A white paper issued last week by the Securities Industry and Financial Markets Association recommends that a Securities and Exchange Commission mandated, but still nascent, automated securities monitoring system should and will eventually incorporate ABS and MBS products into its field of supervision. Last summer, the SEC approved a final rule requiring national securities exchanges, known as SROs, to establish a consolidated audit trail. The SEC rule requires securities exchanges and securities associations to submit to the SEC a plan to create a CAT system that will capture information regarding securities quotes and orders. In particular, the CAT system will have to track...

Investors in ABS backed by private student loans strongly oppose proposals in Congress to change bankruptcy laws in an effort to help such borrowers. In a letter this week to members of Congress, the American Securitization Forum said the proposals would increase the cost of private student loans and harm the investments of those holding private student loan ABS.

It hasn’t been an easy time for due diligence firms that make their living off the mortgage business, at least not this year. Firms like Allonhill LLC, which bulked up on staff to handle the rush of work on investor buyback demands, have been cutting back in recent months as those contracts run their natural course.

The key to advancing tomorrow’s big picture housing finance reform should begin today through a series of smaller steps starting with targeted, nearly ready-to-go reductions to Fannie Mae’s and Freddie Mac’s credit risk, according to a proposal by Moody’s Analytics.

The majority of financial institutions defending themselves against a massive litigation initiative by the Federal Housing Finance Agency on behalf of Fannie Mae and Freddie Mac for toxic mortgage-backed securities purchased by the GSEs launched a counteroffensive this week by urging a federal appeals court to intervene in their favor against the “unfair” trial judge. Fifteen banks, including JPMorgan Chase, UBS Americas, Citigroup, Deutsche Bank and Bank of America, filed a joint petition with the Second Circuit Court of Appeals in New York complaining that U.S. District Judge Denise Cote has engaged in a “one-sided” approach designed to force a settlement rather than “foster fair and reasonable determination of the issues.”

It will take about five years for the new common mortgage securitization platform being developed by Fannie Mae and Freddie Mac to become fully functional, according to Edward DeMarco, acting director of the Federal Housing Finance Agency.Testifying before the House Financial Services Committee, DeMarco explained that the plan for a single MBS platform that would be run by a new government entity separate from Fannie and Freddie “does not mean we are consolidating the companies.” The platform would have its own CEO and chairman and office space separate from the two government-sponsored enterprises. It could, in time, be sold to the private sector, he said.

Streamline refinancing helped boost FHA origination volume as lenders reported substantial increases on monthly and year-over-year bases, according to Inside FHA Lending’s latest analysis of FHA data. Despite increases in mortgage insurance premium and other policy changes aimed at reducing FHA market share and strengthening the Mutual Mortgage Insurance Fund, FHA endorsements were up 18.7 percent in January 2013 from December 2012, and a hefty 38.7 percent from January last year. However, FHA refis accounted for 54.3 percent of total production while purchase mortgages made up ... [1 chart]

Credit Suisse issued a $422.2 million non-agency jumbo mortgage-backed security last week with some of the loans in the private placement sourced from Two Harbors Investment. Two Harbors – a real estate investment trust that has been working to issue its own non-agency MBS for more than a year – is also expected to be the initial investor in the subordinate tranche of the MBS. CSMC Trust 2013-TH1 received AAA ratings from DBRS, Fitch Ratings and Standard & Poor’s, with 7.05 percent credit enhancement ...

Banks with major Ginnie Mae portfolios – and even smaller firms – increased their purchases of delinquent mortgages out of MBS pools in the fourth quarter compared to the third as a way to save money and refinance troubled loans. According to an analysis by Inside FHA Lending, the top 50 Ginnie Mae issuers bought $12.65 billion of problem loans out trusts in fourth quarter compared to $11.17 billion in the third, an increase of 13 percent. “Once you buy the loan it goes into your portfolio,” said Tim Rood, a partner in The Collingwood Group, a Washington-based advisory firm. “You can try to re-perform it and then re-securitize it,” he said. Wells Fargo, the largest Ginnie Mae servicer in the nation with a portfolio of $412 billion, purchased ... [1 chart]

Firms are looking to issue new non-agency mortgage-backed securities with looser representation and warranty standards than most post-crisis issuance, according to Fitch Ratings. The rating service issued a report this week critical of looser reps and warrants and pointed to Redwood Trust as an issuer with high standards for reps and warrants. “We believe that transactions with these more aggressive rep and warranty provisions have the potential to weaken a transaction and effectively reduce ...