Goldman Sachs has agreed to pay an undisclosed settlement amount to ACA Financial Guaranty Corp. to resolve allegations of fraud related to insurance on a collateralized debt obligation backed by subprime mortgages. Details of the Abacus CDO settlement were not disclosed, although ACA initially sought $120 million in damages. First filed in 2011, ACA’s lawsuit accused Goldman Sachs and hedge fund Paulson & Co. of fraudulently persuading it to guarantee payments on the CDO prior to the financial crisis. ACA alleged...

The Federal Reserve’s Open Market Committee appears to be repeating last year’s story line of promising multiple increases in interest rates at the start of the year, only to delay and delay until the final month, when it finally raised rates a bare minimum of 25 basis points. This month, the Fed passed on another opportunity to raise rates and suggested to many in the market that it finally will ratchet the federal funds target rate up a notch at its final meeting of the year in mid-December. The FOMC said the labor market has continued to strengthen and economic activity has picked up from the modest pace seen in the first half of this year. “Although the unemployment rate is little changed in recent months, job gains have been solid,” the committee said. Meanwhile, household spending has risen...

Investors said that market is in the “sweet spot” when it comes to mortgage credit, while speaking at a symposium in Washington sponsored by the Urban Institute and CoreLogic this week. John Vibert, managing director and co-head of structured products for Prudential, said his company is much more interested in financing nonperforming loans than in owning such assets. “We think...

Allegations in an impending government MBS fraud case against Moody’s Corp. will likely mirror allegations of fraud and misrepresentation in a 2013 civil suit against Standard & Poor’s, according to industry observers. Moody’s disclosed the expected case in a recent filing of third-quarter earnings results with the Securities and Exchange Commission. According to the credit rating agency, lawsuits are likely pending from both the Department of Justice and state attorneys general over ratings of MBS in the years leading up to the financial crisis. In a letter dated Sept. 29, 2016, the DOJ informed...

Single-family rental securitization is increasing as spreads have recovered after sell-offs seen earlier this year, according to analysts. While issuance volume will likely be down this year compared with recent years, various factors point to relatively strong issuance of SFR securities going forward. Through September, $2.70 billion in SFR securities had been issued in 2016, according to commercial MBS data tracked by Inside MBS & ABS. That compares to $7.17 billion for all of last year. While issuance has lagged this year, Ying Shen, a research analyst at Deutsche Bank Securities, said...

Ginnie Mae has announced a policy change to ease investor concern over recent streamlined refinancing trends involving a small number of mortgage loans in Ginnie pools. The policy change addresses the issue of premature streamline refinancing of certain loans in Ginnie Mae I single-issuer pools that threatens to deflate investors’ expectation of a full 100-percent return on their MBS investments. “Investor participation … depends...

Mortgage industry representatives are calling upon the Consumer Financial Protection Bureau to do more to facilitate the correction of errors made under the enhanced disclosure regime of the agency’s integrated disclosure rule, to reduce or eliminate disruptions in the secondary market as well as boost access to credit. The pleas were made in conjunction with the industry’s broader response to the CFPB’s proposed clarifying rulemaking related to its so-called TRID rule, issued under the authority of the Truth in Lending Act and the Real Estate Settlement Procedures Act. In a comment letter sent this week to the bureau, the Consumer Mortgage Coalition urged...

The average daily trading volume of agency MBS hit $223.2 billion in September, the strongest reading of the year and a sign that liquidity in the market has improved. According to figures compiled by the Securities Industry and Financial Markets Association, daily trading volume increased by 17.7 percent compared to the same month a year ago. But the year-to-date averages are much closer: $206.6 billion for 2016 compared to $199.9 billion last year. In the agency space there is...

Nonbanks crossed a threshold in the third quarter of 2016, posting a hefty 6.3 percent increase in their combined Ginnie Mae servicing portfolio, according to a new Inside FHA/VA Lending analysis. Nonbanks serviced $826.6 billion of Ginnie single-family mortgage-backed securities as of the end of September. That represented 51.3 percent of the total Ginnie market. The nonbank servicing total includes a small amount of Ginnie servicing held by state housing finance agencies, roughly 1.0 percent of the entire market. But it doesn’t include the significant amount of Ginnie servicing that nonbanks do as subservicers for both depository and nonbank clients. Interestingly, the biggest gain for nonbanks in percentage terms came in servicing VA loans, which rose 8.1 percent from the second quarter to $252.1 billion, or 51.0 percent of the market. The VA sector is one business from ... [4 charts ]

RBS Securities has agreed to pay $120 million to the state of Connecticut to resolve an investigation into its underwriting of residential MBS shortly before the 2008 collapse of the financial markets. CT Attorney General George Jepsen and Department of Banking Commissioner Jorge Perez announced the agreement, which, they said, is the largest single settlement in Connecticut’s history. It also ends a four-year state investigation into RBS’s securities underwriting and due diligence practices. At issue were...