High-risk mortgages securitized by Fannie Mae and Freddie Mac continued to drag down earnings for the government-sponsored enterprises in the first quarter of 2011, forcing the two GSEs to go deeper into debt to the federal government. Fannie and Freddie lost a combined $13.0 billion on their mortgage-backed security guarantee programs during the first quarter, a significant deterioration from the $6.6 billion the GSEs lost during the previous quarter, according to the Federal Housing Finance Agencys latest conservatorship report. Since the beginning of 2008 through the first quarter of 2011, Fannie and Freddie have burned through...
Residential mortgage securitization activity fell sharply during the second quarter of 2011, reaching its lowest level since the low point in the financial market meltdown of 2008. A new analysis by Inside MBS & ABS reveals that only $245.9 billion of single-family MBS were issued during the second quarter of this year, a sharp 31.0 percent downturn from the first three months of 2011. Second quarter MBS issuance wasnt much stronger than the $222.3 billion of MBS issued back in the fourth quarter of 2008, and to find a lower quarterly issuance volume you have to go ... [includes one data chart]
Fitch Ratings has updated its criteria for non-agency MBS, making changes to its standards for representations and warranties, due diligence and originator reviews to better determine credit risk for new issues. Three separate reports released last week revise existing criteria the rating agency created in 2008. Originator reviews, loan-level due diligence results, and the quality of representations and war-ranties to a transaction are key elements of ...
Fannie Mae and Freddie Mac issued $154.95 billion in single-family mortgage-backed securities during the second quarter of 2011, a 40.6 percent drop from the first three months of the year.The recent April-June cycle represented the second straight quarterly decline in business volume since the fourth quarter 2010 surge when the two GSEs issued $331.5 billion in MBS.
An official from the Federal Reserve Bank of New York defended the joint agency proposed rule on risk retention, claiming that it doesnt do anything to block incentives to securitize. The proposed rule has been widely criticized by Wall Street and other financial institutions, which have urged the agencies to start over again with a new proposal. I dont understand how you would get...
Ginnie Mae has made some changes regarding the collection and reporting of data on the underlying collateral that backs outstanding Ginnie Mae MBS. The goal is to expand the type of data collected at pool issuance to provide greater transparency and more relevant information to investors. The technical changes were laid out this week for Ginnie Mae program participants during a webinar hosted by the agency. Some of the changes relate...
It was a bad litigation week for MBS issuers after a federal regulator and a federal judge filed lawsuits and certified a class action, respectively, on behalf of institutional investors that lost billions of dollars when the collateral underlying the securities dropped in value. On June 20, the National Credit Union Administration, acting as liquidating agent for five failed credit unions, filed lawsuits against JPMorgan Securities and RBS Securities for allegedly misrepresenting the risks of MBS investments and systematically disregarding underwriting guidelines. The NCUA is seeking to recover more than $800 billion in MBS losses that led to...
Expect the $11 trillion residential mortgage market to continue struggling to find its footing as market watchers anxiously await for an improved economy and employment picture to revive the sector from recession-induced stupor, according to the Aite Group. Although the residential mortgage market will eventually come back as the economy improves, the ease and speed with which the mortgage-backed securities market recovers is highly dependent on the structural and regulatory forces governing MBS securitization, particularly as it relates to ...
Four more executives have been handed down jail terms for their role in a $2.9 billion fraud scheme that defrauded Freddie Mac, among others, and contributed to the failures of Colonial Bank and Taylor, Bean & Whitaker.
The proposed rule on risk retention for MBS and ABS needs to be re-drafted and published again for another round of public comment because many definitions are unclear and, as it stands now, the proposal is a viable threat to the securitization market, according to industry groups. Although federal regulators recently extended the comment period on the proposal, both the Se-curities Industry and Financial Markets Association and the American Securitization Forum submitted detailed critiques of the plan late last week. SIFMA has described...