Springleaf Finance continues to consider an initial public offering for its real estate investment trust as a way to refinance a portion of its business to pay off debts. The Springleaf REIT filed for an IPO in May and while investor demand has not been overwhelming, the company maintains that it is still considering going public. “The REIT will be primarily engaged in the business of sourcing, screening and acquiring performing whole loans secured by mortgages on residential real estate,” Springleaf Finance said ...

With no end in sight for the conservatorships of Fannie Mae and Freddie Mac and huge obstacles to the recovery of the non-agency MBS market, Washington policymakers and industry analysts are searching for ways to bring private capital into the mortgage market without jeopardizing the stability provided by government mortgage finance programs. Analysts at Barclays Capital think they have found a way. The company this week released a paper outlining a new program through which the government-sponsored enterprises would issue a new form of unsecured debt with cash flows linked to...

As the Securities and Exchange Commission considers updating its oversight of asset-backed securities issuers, such as enhancing investor protections and changing the use of credit rating agencies, major players in the securitization market are split on whether – and how – it should do so. The SEC is considering whether to revise Rule 3a-7, which excludes qualified ABS issuers from being classified as investment companies under the Investment Company Act of 1940. The rule now includes several conditions that refer to credit ratings by nationally recognized statistical...

Major mortgage servicers are widely expected to agree to principal reduction for some struggling homeowners as part of the price of settling complaints over foreclosure practices brought by state attorneys general. That idea doesn’t sit well with some MBS investors, who are concerned that they will end up paying some of the cost of reducing principal as a way to keep distressed borrowers in their homes. The Association of Mortgage Investors warns that principal reduction of securitized loans would be akin to forcing the middle class to bear the settlement’s burden. In a statement, the AMI warned that principal reductions could...

Legislative proposals for a TBA market backed by non-agency MBS as an alternative to a market driven by government-sponsored enterprises lack precedence and are full of unknowns, according to analysts. “While this is a laudable effort – and a necessary one in order to remove the government’s sup-port from the housing finance market – the extent to which private enterprise will be able to pick up the slack the GSEs leave behind is unknown,” said Benjamin Feldman, a housing policy analyst and advocate. Peter Wallison, an Arthur F. Burns fellow in financial...

Freddie Mac this week announced a new class of single-family MBS backed by mortgages previously repurchased from MBS because they were in serious delinquency. Both government-sponsored enterprises began aggressively buying seriously delinquent loans out of their MBS trusts at the beginning of 2010 because new accounting rules required them to consolidate all their outstanding MBS on their balance sheets. Buying the distressed loans out of the MBS trusts had no impact on their financial accounting, but it allowed them to better manage...

Although primary market lenders will face fewer hurdles in originating refinance loans for underwater Fannie Mae and Freddie Mac borrowers, detailed guidelines released by the government-sponsored enterprises this week confirm that it will take several months before the expanded programs are fully implemented. And when they are, the revamped Home Affordable Refinance Program will generate up to one million new loans that otherwise wouldn’t have happened, according to estimates by Keefe, Bruyette & Woods. That’s just about what the market expected, and it will mean... (Includes one data chart)

Four years after the credit crisis, analysts at Fitch Ratings expect eventual losses from structured finance transactions to soar from current levels, about $94 billion, or 2.7 percent of the original balance of rated transactions, to $376 billion, or 10.6 percent, by the time the dust settles. And the primary culprit, of course, is residential MBS. “Fitch expects a further 9,754 tranches to not recover their full principal, representing 33 percent of all tranches and increasing the proportion of tranches with realized or expected losses to 63 percent of the total...

Mortgage real estate investment trusts, along with investors, urged the Securities and Exchange Commission to maintain certain exemptions for mortgage REITs or risk further housing finance issues. REITs are seen as key in efforts to reduce the federal government’s current support of mortgage finance. “Mortgage-focused real estate investment trusts, such as Redwood, are well-suited to carry out this key mortgage banking business function,” said Andrew Stone, general counsel for Redwood Trust. “However, these companies need to continue to be able to rely on the [SEC] exclusion in order to efficiently and effectively carry out...

The fallout from Taylor, Bean & Whitaker’s collapse in 2009 continues to haunt Ginnie Mae after a recent independent auditor’s report found a potential overstatement of the agency’s portfolio of mortgages-held-for-investment (MHFI) apparently linked to the TBW debacle.The report by Clifton Gunderson, a Fairfax, VA-based certified public accounting firm, attributes the apparent portfolio anomaly to the current document custodian’s failure to complete a review and provide a final certification on the non-performing TBW loans. Ginnie Mae repurchased the loans from the defaulted TBW mortgage-backed securities pools and reclassified them as MHFIs. Overall, independent auditors signed off on Ginnie Mae’s FY 2011 balance sheet and found no material weaknesses in internal control over financial reporting or any instance of noncompliance. Auditors, however, noted ...