MBS and ABS investors would have an easier time organizing to press deal sponsors to address potential problems under a revised proposed rule on shelf registration that was approved by the Securities and Exchange Commission this week. The agency made several major changes to its proposed overhaul of shelf eligibility requirements that was aired back in 2010 and put the revised package out for public comment. Most of the changes reflect public comment on the original proposal as well as the passage of the Dodd-Frank Act. Under the latest proposal, MBS and ABS issuers would be required to ...

The Federal Housing Finance Agency this week filed suit against UBS Securities and various related entities as well as former top officials of the firm over alleged misrepresentations on subprime and Alt A MBS sold to Fannie Mae and Freddie Mac. The two government-sponsored enterprises bought some $4.5 billion of non-agency MBS issued on two UBS shelf registrations between September 2005 and August 2007. The deals included single-seller and conduit transactions with mortgages originated by ...

Trustees of residential MBS should consider themselves “on notice” that they need to be much more attentive and aggressive in meeting their obligations under the pooling and servicing agreements governing MBS trusts, according to a trade group representing investors. Last week, the Association of Mortgage Investors sent letters to several major MBS trustees – including JPMorgan Chase, Deutsche Bank, US Bank, Wells Fargo and Bank of New York – remind-ing them of their legal obligations to RMBS certificate holders. The AMI letter also informed trustees that ...

The Federal Reserve’s proposed rulemaking that would establish the “qualified mortgage” as a standard for complying with the ability-to-repay requirement under the Dodd-Frank Act would create a number of significant legal liabilities that will threaten buyers of MBS, Wall Street groups said. The American Securitization Forum emphasized that questions about the lack of objective criteria in the proposal for determining whether a loan is a QM, and how little legal certainty the final rulemaking would actually provide, become of “critical importance when ...

Credit rating agencies and government regulators are making wholesale changes to the way they come up with and use credit ratings in order to prevent a repeat of the financial meltdown, witnesses at a hearing of the House Committee on Financial Services said. “While much has changed with regard to credit ratings and credit rating agencies over the course of the past several years, our fundamental mission remains the same: to provide the market with independent benchmarks about the creditworthiness of ...

The Federal Housing Finance Agency this week filed a lawsuit against UBS Americas alleging misstatements and omissions on non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac. FHFA Acting Director Edward DeMarco warned that further action against other non-agency MBS issuers is likely. “From the issuance of 64 subpoenas last year to the filing of this lawsuit and further actions to come, we continue to seek redress for the losses suffered by ...

An increasing number of non-agency mortgage-backed security investors have opposed Bank of America’s proposed $8.5 billion settlement related to buybacks and servicing. The proposed settlement announced last month was seen as a precedent for the sector, though final approval remains far from certain. MBS investors have raised concerns about the settlement price, conflicts of interest and second liens, among other issues. If approved, the settlement would apply to all investors in the 530 Countrywide Financial securities in question, not just to the 22 large firms represented by ...

The impact of lower loan limits on the supply of Ginnie Mae mortgage-backed securities and other agency MBS would be very modest and that such loan limit changes should not affect Ginnie Mae prepayments, according to a recent analysis by Barclays Capital. With respect to agency MBS supply, the “permanent” lower loan limit established by the Housing and Economic Recovery Act of 2008 should cut the combined issuance of both conventional and Ginnie Mae pools by about 5 percent, the report said. The report, among other things ...

As FHA tightens its underwriting further to give more room for private capital in the mortgage market, the federal single-family mortgage insurance program may no longer provide mortgage alternatives for as many “non-qualified residential mortgage” borrowers as it would have in the past, according to a new report issued by the Government Accountability Office. Analyzing the impact of the Dodd-Frank Act on homeowners and the mortgage market, the GAO report concludes that potential changes in the FHA’s role could influence ...

The Department of Housing and Urban Affairs’ Office of the Inspector General recommended that HUD obtain complete documentation to close Ginnie Mae contracts after an audit uncovered flawed procedures at the Office of the Chief Procurement Officer. The OIG called for tighter procedures after finding that the procurement office did not get documentation from Ginnie Mae to close out completed and expired Ginnie Mae contracts in a timely manner. That was a violation of HUD’s guidelines for contract closeout procedures, the internal watchdog unit said. In addition, Ginnie Mae did not follow department guidelines ...