Observers in MBS and legal circles are closely watching how a federal judge will rule on a pending motion by UBS Americas to dismiss the mortgage securities lawsuit brought last summer by the Federal Housing Finance Agency on statute of limitations grounds and the rulings potential impact on other pending FHFA MBS litigation. The FHFA sued UBS in July and then filed a blizzard of 17 lawsuits against some of the industrys biggest institutions, including Bank of America, Credit Suisse, JPMorgan Chase, Morgan Stanley and others, seeking tens of billions of dollars in damages incurred by Fannie Mae and Freddie...
A week after federal and state enforcement agencies launched a residential MBS investigative effort, reports have surfaced that Ally Financial, Bank of America, Citigroup, Deutsche Bank and Goldman Sachs are about to be sued by the Securities and Exchange Commission for allegedly misrepresenting the quality of mortgages they packaged and sold to investors. Officials at the SEC, which never confirms specific Wells Notices of impending legal action, declined to comment on the investigation, as did spokesmen for Ally, Citi and Goldman. Representatives from Bank of America and Deutsche Bank did not...
While a major regulatory concern of the past few years the risk-retention rule has yet to be resolved, the industry is squaring its shoulders for new challenges: the so-called Volcker Rule, a proposal on conflicts of interest in securitization and new bank capital requirements regarding market risk. These projects could do enormous or irreparable damage to the industry, and entire sectors of the industry could be lopped off, said Tom Deutsch, executive director of the American Securitization Forum, during the ASF conference last week in Las Vegas. Only about one eighth of the regulatory requirements...
The Obama administration late last week announced that it is extending its Home Affordable Modification Program for another year and sweetening the inducements to get investors to agree to principal reduction loan mods. MBS analysts generally grade the changes as a positive for the non-agency MBS market, but the impact on Fannie Mae and Freddie Mac securities may depend on whether the government-sponsored enterprises agree to principal reductions. The revised HAMP program will now be available for investor-owned mortgages, and it will feature a revised debt-to-income calculation taking into...
MBS and ABS markets in the U.S. are increasingly being shaped by global forces, from the impact of the European debt crisis to the worldwide adoption of new international regulatory standards and the surge in Euro securitizations thats taking up some of the slack from the depressed U.S. non-agency MBS sector. There was an unmistakable international flavor to the ASF 2012 conference sponsored by the American Securitization Forum in Las Vegas this week. A significant number of the more than 5,000 attendees an ASF record came from outside the U.S., and numerous panels were devoted to global issues...
The U.S. residential housing market used to provide the lions share of business for non-agency asset securitization, but experts at this weeks American Securitization Forum say it will take years for the sorely damaged housing market to recover and the nationalized mortgage finance system to be overhauled. Supply and demand fundamentals in the housing market are severely broken, said Laurie Goodman, senior managing director at Amherst Securities Group. There are some 2.9 million borrowers in foreclosure or more than 12 months delinquent, plus another 400,000 units of real estate-owned properties. With...
With a price tag of $100 billion required to forgive the principal of underwater Fannie Mae and Freddie Mac mortgages, the best bet for the government-sponsored enterprises and for taxpayers is for the GSEs to pursue a policy of principal forbearance, the Federal Housing Finance Agency said. This week, the FHFA released its analysis conducted in 2010 following numerous requests and an eventual threat of subpoena by House Democrats. The agencys number crunchers found that principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure. As of June 30, 2011, Fannie and Freddie...
The aging of the subprime and prime mortgages that back the shrinking universe of non-agency MBS is gradually changing the performance trends of these loans, according to analysts speaking at a Fitch Ratings conference in New York this week. Selection bias changes in the composition of the remaining subprime and prime mortgage pools as borrowers default or refinance will mean different things for different asset classes, but differences between the two will likely become less pronounced over the next year, analysts said. Grant Bailey, a managing director at Fitch, explained that in many ways...
Despite lower mortgage rates, MBS prepayment speeds slowed across the board in December, particularly for the recent low coupons, while speeds for higher coupons were up slightly, according to securitization analysts. Researchers varied slightly in their estimates, saying speeds for 30-year Fannie Mae securities slowed 2-6 conditional prepayment rate for the recent low coupons (3.5-4.5 percent from 2011 and 2010). Barclays Capital analysts attributed the slowdown to reduced refinancing activity during the December holiday season. The weighted average CPR for all Fannie Mae MBS declined to...
Some mortgage servicers have done a better job than others in adjusting to a market environment of high default and foreclosure rates, according to a new Barclays Capital report, and the difference can have a significant impact on the value of non-agency mortgage securities they service. Servicing is not as easy as it used to be and has come much more under the spotlight, Barclays noted. Servicers have to work with distressed borrowers to determine whether loan modification, refinance or liquidation is the most appropriate response. Servicer performance can be shaped by the composition of...