Assured Guaranty won a lawsuit this week against Flagstar Bank regarding a breach of representations and warranties on more than $900 million in non-agency mortgage-backed securities issued by Flagstar. Industry analysts suggest the ruling is significant as it is one of the first in favor of bond insurance companies trying to enforce breaches of reps and warrants, and U.S. District Judge Jed Rakoff endorsed many of the tactics they have used to seek buybacks, including ... [Includes two briefs]

The FHA this week has proposed to set a 95 percent maximum loan-to-value ratio for FHA-insured loans over $625,500, effectively raising the minimum downpayment for jumbo loans from 3.5 percent to 5 percent. In a Feb. 6 Federal Register notice, the FHA said the proposed change is aimed at improving the health of the Mutual Mortgage Insurance Fund, whose statutory capital reserve ratio has fallen to a precarious level, raising the specter of a taxpayer bailout. Despite steps taken since 2009 to strengthen the MMIF, actuarial reviews of the fund have projected rising levels ...

A major surge in the securitization of student loans helped push overall non-mortgage ABS issuance up 65.9 percent during the fourth quarter of 2012, according to a new Inside MBS & ABS ranking and analysis. Total non-mortgage ABS issuance climbed to $147.0 billion in 2012, up 15.9 percent from the previous year. It was the strongest market for ABS securitization since 2009, but still trailed the levels reached prior to the financial market collapse in 2008. ABS backed by retail vehicle financing were...[Includes two data charts]

A credit rating agency has agreed to be barred for 18 months from rating asset-backed and government securities issuers, while a former broker-dealer executive has been charged with duping investors in connection with the sale of MBS. Egan-Jones Ratings Co. and its owner/president, Sean Egan, have agreed to the temporary prohibition as part of a settlement with the Securities and Exchange Commission for allegedly “making willful and material misstatements and omissions” while registering with the SEC to become a nationally recognized statistical ratings organization for ABS and government securities. The SEC discovered...

Mortgage lenders seeking new agency approvals from Fannie Mae, Freddie Mac and Ginnie Mae have to take a number and wait. And sometimes that wait can last for a year or more, even longer depending on which “agency” a company is dealing with. But all that appears to be changing, according to interviews conducted by Inside Mortgage Finance over the past two weeks. Unfortunately, there’s little in the way of hard numbers to back that up, except for Ginnie Mae. According to an agency spokesman, Ginnie approved...

Some top legal minds expect to see more investigations, and perhaps settlements, brought by the Residential MBS Working Group in the months ahead, and they’ll likely be flavored by interagency turf wars and the political ambitions of the elected officials that are helping to steer the group’s actions. “Just on the basis of prosecutorial rivalry, you can expect there will be further activity in this area,” said Jeremiah Buckley, partner in the BuckleySandler law firm, during a webinar discussion this week on the working group’s activities. Andrew Schilling, former chief of the Civil Division of the U.S. Attorney’s Office for the Southern District of New York...

Outside investors poking around the mortgage banking industry for a possible franchise deal first and foremost want the companies they’re courting to have Ginnie Mae approvals. “If you have the Ginnie eagle, it’s golden,” said Chuck Klein, managing director for mergers and acquisitions for Mortgage Banking Solutions. “Retained Ginnie servicing is what it’s all about.” Klein, of course, isn’t...

Despite a surge in agency MBS issuance in 2012, new production of agency-backed real estate mortgage investment conduits fell 19.4 percent from 2011 levels, according to a new analysis and ranking by Inside MBS & ABS. Fannie Mae, Freddie Mac and Ginnie Mae issued a combined $292.5 billion in REMICs last year, with Fannie accounting for 44.1 percent of the market. Fannie was the only agency of the three to increase its REMIC production compared to 2011 levels, managing a 6.0 percent increase. Agency REMIC volume fell...[Includes one data chart]

Covered bond investors are taking a more flexible view of ratings and other characteristics associated with these investments, according to a survey conducted last month by Fitch Ratings. “Continuing a trend discovered during last year’s survey, the results … reveal that investors are increasingly willing to innovate, not only in terms of bond characteristics, but also in terms of rating,” analysts at Fitch said. For example, “a remarkable 91 percent of investors declared...

The volume and market share of non-agency jumbo mortgage-backed security issuance increased significantly in 2012 compared with other post-crisis years. However, volume remains well below activity seen even before the 2005 boom in non-agency MBS issuance. Some $3.46 billion in non-agency jumbo MBS were issued last year, according to the Inside Mortgage Finance MBS Database, more than four times the volume issued in 2011. Redwood Trust issued six deals last year totaling ... [Includes one data chart]