Bank of America won a favorable ruling this week on its proposed $8.5 billion settlement with a group of non-agency mortgage-backed securities investors. With the settlement likely to be decided in state court, analysts suggest that the deal will serve as a model for other non-agency MBS disputes. Baupost Group, a distressed debt fund that has challenged the settlement under the name “Walnut Place,” succeeded in October in having the settlement moved to federal court. However, the Second Circuit Court of Appeals determined this week that the settlement should be overseen by the Manhattan State Supreme Court ...

With the economics of non-agency securitization uncertain, Redwood Trust announced this week that it is considering bulk sales of newly originated non-agency jumbo loans in lieu of securitization. The real estate investment trust said it plans to issue four to six mortgage-backed securities this year – including the one completed in January – depending on whether the REIT sells a portion of its whole loans on a bulk basis. The business decision to either securitize or sell whole loans will be based on balancing ...

State housing finance agencies are returning to Ginnie Mae as investors’ appetite for state mortgage revenue bonds continue to wane and the government-sponsored enterprises are no longer major purchasers. With funding severely constrained, HFAs have turned increasingly to FHA-insured mortgage loans and Ginnie Mae securitization to finance their long-term, fixed-rate mortgage revenue bonds. The MRBs enable the state agencies to continue to offer mortgage products at affordable rates to lower-income and first-time homebuyers. President Obama’s FY 2013 budget noted that, among the new issuers, numerous HFAs have gone ...

Ginnie Mae will publish, in advance, the CUSIP and pool information for multiple issuer pools (MIP) on its website for the current month, plus the upcoming three months of issuance. The information will be published by pool term, pool type and security interest rate. This enhancement applies to all securities with an April 1, 2012, issue date and thereafter. According to Ginnie Mae, publishing the CUSIP and pool numbers will improve issuers’ ability to manage their loan pipelines and MIP loan package submissions before the pool is finalized. Both the finalized CUSIP and pool numbers as well as the future CUSIP and pool numbers for MIPs will be ...

Fannie Mae and Freddie Mac buyback demands on Countrywide mortgages were more than double the amount sought on any other lender, but the key reason is that Countrywide securitized a lot more loans than anyone else from 2006 through 2008. A new Inside Mortgage Finance analysis of representation and warranties disclosures made by the two government-sponsored enterprises shows that some $16.22 billion of Countrywide mortgages were subject to buyback demands, both before and after the company was acquired by Bank of America in 2008. In a distant second place was Wells Fargo...(Includes one data chart)

The U.S. Court of Appeals for the Second Circuit is apparently on the verge of deciding in which jurisdiction the pending $8.5 billion Bank of America/Countrywide residential MBS representations and warranties settlement with Bank of New York Mellon and investors will be finalized. The final outcome is expected to influence similar disputes involving other large mortgage originators, but probably on a smaller scale. Last week, the appeals court held a hearing to determine if the case should be moved back to New York state court, which would accelerate a conclusion of the settlement. “A final decision from...

State and local housing finance agencies are looking at ways to rekindle investor interest in single-family housing bonds, including the potential use of Ginnie Mae MBS as collateral for mortgage-related municipal bonds, according to the agency’s top executive. More housing finance agencies are considering returning to FHA and Ginnie Mae to take advantage of the government insurance and guarantee to boost their long-term, fixed-rate bonds at rates low enough for HFAs to continue offering affordable rate mortgage products, according to Ginnie Mae President Ted Tozer. As the municipal bond market...

The long-anticipated settlement among mortgage servicers, state attorneys general and federal agencies will be a positive for the housing market but have a modest impact on non-agency MBS, according to Moody’s Investors Service. The deal provides $10 billion for principal reduction loan modifications, and coupled with an expansion of the Home Affordable Modification Program, should help up to 1 million homeowners avoid foreclosure, Moody’s said. That may be a relatively small number compared to the 14.6 million households that are underwater, but it will help curb the flow of foreclosed...

The massive legal action initiated by the Federal Housing Finance Agency last year on behalf of Fannie Mae and Freddie Mac against many of the nation’s biggest lenders is getting ready to face its first legal challenge, and the federal judge’s ruling will determine the scope and direction of the cases, experts say. The FHFA lawsuits seek tens of billions of dollars in damages for losses incurred by Fannie and Freddie on purchases of approximately $200 billion in residential mortgage-backed securities.

Observers in MBS and legal circles are closely watching how a federal judge will rule on a pending motion by UBS Americas to dismiss the mortgage securities lawsuit brought last summer by the Federal Housing Finance Agency on statute of limitations grounds and the ruling’s potential impact on other pending FHFA MBS litigation. The FHFA sued UBS in July and then filed a blizzard of 17 lawsuits against some of the industry’s biggest institutions, including Bank of America, Credit Suisse, JPMorgan Chase, Morgan Stanley and others, seeking tens of billions of dollars in damages incurred by Fannie Mae and Freddie...