice as long as average liquidation timelines in 2008. “Longer timelines translate...

A report released this week by analysts at the Federal Reserve Bank of Richmond suggests that real estate investment trusts that invest in agency MBS don’t necessarily pose systemic risks. “While mortgage REITs clearly present risks to investors, it is not yet clear where mortgage REITs fall relative to other financial institutions in terms of their systemic risk,” according to an economic brief from the Richmond Fed. REITs held...

A Manhattan district court judge dismissed a lawsuit against Bank of America in which shareholders accused the bank of hiding a $10 billion fraud case, saying the defendant and several of its top executives were not obliged to reveal the lawsuit in advance to shareholders. Filed in 2011, the shareholders alleged that CEO Brian Moynihan and other BofA executives knew as early as February 2011 that insurer AIG intended to sue BofA in connection with $28 billion of MBS it bought from the bank and its Countrywide and Merrill Lynch acquisitions. According to the shareholders, the bank knew...

Citigroup Global Markets Realty last week issued the first jumbo mortgage-backed security in more than a month and Redwood Trust is preparing a deal for next week. However, industry participants suggest that jumbo MBS issuance will remain limited through at least early 2014 due to a lack of demand from investors and strong portfolio appetite jumbos among from big banks. Citi’s $209.95 million jumbo MBS, its first in the new era of the non-agency market, wasn’t met with strong demand, according to ...

With qualified-mortgage underwriting requirements set to take effect Jan. 10, the rating services are beginning to detail the role QM status will play in ratings for non-agency mortgage-backed securities. Fitch Ratings appears to be the furthest along in adjusting its ratings process to account for the Consumer Financial Protection Bureau’s ability-to-repay rule and QM standards. The rating service this week released its initial perspective for rating non-agency MBS with loans originated in a QM world ...

Ginnie Mae is deploying four new applications as part of the agency’s effort to modernize its securitization platform. Current paper-based processes are being converted to electronic submissions and the new applications will be deployed during the fourth quarter of 2013. Issuers and document custodians will be able to use the new applications via the Ginnie Mae Enterprise Portal when they become available. These business applications include requests for pool numbers, request for commitment authority, submission of master agreements; and requests for transfer of issuer responsibility (pool transfer). Users will need an ...

Ginnie Mae issuers reported a 14.0 percent drop in mortgage-backed securities issuances in the third quarter from the previous quarter as refinance activity declined further and home-purchase lending slowed during the period, according to an Inside FHA Lending analysis of Ginnie Mae data. Despite the quarter-over-quarter drop, Ginnie production rose 11.2 percent in the first nine months of 2013. Volume over this period totaled $313.8 million, of which 60.3 percent were FHA loans, 33.9 percent were VA, and 5.2 percent were rural housing loans. Ginnie MBS issuance dropped gradually ... [2 charts]

Will the banks that bought “junior” preferred stock in Fannie Mae and Freddie Mac prior to the housing bust ever be made whole? Will investors that purchased the preferred after that time eventually be rewarded for the gamble they took on such a highly speculative investment? Those two questions look a lot more interesting these days thanks to continued strong earnings from the two government-sponsored enterprises. According to filings with the Securities and Exchange Commission, Fannie and Freddie say...

Investors and analysts are starting to wonder if Nationstar Mortgage bit off more than it could chew with its multi-billion dollar servicing purchases of the past two years. Sources say the company recently hired PricewaterhouseCoopers as a consultant to look at its quickly growing $375 billion servicing portfolio. A spokesman for the company dismissed...

After a relatively strong first eight months of the year, no jumbo MBS were issued in September or October. Although investor interest seems tepid, the market is showing signs of life as Citigroup issued its first post-crisis jumbo MBS this week, and Redwood Trust offered its first jumbo deal since August. The activity comes just weeks after Shellpoint Partners tried twice to sell a jumbo MBS, eventually pulling the deal and opting for a whole-loan sale. Pricing for jumbo MBS has improved enough for Citi and Redwood to test the market, and investors have also shown strong interest in other recent non-agency offerings. The $209.95 million Citigroup Mortgage Loan Trust 2013-J1 received...