A New York appellate court this week denied Credit Suisse’s motion to dismiss claims made by NY Attorney General Eric Schneiderman in relation to the creation and sale of MBS to investors. In a majority decision, the New York Supreme Court held that the AG’s claims of securities fraud and persistent fraud or illegality are not time-barred, finding that the claims under the state Martin Act and Executive Law are governed by the six-year statute of limitations rather than the three-year limitations found in Section 214(2) of the state’s Civil Practice Law and Rules (CPLR). As of March 21, 2012, the parties entered...

The Structured Finance Industry Group released the fifth edition of its RMBS 3.0 green papers last week, featuring a draft deal-agent agreement and proposed bondholder-communication protocols. The green paper effort to revive the non-agency mortgage-backed securities market started in 2013 and now totals 400 pages. “That’s a lot of work for an industry that apparently doesn’t exist,” Richard Johns, SFIG’s executive director, said last week at the trade group’s annual ...

Proposals aimed at reviving the issuance of non-agency mortgage-backed securities have done little thus far to get volumes anywhere near the levels seen before the financial crisis. Industry participants suggest that there are a number of factors beyond proposed standards from trade groups that are limiting issuance. The American Securitization Forum started its effort to revive the non-agency mortgage-backed security market in 2009. The first post-crisis jumbo MBS backed by newly originated ...

The TRID 2.0 clarifying rulemaking proposal fails to alleviate most of the concerns that investors in the secondary mortgage market have about their potential legal liability, according to Pacific Investment Management Company. In its recent comment letter to the CFPB, PIMCO noted, “In most cases, the errors that relate to the [TRID] disclosures are subtle and technical in nature and do not result in corresponding consumer harm or confusion. Nevertheless, because the … rules implement provisions of the Truth in Lending Act that may carry actual or statutory damages and assignee liability to purchasers, there are serious concerns among secondary purchasers due to the rules’ expansion of liabilities in mortgage origination and investing.” Moreover, asset managers and other loan purchasers ...

The supply of outstanding single-family MBS grew by 1.0 percent during the third quarter of 2016, with strong demand from several key investor groups soaking up new issuance, according to a new analysis by Inside MBS & ABS. The agency MBS market grew by 1.4 percent from the end of June, reaching $5.948 trillion. Ginnie Mae continued to be the fastest-growing program, with total MBS outstanding climbing 2.2 percent during the third quarter to $1.631 trillion. Fannie Mae saw...[Includes two data tables]

The Structured Finance Industry Group this week put more flesh on the bones of its proposed deal-agent role in future non-agency MBS and introduced a plan for improved communications among MBS investors. The fifth edition of SFIG’s RMBS 3.0 Green Paper adds recommendations on data standardization, enforcement mechanisms for breaches of deal terms and materiality standards. The new proposal on bondholder communications was drafted...

Risk-sharing transactions from Fannie Mae and Freddie Mac have delivered strong returns for investors in the past year, but that could change under the monetary policies of the Trump administration, according to analysts at Bank of America Merrill Lynch. The analysts recently dialed down their recommendation on the risk-sharing transactions issued by the two government-sponsored enterprises to “underweight.” “Trump’s victory paves...

Analysts at Wells Fargo Securities worry that the post-election rate shock is not a positive omen for bank and overseas investors in MBS. “Since the U.S. presidential election, the 10-year yield has sold off by 55 basis points in a matter of two weeks,” they said in a recent client note. “Although banks and overseas investors are typically looking to buy on dips, large selloffs do not bode well for demand from these investors right after a rate shock. For banks, a large rate shock results in a hit on their regulatory capital.” According to their calculations, during the week ending Nov. 9, 2016, the net realized gains on bank portfolios declined...

Standards proposed by the Structured Finance Industry Group for disclosures of representations and warranties on new non-agency mortgage-backed securities are likely to put a burden on conduits and other aggregators that pool mortgages from scores of originators. The Wall Street group recently released the fourth edition of its RMBS 3.0 “green papers,” which aim to revive issuance of non-agency MBS by making reforms that will attract investors. The latest green paper focused on ...

Total FHA and VA originations increased during the first nine months of 2016 compared to the same period last year, although VA was more active, posting a double-digit production increase, according to an analysis of Ginnie Mae data. Lenders delivered $201.0 billion of FHA loans to Ginnie single-family mortgage pools over the last three quarters, up 4.8 percent from the previous year. Approximately 65.4 percent and 29.3 percent of FHA loans securitized were purchase loans and refinances, respectively. The remainder was loan modifications. VA originations totaled $143.2 billion over the same period, up 22.3 percent from last year. Refinances accounted for 51.9 percent of volume and purchase loans comprised 47.0 percent. The share of FHA loans in agency mortgage-backed securities for the nine-month period was 19.5 percent and 13.9 percent for VA. FHA loans accounted for ...