The consensus among mortgage market watchers is that the downgrade earlier this month of the GSEs by Standard & Poor’s will have no immediate, detrimental impact even as Fitch Ratings this week said it is keeping Fannie Mae and Freddie Mac’s “AAA” rating.Fitch this week also said its outlook for Fannie and Freddie’s ratings remained “stable.” The move was in concert with Fitch’s decision to keep its rating on U.S. debt at the highest grade.“A key element of the explicit support is the guarantee by the U.S. Treasury to inject funds into Fannie Mae and Freddie Mac, so that each firm can avoid being considered technically insolvent by their regulator,” said the rating agency.

The rush to Treasuries that resulted from investor fears about the U.S. and European economies has pushed interest rates closer to the level where a major mortgage refinance wave could start to take shape, but analysts say it’s a good time to load up on agency MBS. “The Fed’s commitment to keep interest rates low until at least mid 2013 strongly improves demand technicals for MBS, in our view,” said analysts at Credit Suisse in a report issued after the Federal Open Market Committee vowed to keep rates at historically low levels for at least two more years. “This provides ...

New York Attorney General Eric Schneiderman blew the whistle on a pending settlement between Bank of America and MBS investors worth $8.5 billion for Countrywide non-agency MBS issued before the financial crisis. Schneiderman last week filed a lawsuit against Bank of New York Mellon – a party to the settlement – for allegedly committing fraud while acting as trustee for MBS trusts securitized by BofA, and asked the court to reject the settlement proposal. “In negotiating the proposed settlement, BNYM labored under a conflict of interest because it stands ...

The recent rancorous debate over raising the debt ceiling brings little hope of relief from the overwhelming amount of regulation coming down the pike. Analysts say the uncertainty has made it more difficult to quantify risks for MBS and other securitized products. Analysts at Bank of America/Merrill Lynch said the outcome of the debate was far worse than expected, forcing them to temper their optimism for securitized products. Instead, they are calling for a more neutral exposure. “The pragmatism we thought we would see never really emerged,” said Chris Flanagan, an analyst with the firm. “Instead ...

The FHA has announced changes to help ensure prompt, accurate and consistent responses to industry and public inquiries about FHA matters. The new primary electronic mail address and Internet site of the FHA Resource Center, which includes a Frequently-Asked-Questions site, will be easier to remember and access, according to the FHA. The new email address is answers@hud.gov, which replaced the previous info@fhaoutreach.com. The site address for the FHA FAQ site will change from www.fhaoutreach.gov/FHAFAQ to www.hud.gov/answers. Users should begin using the new addresses exclusively on Aug. 15, according to the FHA. The primary...

The zero risk weight for Ginnie Mae mortgage-backed securities remains despite Standard & Poor’s recent lowering of the long-term rating of the U.S. government and federal agencies from AAA to AA+ and affirmation of the A-1+ short-term rating, according to federal regulators. The rating agency also removed both the short- and long-term ratings from CreditWatch, where they have been since July 14 with negative implications. On August 5, federal banking and credit union regulators announced that, for risk-based capital purposes, the risk weights for Treasury securities and securities guaranteed by...

Short of a market miracle, the chances of other Ginnie Mae mortgage-backed securities servicers catching up with market leaders Wells Fargo and Bank of America are practically nil. Wells Fargo and BofA appear to have a solid lock on 55.0 percent of Ginnie Mae servicing outstanding based on a combined portfolio total of $634.0 billion at the end of June. Overall, the supply of Ginnie Mae servicing grew 3.8 percent during the second quarter. Wells Fargo commanded a 28.2 percent share of Ginnie Mae servicing during the second quarter, up 4.7 percent from the first quarter. Not far behind is second-ranked BofA with a 26.6 percent share, thanks to... [Includes one data chart]

Officials testifying before a Senate Banking, Housing and Urban Affairs Committee hearing this week came out in strong opposition to eliminating a government guarantee in the MBS market of the future, claiming that such measures would have a significant impact on borrowers’ ability to obtain plain vanilla 30-year fixed-rate mortgages. “Many large investors utilize the MBS market to execute trades driven by macroeconomic views and would not utilize a market which combines credit risk with interest rate risk,” said Andrew Davidson, president of Andrew Davidson & Co., an analytics and consulting firm. “With a smaller investor base, liquidity would be...

Nationally recognized statistical rating organization Kroll Bond Rating Agency demonstrated its optimism in the non-agency market by requesting public comment this week on its rating methodology for evaluating residential MBS. “By providing complete transparency into our approach and processes, we aim to instill trust in the market and to raise the bar on ratings accuracy,” said James Nadler, Kroll’s president, in a statement. “These [publications on our proposed rating process] demonstrate our strong commitment to serving the market through a rigorous evaluation of the collateral as well as key parties in an RMBS, and combine all aspects of...

Two Harbors Investment Corp. said this week it is “impressed with the investment opportunities” in the non-agency MBS sector, particularly over the next year and beyond and is pushing forward with its plans to begin a securitization program. Thomas Siering, president and CEO of the New York-based real estate investment trust, said during a conference call to discuss the firm’s second quarter earnings that despite the “challenging” non-agency environment in June, there is tremendous opportunity to profit from non-agency MBS issuance throughout the rest of this year into 2012. “The recent pullback in the non-agency market has created...