Bank of America has settled two major securities fraud claims with various pensions funds and other investors in connection with Countrywide-related stocks and non-agency MBS. It also faces the prospect of a challenge by two state attorneys general, whose requests to intervene in another multi-billion dollar MBS case were granted by a New York federal court this week. The bank agreed to an undisclosed settlement amount with the California Public Employees’ Retirement System, the Government of Guam Retirement Fund and 14 other large pension and mutual fund investors. Accounting firm...

Most bond dealers expect the Federal Reserve to begin buying a substantial volume of MBS in an effort to stimulate an anemic economy, according to the results of a Bloomberg News survey of bond dealers. They project that the Fed could buy as much as $800 billion of MBS in 2012. The Fed would not respond to requests for comment regarding this plan, but the purchasing of MBS may be a part of a new round of quantitative easing for the market. Fed analysts claim that the agency’s first big MBS buying binge, between November 2008 and March 2010, helped push mortgage rates...

Settlements regarding non-agency mortgage-backed securities are starting to increase as industry analysts suggest that the agreements limit the future liability faced by issuers. Bank of America and the Royal Bank of Scotland recently reached separate non-agency MBS settlements. At the end of October, BofA quietly settled with investors – including the Public Employees’ Retirement System of Mississippi – in 18 non-agency securities issued by Merrill Lynch. The settlement price was not disclosed but was reportedly $315.0 million. ...

Springleaf Finance continues to consider an initial public offering for its real estate investment trust as a way to refinance a portion of its business to pay off debts. The Springleaf REIT filed for an IPO in May and while investor demand has not been overwhelming, the company maintains that it is still considering going public. “The REIT will be primarily engaged in the business of sourcing, screening and acquiring performing whole loans secured by mortgages on residential real estate,” Springleaf Finance said ...

With no end in sight for the conservatorships of Fannie Mae and Freddie Mac and huge obstacles to the recovery of the non-agency MBS market, Washington policymakers and industry analysts are searching for ways to bring private capital into the mortgage market without jeopardizing the stability provided by government mortgage finance programs. Analysts at Barclays Capital think they have found a way. The company this week released a paper outlining a new program through which the government-sponsored enterprises would issue a new form of unsecured debt with cash flows linked to...

Major mortgage servicers are widely expected to agree to principal reduction for some struggling homeowners as part of the price of settling complaints over foreclosure practices brought by state attorneys general. That idea doesn’t sit well with some MBS investors, who are concerned that they will end up paying some of the cost of reducing principal as a way to keep distressed borrowers in their homes. The Association of Mortgage Investors warns that principal reduction of securitized loans would be akin to forcing the middle class to bear the settlement’s burden. In a statement, the AMI warned that principal reductions could...

Legislative proposals for a TBA market backed by non-agency MBS as an alternative to a market driven by government-sponsored enterprises lack precedence and are full of unknowns, according to analysts. “While this is a laudable effort – and a necessary one in order to remove the government’s sup-port from the housing finance market – the extent to which private enterprise will be able to pick up the slack the GSEs leave behind is unknown,” said Benjamin Feldman, a housing policy analyst and advocate. Peter Wallison, an Arthur F. Burns fellow in financial...

Although primary market lenders will face fewer hurdles in originating refinance loans for underwater Fannie Mae and Freddie Mac borrowers, detailed guidelines released by the government-sponsored enterprises this week confirm that it will take several months before the expanded programs are fully implemented. And when they are, the revamped Home Affordable Refinance Program will generate up to one million new loans that otherwise wouldn’t have happened, according to estimates by Keefe, Bruyette & Woods. That’s just about what the market expected, and it will mean... (Includes one data chart)

Mortgage real estate investment trusts, along with investors, urged the Securities and Exchange Commission to maintain certain exemptions for mortgage REITs or risk further housing finance issues. REITs are seen as key in efforts to reduce the federal government’s current support of mortgage finance. “Mortgage-focused real estate investment trusts, such as Redwood, are well-suited to carry out this key mortgage banking business function,” said Andrew Stone, general counsel for Redwood Trust. “However, these companies need to continue to be able to rely on the [SEC] exclusion in order to efficiently and effectively carry out...

Ginnie Mae reiterated its desire to enhance its MBS disclosures by moving towards a Freddie Mac disclosure model, but officials are not providing specifics or a timeline. During a telephone press briefing on the agency’s fiscal year 2011 results this week, Ginnie Mae President Ted Tozer said the plan to move toward loan-level disclosures is still in play and investors are being consulted regularly on the kind of disclosures they would like to get. “We want to make sure we are doing it in a controlled, prescriptive manner and we want the information that we provide to be superior and consistent,” he said. “We are also...