Leading Senate Democrats and Republicans have been moving cautiously to advance legislation to expand the Home Affordable Refinance Program, although industry observers say the odds are long the measure will see meaningful Congressional action before the legislative clock runs out. Senate Banking Committee Chairman Tim Johnson, D-SD, and Sen. Richard Shelby, R-AL, the committees ranking member, have been working on an agreement to ensure that the proposed amendments to the legislation in a markup would be strictly narrowed to making changes to HARP. However, Shelby is pushing to permit any provision on housing finance to be considered...
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...
Current and potential defendants in residential MBS litigation should expect more lawsuits stemming from the mortgage market collapse, particularly by or on behalf of state actors, but entities named in those suits are not without legal countermeasures, according to legal experts. During a webinar sponsored this week by the State Attorneys General Enforcement Network, attorneys Jason Halper and Martin Seidel of the law firm of Cadwalader, Wickersham & Taft predicted that the mortgage industry is only about halfway through the onslaught of MBS litigation to be brought by aggrieved investors. I think this...
A new secondary market policy announced by Wells Fargo last week is sending ripples across the industry and could potentially cause the FHA Streamline Refinance program to falter in the coming weeks. Major FHA lenders have quietly adopted similar policies as FHA refinance volume, fueled by increased streamline refi business, more than doubled over the week. Wells Fargo raised eyebrows by announcing it will do FHA streamline refis only on loans in its own servicing portfolio and will not accept streamline refis from third-party originators. The top FHA producer in the first quarter of 2012 said focusing on ...
The Department of Housing and Urban Development is looking for ways to expand the FHAs home renovation program to accommodate real estate-owned properties even as the mortgage industry urged HUD to open the program to investors. Acting FHA Commissioner and Assistant Secretary for Housing Carol Galante said HUD is considering use of the 203(k) Rehabilitation Loan program to ease FHAs huge inventory of foreclosed properties. HUDs REO inventory has dropped from a peak of 68,997 foreclosed properties in March 2011 to 29,692 in February. As of May 27, the inventory was ...
Berkshire Hathaway and other new bidders are circling around the assets of Residential Capital, setting the stage for a showdown at the Southern District of New York Bankruptcy Court after the court approved the current way the mortgage unit is operating in bankruptcy. In a turn of events that has shaken the stability of ResCaps initial bankruptcy plan that includes $8.7 billion to settle MBS investor lawsuits, Berkshire Hathaway objected to the current sale procedures in place, which have yet to be approved in court, in lieu of its own offer. The Nebraska-based conglomerate set the wheels in motion...
The booming market for rental housing and efforts to resolve the massive foreclosure inventories of Fannie Mae, Freddie Mac and the FHA has sparked investor interest in single-family rental securitization, according to credit rating agencies. Credit rating agencies have begun looking at real estate owned conversions to rental properties and the potential for securitizing cash flows from REO-to-rent securitizations. Based on initial assessments, the rating services see a promising, emerging asset class. REO-to-rent securitizations could take a number of forms, any of which can offer advantages to...
A handful of critical lawsuits stemming from the mortgage market collapse may yield meaningful legal precedents for the securitization markets as 2012 unfolds, according to a legal observer. Were finally getting to the point where there can be meaningful precedent established, said Isaac Gradman, a managing partner at IMG Enterprises. For the last three or four years, there has been a wide gap in the claims banks have made and the claims monolines and investors have made as to the merits of these suits. What comes from the courts will become the standards by which the new MBS market...
Manhattan District Attorney Cyrus Vance has charged Abacus Federal Savings Bank and a group of its former employees in a massive mortgage fraud scheme for allegedly originating and selling fraudulent mortgage loans to Fannie Mae over a five-year period. The Manhattan-based bank, which provides loans and other banking services in New York Citys Chinatown, as well as 19 former employees, were charged with residential mortgage fraud, securities fraud, grand larceny, conspiracy and falsifying business records. Eleven of the banks employees were indicted in state court two weeks ago, while eight waived indictment and admitted guilt, according to the DAs 184-page indictment.
Non-agency mortgage-backed security investors are hoping to influence the implementation of the recent $25 billion foreclosure settlement and ward off similar agreements in the future. They raised concerns this week at a hearing before the House Financial Services Committees Subcommittee on Capital Markets and Government Sponsored Enterprises. As it stands, it will damage residential MBS markets further, said Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, on behalf of the Association of Mortgage Investors. By adding yet another risk premium to government intervention, it will further...