In a move intended to maintain the integrity of data that helps guide the decisions of MBS investors, the Financial Industry Regulatory Authority last week fined Citigroup Global Markets $3.5 million for allegedly providing inaccurate mortgage performance information, supervisory failures and other violations in connection with subprime residential MBS. Citigroup posted data for its RMBS deals that it should have known was inaccurate; and even after they learned that the data was inaccurate, Citigroup did not correct the problem until years later, said Brad Bennett, FINRA executive vice president and...
The Federal Deposit Insurance Corp. late last week filed separate lawsuits against a number of companies that issued or underwrote non-agency MBS purchased by Citizens National Bank and Strategic Capital Bank, two Illinois banks that failed in May 2009. The two banks purchased some $140.5 million of non-agency MBS issued by Bear Stearns, Citicorp, Credit Suisse and Merrill Lynch. The lawsuits also name JPMorgan Securities, Citigroup, Credit Suisse, Deutsche Bank, Ally Securities, HSBC Securities, RBS Securities and UBS Securities as underwriters of these transactions. The FDIC is seeking $77.0...
The Securities and Exchange Commission has given Royal Bank of Canada the green light to issue residential mortgage covered bonds registered in the U.S. The SEC granted permission through a no-action letter shortly after RBC submitted plans for a program through which covered bonds backed by U.S. home loans will be offered to U.S. investors. RBC is a foreign private issuer under U.S. securities laws and, as a Form S-3 issuer, has a registered shelf with the SEC through which it can offer multiple securities on an immediate, continuous or even on a delayed basis. Covered bonds are debt securities backed by cash...
Uncertainty lingers in the wake of last weeks announced $8.7 billion settlement between non-agency MBS investors and Ally Financials subsidiary Residential Capital as the details and implications of the deal resonate throughout the market. The agreement with 17 residential MBS investors was struck in a photo finish shortly before ResCaps bankruptcy filing, and it represents the second major settlement between non-agency MBS investors and the sponsors of non-agency securitizations. Bank of Americas controversial $8.5 billion proposed settlement with investors that purchased Countrywide non-agency MBS...
While non-agency mortgage-backed security investors did not file a formal challenge to the $25.0 billion servicing settlement, they remain concerned with the implementation of principal forgiveness loan modifications. The latest qualms were raised last week in a letter to Shaun Donovan, secretary of the Department of Housing and Urban Development, from Sens. Sherrod Brown, D-OH, and Bob Corker, R-TN. Because any settlement could dramatically affect [pension funds and retirement funds], their managers should ...
The still-developing market for real estate-owned property rentals is starting to get crowded. A number of firms have formed in recent weeks hoping to benefit from low prices on REO properties. Homebuilder Beazer Homes announced this month that it formed a private real estate investment trust to acquire, refurbish and lease single-family homes on a large scale in select markets. Beazer Pre-Owned Rental Homes was arranged by affiliates of Kohlberg Kravis Roberts & Co. and has approximately $85 million in funding ...
Banks and thrifts added some $67.2 billion in residential MBS to their investment portfolios during the first quarter of 2012, according to a new Inside MBS & ABS ranking and analysis. The increase amounted to a 4.3 percent gain from bank and thrift MBS holdings at the end of 2011, and raised the industrys total investment to a record $1.634 trillion. It marked the first time since 2004 that banks and thrifts owned more than a quarter of the MBS market. The biggest increase was in holdings of agency pass-through securities, which rose 6.2 percent from the fourth quarter to $974.4...(Includes two data charts)
Ally Financial negotiated an $8.7 billion settlement with investors in non-agency MBS issued by Residential Capital before putting the company, one of the pioneers in the securitization of jumbo, Alt A and subprime mortgages, into bankruptcy. Long before ResCaps bankruptcy filing early this week, trustees for outstanding non-agency MBS had already been instructed by 17 investors to sue Ally Financial for compensation over alleged violations of ResCap representations and warranties. The deal was reached shortly before the filings, according to a source close to the matter. Ally said that some 290 MBS trusts...
The government overseer of Fannie Mae and Freddie Mac wants to help trim the footprint of the two government-sponsored enterprises by selling credit risk to private investors, but a top public policy analyst questions how effective such efforts will be in bringing private capital back to residential mortgage markets. The basic business model of credit-risk insurance doesnt just make sense, said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a think-tank in Washington, DC. Because of the damage done in the run-up to the crisis, traditional insurers are at great risk of being...
Converting real estate owned properties to rental units is still in its infancy but it could be a compelling asset type for investors. If securitized, it could provide a much-needed boost to the real estate market, according to Standard & Poors. In a recent analysis, S&P suggested taking the governments REO-to-rent pilot program a step further and consider securitizing the rental streams from a pool of underlying REO assets, which could potentially provide a steady cash flow to back securitization transactions. Proceeds from the eventual sale of the properties could also be incorporated into the cash...