The Treasury Market Practices Group this week issued new guidance on the system of charges for failed agency MBS trades that went into effect earlier this year, hoping to address lingering industry concerns about the voluntary program. The group acknowledged that market participants will likely see an increase in operational expenses from the system, but participants should see a decline in the amount of resources they have to commit to addressing these issues as the number of failed trades declines. For the agency MBS market, the TMPG said its recommended two-day resolution period should allow...
A Chicago police officers pension fund has filed suit against Bank of America and U.S. Bancorp, claiming that the two banks failed to protect investors during their turn as MBS trustees and violated an obscure, seven-decade-old federal securities statute. The lawsuit, brought last week by the Chicago Policemans Annuity & Benefit Fund, said that BofA, and later U.S. Bank as successor trustee, regularly disregarded their contractual and statutory duties by failing to oversee some 41 Washington Mutual trusts backed by home loans. By failing to perform their duties, defendants have caused MBS holders...
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...
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.OCCs 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 Fannies 18.8 percent.
An ongoing Securities and Exchange Commission investigation into possible misconduct related to Wells Fargos 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 Fargos 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 Moodys Investors Service report. The rating agencys 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 Moodys report observes Bank of America, Chase, Citi, GMAC, Ocwen and Wells Fargo the...
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. Treasurys 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...
The non-agency MBS market showed some spark as always-performing loans continued to improve in February and more nonperforming loans moved to the re-performing bucket, according to Amherst Securities Groups latest analysis of the mortgage market. In its February report, Amherst said first-time defaults from the always-performing bucket dropped to 0.75 percent during the month from 0.82 percent in January. In dollar terms, new defaults constituted $4.0 billion, down from $4.4 billion the previous month, the firm reported. On a year-over-year basis, always-performing loans were down to $525.6 billion from...
Fannie Mae and Freddie Mac buyback demands on Countrywide mortgages were more than double the amount sought on any other lender, but the key reason is that Countrywide securitized a lot more loans than anyone else from 2006 through 2008. A new Inside Mortgage Finance analysis of representation and warranties disclosures made by the two government-sponsored enterprises shows that some $16.22 billion of Countrywide mortgages were subject to buyback demands, both before and after the company was acquired by Bank of America in 2008. In a distant second place was Wells Fargo...(Includes one data chart)