The outstanding volume of single-family agency MBS continued to grow during the first quarter of 2012, accounting for a slightly larger share of the overall mortgage market. Total agency MBS edged up 0.6 percent from the end of 2012 to reach $5.381 trillion – still slightly below the record of $5.430 trillion set at the end of 2009. The agency MBS market declined in early 2010 as Fannie Mae and Freddie Mac began buying distressed home loans out of MBS pools. While the agency MBS market was up in the first quarter, the amount of home mortgage debt outstanding continued to decline, dropping...(Includes one data chart)

Berkshire Hathaway and other new bidders are circling around the assets of Residential Capital, setting the stage for a showdown at the Southern District of New York Bankruptcy Court after the court approved the current way the mortgage unit is operating in bankruptcy. In a turn of events that has shaken the stability of ResCap’s initial bankruptcy plan that includes $8.7 billion to settle MBS investor lawsuits, Berkshire Hathaway objected to the current sale procedures in place, which have yet to be approved in court, in lieu of its own offer. The Nebraska-based conglomerate set the wheels in motion...

The booming market for rental housing and efforts to resolve the massive foreclosure inventories of Fannie Mae, Freddie Mac and the FHA has sparked investor interest in single-family rental securitization, according to credit rating agencies. Credit rating agencies have begun looking at real estate owned conversions to rental properties and the potential for securitizing cash flows from REO-to-rent securitizations. Based on initial assessments, the rating services see a promising, emerging asset class. REO-to-rent securitizations could take a number of forms, any of which can offer advantages to...

A handful of critical lawsuits stemming from the mortgage market collapse may yield meaningful legal precedents for the securitization markets as 2012 unfolds, according to a legal observer. “We’re finally getting to the point where there can be meaningful precedent established,” said Isaac Gradman, a managing partner at IMG Enterprises. “For the last three or four years, there has been a wide gap in the claims banks have made and the claims monolines and investors have made as to the merits of these suits.” What comes from the courts will become the standards by which the new MBS market...

Manhattan District Attorney Cyrus Vance has charged Abacus Federal Savings Bank and a group of its former employees in a massive mortgage fraud scheme for allegedly originating and selling fraudulent mortgage loans to Fannie Mae over a five-year period. The Manhattan-based bank, which provides loans and other banking services in New York City’s Chinatown, as well as 19 former employees, were charged with residential mortgage fraud, securities fraud, grand larceny, conspiracy and falsifying business records. Eleven of the bank’s employees were indicted in state court two weeks ago, while eight waived indictment and admitted guilt, according to the DA’s 184-page indictment.

Non-agency mortgage-backed security investors are hoping to influence the implementation of the recent $25 billion foreclosure settlement and ward off similar agreements in the future. They raised concerns this week at a hearing before the House Financial Services Committee’s Subcommittee on Capital Markets and Government Sponsored Enterprises. “As it stands, it will damage residential MBS markets further,” said Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, on behalf of the Association of Mortgage Investors. “By adding yet another risk premium to government intervention, it will further...

A federal judge in Los Angeles has dismissed a number of claims in an American International Group lawsuit against Bank of America over mortgage securities issued by Countrywide Financial, although AIG has promised to continue its legal efforts to recoup more than $10 billion in MBS losses. U.S. District Judge Mariana Pfaelzer of the Central District of California in a new ruling dismissed AIG’s federal securities-law claims because they were filed too late – more than three years after the MBS were first sold. AIG filed suit against BofA as Countrywide’s owner and Merrill Lynch in New York state court...

The settlement baked into the Residential Capital bankruptcy agreement is facing new challenges, including one from Warren Buffet’s Berkshire Hathaway and another from unsecured creditors. When ResCap announced its bankruptcy last month, it did so with a plan to sell its mortgage origination platform and servicing rights to Nationstar Mortgage, a division of Fortress Investment Group, for $4 billion and its portfolio loans to its parent company Ally Financial. Part of the deal is a release of legal liability for Ally, which will pass along some of its lingering obligations – like follow through on the...

In an effort to standardize its commercial mortgage-backed security rating criteria, Standard & Poor’s plans to establish a single, all-around framework for rating U.S. and Canadian CMBS transactions. The credit rating agency is seeking comment on proposed criteria for structuring a new CMBS rating framework, which would be used to evaluate stand-alone, large loan and conduit/fusion CMBS transactions. Based on a representative sample of CMBS deals, a modest, limited impact on ratings may be expected on 25 percent of rated CMBS tranches, S&P said. The proposed criteria generally assume a...

Non-agency mortgage-backed security investors and politicians on both sides of the aisle were critical this week of the recent $25.0 billion servicing settlement. The settlement requires principal reduction loan modifications on mortgages held in five banks’ portfolios and allows the servicers to receive credit for reducing principal on mortgages in non-agency MBS. Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, noted that the Association of Mortgage Investors is not opposed to principal reduction mods ...