The investment period for the remaining funds participating in the Public-Private Investment Program ended during the fourth quarter of 2012, with four funds exiting the program during that time. The Treasury Department said it earned a profit from the PPIP, which focused on investment in non-agency mortgage-backed securities, and most of the individual funds also turned significant profits. “Our ability to aid in the stability of the MBS market and deliver solid investment ... [Includes one data chart]

Assured Guaranty won a lawsuit this week against Flagstar Bank regarding a breach of representations and warranties on more than $900 million in non-agency mortgage-backed securities issued by Flagstar. Industry analysts suggest the ruling is significant as it is one of the first in favor of bond insurance companies trying to enforce breaches of reps and warrants, and U.S. District Judge Jed Rakoff endorsed many of the tactics they have used to seek buybacks, including ... [Includes two briefs]

The FHA this week has proposed to set a 95 percent maximum loan-to-value ratio for FHA-insured loans over $625,500, effectively raising the minimum downpayment for jumbo loans from 3.5 percent to 5 percent. In a Feb. 6 Federal Register notice, the FHA said the proposed change is aimed at improving the health of the Mutual Mortgage Insurance Fund, whose statutory capital reserve ratio has fallen to a precarious level, raising the specter of a taxpayer bailout. Despite steps taken since 2009 to strengthen the MMIF, actuarial reviews of the fund have projected rising levels ...

Some top legal minds expect to see more investigations, and perhaps settlements, brought by the Residential MBS Working Group in the months ahead, and they’ll likely be flavored by interagency turf wars and the political ambitions of the elected officials that are helping to steer the group’s actions. “Just on the basis of prosecutorial rivalry, you can expect there will be further activity in this area,” said Jeremiah Buckley, partner in the BuckleySandler law firm, during a webinar discussion this week on the working group’s activities. Andrew Schilling, former chief of the Civil Division of the U.S. Attorney’s Office for the Southern District of New York...

Covered bond investors are taking a more flexible view of ratings and other characteristics associated with these investments, according to a survey conducted last month by Fitch Ratings. “Continuing a trend discovered during last year’s survey, the results … reveal that investors are increasingly willing to innovate, not only in terms of bond characteristics, but also in terms of rating,” analysts at Fitch said. For example, “a remarkable 91 percent of investors declared...

Rule for Selling Government Mortgages to Fannie Mae Updated. Eligibility for delivery of mortgage loans backed by FHA, VA and the Department of Agriculture is now available on a negotiated basis only, Fannie Mae announced in a recent update to its Selling Guide (Announcement SEL-2013-01). The change is effective for all government loans, including whole loans sold to Fannie on or after May 1, 2013, and government loans in mortgage-backed securities with issue dates on or after May 1. Genworth to Delink Struggling Mortgage Insurance Operations from Holding Company. Genworth Financial plans to ...

ReadyCap Commercial LLC, a startup based in Irvine, CA, issued its first loan approval a few days ago, and hopes to issue a commercial MBS by the fall. The company’s forte is what it calls “low balance” commercial mortgages, including multifamily, office, industrial and retail properties. Its loan size menu ranges from $500,000 to $5 million, company CEO Steve Skolnik told Inside MBS & ABS. Skolnik, who until last June headed commercial services at Aurora Bank FSB, is...

During the next 12 to 24 months, investors should expect “robust growth” from the historically fragmented single-family real estate-owned-to-rental market as it emerges into an institutional asset class, according to analysts at Keefe, Bruyette & Woods. The KBW report noted that despite the market’s traditionally limited funding source of capital – retail or smaller institutional investors – its horizons are expanding. “Investor interest has increased...

Much attention over the last few years has centered on how best to help revive non-agency mortgage securitization. But recent advances in technology have enabled whole loan trading to emerge as a viable alternative that is filling some of the void left in the marketplace by less securitization. “At least in the U.S. residential debt market, we are seeing a much larger market for the trading of whole loans,” said Wyck Brown, president of Denver-based BlackBox Logic, a provider of loan-level data aggregation, analytics and consulting services. “Large whole loan blocks can ...

The federal judge in charge of overseeing the multiple lawsuits filed by the Federal Housing Finance Agency against non-agency mortgage-backed securities issuers for allegedly misrepresenting deals that were sold to Fannie Mae and Freddie Mac rebuffed yet another motion by one of the banks to shut down the legal action. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of Manhattan rejected a motion to reconsider her December decision allowing the FHFA to proceed on behalf of the GSEs with most of its fraud claims against Ally Financial. On Dec. 19, the judge denied most of Ally’s motion to dismiss, including the defendant’s request that the court strike the demand for punitive damages, finding there were sufficient factual allegations in the FHFA’s complaint to move forward with its fraud complaint.