Wells Fargo and JPMorgan Chase reclassified more than $3 billion of second-lien mortgages as nonperforming loans in the first quarter of 2012, a move other banks have copied. Both Wells and JPMorgan said that federal guidance from late January was behind the change. Wells characterized $1.7 billion of subordinate home-equity loans as nonperforming and JPMorgan assigned $1.6 billion to that status. “We do not view this as a material shift in the performance of these loans or the reserving methodology,” Fitch Ratings wrote. “However, increased regulatory scrutiny of second liens may continue to...

A subsidiary of Credit Suisse Group issued a $741.94 million non-agency jumbo mortgage-backed security at the end of March, the first jumbo issuance by a company other than Redwood Trust since 2008. CSMC Trust 2012-CIM1 included some unique characteristics prompting criticism from Fitch Ratings and speculation about whether Credit Suisse will issue more non-agency MBS. Standard & Poor’s and DBRS placed AAA ratings on the senior bond in the privately-placed deal based on 8.00 percent credit enhancement. Fitch – which was paid to provide feedback on the deal but ultimately was not selected to rate the deal – said the credit enhancement for the AAA tranche should have been 9.75 percent ...

Credit Suisse has joined Redwood Trust to push the comeback of the non-agency MBS sector with a new public issue, while Springleaf Financial has put together another securitization backed by seasoned subprime mortgages. The Credit Suisse transaction, CSFB Mortgage Securities 2012-CIM1, is backed by $1.4 billion of prime residential mortgages, 82 percent of which had been originated by MetLife Home Loans. The deal sparked some controversy among rating services as Fitch Ratings questioned whether it had enough credit enhancement to cover risks related to property valuations on many of the...

Some liberal interest groups are questioning whether the RMBS working group formed by federal and state enforcement agencies to coordinate securitization investigations is moving fast enough. In an email circulated earlier this week, CREDO, a progressive network, wrote that the Department of Justice has yet to deliver on its promise of 55 investigators to the RMBS working group. As federal and state enforcement agencies were wrapping up the contentious $25 billion settlement with five mortgage servicers in late January, U.S. Attorney General Eric Holder announced a new task force designed to “stream...

Mortgages modified by Freddie Mac performed slightly better than Fannie Mae loans in the short term while the performance gap between the two GSEs widened further one year after modification, according to the Office of the Comptroller of the Currency.OCC’s latest Mortgage Metrics Report noted that Freddie loans had an 11.3 percent re-default rate three months after modification, while Fannie mods saw an 11.7 percent rate. At the six-month mark, Freddie stood at 18.1 percent compared to Fannie’s 18.8 percent.

Mortgage lenders delivered a hefty $303.9 billion in single-family home loans to Fannie Mae and Freddie Mac securitization programs during the first quarter of 2012, the biggest flow of new business to the government-sponsored enterprises in over a year, according to a new analysis and ranking by Inside Mortgage Finance. During the first three months of 2012, GSE single-family securitization jumped 16.2 percent from the fourth quarter. It marked the fourth straight quarterly increase in production of Fannie and Freddie mortgage-backed securities after the market troughed...(Includes three data charts)

An ongoing Securities and Exchange Commission investigation into possible misconduct related to Wells Fargo’s sale of almost $60 billion in MBS has resulted in the agency filing a subpoena enforcement action in the U.S. District Court for the Northern District of California against the firm. “The commission is investigating possible fraud in connection with Wells Fargo’s sale of nearly $60 billion in residential MBS to investors,” the SEC said. “Pursuant to subpoenas dating back to September 2011, the bank was obligated to produce (and agreed to produce) documents to the...

Residential MBS investors should expect loans in states that require judicial review for every foreclosure to incur greater costs as they make their way through the foreclosure process, according to a new Moody’s Investors Service report. The rating agency’s fourth quarter 2011 Servicer Dashboard found that the average days in foreclosure at year-end 2011 stood at 654 days in judicial states and 297 days in non-judicial states with further increases in the foreclosure timelines expected. Of the six banks the Moody’s report observes – Bank of America, Chase, Citi, GMAC, Ocwen and Wells Fargo – the...

The Securities and Exchange Commission and Wells Fargo are in a dispute regarding due diligence reports relating to almost $60.0 billion in non-agency mortgage-backed securities issued by Wells between September 2006 and early 2008. The SEC last week filed a subpoena enforcement action against Wells for failure to produce documents. The bank disputes the SEC’s account. The SEC said it has been seeking the documents since September. The regulator claimed that Wells agreed to produce the documents but has failed to do so. The SEC said its action relates to its investigation into whether Wells made material misrepresentations or omitted material facts on certain non-agency MBS issued by the bank ...

The Treasury Department this week finished winding down its holdings of Fannie Mae and Freddie Mac MBS, claiming a positive return of $25 billion for the U.S. taxpayers from a market stabilization initiative launched in the teeth of the 2008 financial market meltdown. Treasury’s holdings of MBS issued by the two government-sponsored enterprises peaked at $197.6 billion in December 2009. “These MBS purchases helped preserve access to mortgage credit during a period of unprecedented market stress,” the agency said. The Federal Reserve agency MBS investment program was far bigger, peaking at $1.12...