Securitization representatives are forcefully pushing back against a proposal under review by three jurisdictions in California to use eminent domain to seize performing, underwater mortgages out of non-agency MBS pools, renegotiate them on terms more favorable to the borrowers, and repackage and sell them off to another group of private investors. Last Friday, a joint powers authority created by San Bernardino County and two of its cities, Ontario and Fontana, formally convened for the first time for an organizational meeting. Two groups that represent the securitization industry, the American Securitization Forum and the Securities Industry and Financial Markets Association, expressed their opposition during the meeting. The ASF said that “this inappropriate use of government power,” which is based on a plan by San Francisco-based Mortgage Resolution Partners, a private investment firm, was “designed...

Alleged manipulation of the London Interbank Offered Rate could have had a significant impact on investments in MBS and ABS, according to industry analysts. However, three weeks after Barclays Bank reached a settlement with regulators on LIBOR manipulation, major securities investors have yet to voice concerns about potential losses tied to the interest rate benchmark. Tom Deutsch, executive director of the American Securitization Forum, said he has not heard any “hubbub” from investors thus far about the impact of potential LIBOR manipulation. The Securities Industry and Financial Markets Association, the Association of Mortgage Investors and the Association of Institutional Investors did not reply to requests for comment on the issue. Laurie Goodman, a senior managing director at Amherst Securities Group, said it is unknown...

A surge in securitization of home purchase-money mortgages during the second quarter was not enough to offset a sizable drop in refinance activity during the first three months of the year, according to a new Inside MBS & ABS analysis and ranking. A total of $372.85 billion of agency single-family MBS was issued during the second quarter, down 3.1 percent from the first three months of 2012. Although securitization of purchase mortgages rose 22.4 percent, partly from seasonal factors as well as firming in the housing market, the volume of refinance loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae declined 10.6 percent.Includes two data charts.

A federal judge in New York has given the go-ahead for a group of investors in an IndyMac Bank MBS offering to proceed as a class in a suit against Credit Suisse, the offering’s underwriter. The June 29 ruling by U.S. District Judge Lewis Kaplan granted a December 2010 request for class certification to investors as they allege Credit Suisse misled them about the quality of toxic loans underlying a $642 million MBS offering in 2006. The plaintiffs claim in their suit that the sale of the MBS, Residential Asset Securitization Trust 2006-A8, sponsored by IndyMac Bank, violated the Securities Act of 1933 because the offering falsely represented that the underlying mortgage loans were originated in accordance with IndyMac’s underwriting standards.

Moody’s Investors Service is warning that the booming market for subprime auto ABS is poised to potentially overheat as growing demand could push lenders to loosen underwriting standards to boost volume, repeating what occurred during the 1990s. A recent Moody’s report cites emerging parallels between the U.S. subprime auto lending mar-ket today and the early 1990s when investor capital flocked into the sector by charging high loan rates while enjoying low funding costs. When the ‘90s lending boom went bust, net losses in subprime auto ABS jumped from under 3 percent in early 1995 to over 10 percent in 1997, according to Moody’s.

A subsidiary of Credit Suisse Group issued its second non-agency jumbo mortgage-backed security of the year last week. The transaction was backed by $425.09 million of jumbo mortgages, largely originated by MetLife Home Loans, which ceased originations at the beginning of this year. The privately-placed deal – CSMC Trust 2012-CIM2 – received AAA ratings from Standard & Poor’s and DBRS with credit enhancement of 8.25 percent on the AAA tranche. S&P also placed a AAA rating on CSMC Trust 2012-CIM1, the $741.94 million ...

Loan modifications performed on mortgages in bank portfolios perform much better than mods on mortgages included in non-agency mortgage-backed securities, according to an analysis by Inside Nonconforming Markets of new data from the Office of the Comptroller of the Currency. The performance varies significantly even as the two types of non-agency mortgages receive the vast majority of principal reduction loan mods. The 12-month re-default rate on mods implemented from 2008 through the first quarter of 2011 was ...

Relatively few repurchase demands on mortgage loans backing non-agency MBS were resolved during the first quarter of 2012, according to a new Inside MBS & ABS analysis of disclosure filings made by 34 securitizers. The securitizers reported that a total of $29.03 billion of loans were in some stage of the process following demands that the mortgages be repurchased because of breaches of representations and warranties by the originator of the loans. But of that amount, some $28.62 billion – 98.6 percent of total activity – were classified...(includes one data chart)

Roughly 27 percent of outstanding Ginnie Mae MBS pools are eligible for the FHA’s revised streamline refinancing program, which could translate to $36 billion in new annual Ginnie Mae issuance, according to a report from Barclays Research. Barclays analysts estimated that about $293.0 billion of Ginnie Mae’s $1 trillion-plus 30-year loan pools were originated before May 2009. About 79 percent of the collateral backing these pools are FHA loans, which suggests that as much as $232.0 billion could qualify...

The gap between the performance and liquidity of Fannie Mae and Freddie Mac MBS continues to widen and a proposal to make their securities interchangeable is gaining traction among stakeholders. But unless a workable valuation solution is found, bridging that gap between the two government-sponsored enterprises will remain nearly impossible, said the Mortgage Bankers Association. Pricing differences between Fannie and Freddie have grown...