A proposal from the Financial Industry Regulatory Authority to begin disseminating data for agency MBS traded as specified pools could compromise the confidentiality of market participants and discourage them from future participation, according to the Securities Industry and Financial Markets Association. The FINRA wants to implement shorter reporting timeframes for MBS-SP transactions (initially two hours, then one hour), as well as real-time dissemination of trade information. Volume information would be capped at $10 million. Trades above that amount would be displayed as “10+.” “Our dealer and...

Both Fannie Mae and Freddie Mac held onto their ample shares of mortgage-backed securities with something of a bump during the first quarter of 2012, according to a new Inside The GSEs analysis. The GSEs issued a combined $303.9 billion in MBS during the first quarter, a 13.9 percent increase from the fourth quarter of 2011. Compared to the first quarter of last year, Fannie and Freddie saw a 16.4 percent increase in MBS issuance. Between the two companies, Fannie and Freddie registered a plentiful 77.9 percent share of new MBS during the period that ended March 31, 2012, up from 77.1 percent the two companies held during the fourth quarter of 2011 and much farther apart from the 74.8 percent both GSEs held during the first quarter of 2011.

Look for the Federal Housing Finance Agency to press its multiple legal actions against many of the nation’s biggest issuers of non-agency mortgage-backed securities after a federal judge rejected a bid by UBS Americas to turn back the FHFA’s lawsuit over its sale of non-agency MBS to Fannie Mae and Freddie Mac. Judge Denise Cote, of the U.S. District Court for the Southern District of New York, two weeks ago denied UBS’ motion to dismiss on statute of limitations grounds, while dismissing the FHFA’s negligent misrepresentation claims. The FHFA, as GSE conservator, sued UBS in July 2011 alleging that billions of dollars of MBS purchased by Fannie and Freddie were based on offering documents that contained “materially false statements and omissions.”

The Mortgage Bankers Association is pushing a proposal to change the remittance schedule on Freddie Mac participation certificates and make them fully fungible with Fannie Mae pass-through MBS for good delivery under to-be-announced guidelines. The proposal would address the historical discount to Fannie MBS at which Freddie securities trade, said MBA President Dave Stevens during the group’s National Secondary Market Conference in New York this week. Freddie PCs typically trade 1 or 1.5 points behind Fannie MBS, a difference that Freddie Mac – and ultimately U.S. taxpayers, now that the government-sponsored...

Participants in the startup of the new central counterparty for agency MBS trades realized a sharp reduction in costs and operational risks, according to the CCP’s sponsor, the Depository Trust & Clearing Corp. The first settlement cycle run through the CCP resulted in a 70 percent reduction in the volume of pools and payments needed to settle all the trades, said the DTCC. The central counterparty began operation on April 2. In the first trade cycle, the CCP was able to reduce some 43,000 pool allocations to fewer than 13,000 through netting, the sponsor reported. As the month went along and...

Bank of America’s pending $8.5 billion settlement with non-agency MBS investors appeared to gather some momentum last week following a BofA-favorable ruling by a New York state court. New York State Supreme Court Justice Barbara Kapnick ruled the case will move forward under Article 77 rather than a broader plenary action sought by investors opposed to the amount of the settlement. The proposed settlement reached last June with 22 institutional investors would resolve BofA’s liability related to non-agency MBS issued by Countrywide. Supporters of the settlement, including the trustee, Bank of New York Mellon...

Although Fannie Mae and Freddie Mac have begun buying the latest generation of Home Affordable Refinance Program mortgages with loan-to-value ratios exceeding 125 percent, a number of lenders are holding these loans in the pipeline until the government-sponsored enterprises open the spigot on securitization options for these loans. According to the Federal Housing Finance Agency, Fannie and Freddie purchased 1,548 of the high LTV HARP loans in February. FHFA Senior Associate Director Meg Burns said during an Inside Mortgage Finance webinar this week that a similar volume of 125+ LTV loans were...

Fitch Ratings has placed 157 residential MBS classes serviced by Residential Capital on Rating Watch Negative as the ailing subsidiary of Ally Financial slid closer to bankruptcy. The rating action came on the heels of a Fitch downgrade of ResCap’s issuer default rating to ‘C’ from ‘CCC’ on April 18. In addition, Fitch placed GMAC Mortgage’s servicer rating on Rating Watch shortly before the adverse rating action against ResCap. Fitch said the coordinated rating actions reflect the current uncertainty for the servicing portfolio due to the growing possibility of a bankruptcy or debt restructuring for...

Short sales on mortgages included in non-agency mortgage-backed securities have increased sharply in the past year, as a percentage of total distress property dispositions, according to analysts at Deutsche Bank Securities. The loss mitigation technique is seen as beneficial for borrowers, portfolio servicers and non-agency MBS investors, especially compared with foreclosure costs and timelines. “Short sales typically result in faster resolution and significantly higher principal recovery,” the analysts said. Short sales accounted for about ...

The Obama administration’s Residential MBS Working Group, set up in January to probe misconduct that drove the financial crisis, is apparently trying to tap the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to make such cases easier to bring. Although it hasn’t been used that much, the appeal of pursuing criminal investigations under FIRREA is apparently the relatively lower burden of proof than bringing more traditional criminal charges. Also, FIRREA has a longer statute of limitations than do other finance-related laws, along with the potential for large fines...