A new secondary market policy announced by Wells Fargo last week is sending ripples across the industry and could potentially cause the FHA Streamline Refinance program to falter in the coming weeks. Major FHA lenders have quietly adopted similar policies as FHA refinance volume, fueled by increased streamline refi business, more than doubled over the week. Wells Fargo raised eyebrows by announcing it will do FHA streamline refis only on loans in its own servicing portfolio and will not accept streamline refis from third-party originators. The top FHA producer in the first quarter of 2012 said focusing on ...
The Department of Housing and Urban Development is looking for ways to expand the FHAs home renovation program to accommodate real estate-owned properties even as the mortgage industry urged HUD to open the program to investors. Acting FHA Commissioner and Assistant Secretary for Housing Carol Galante said HUD is considering use of the 203(k) Rehabilitation Loan program to ease FHAs huge inventory of foreclosed properties. HUDs REO inventory has dropped from a peak of 68,997 foreclosed properties in March 2011 to 29,692 in February. As of May 27, the inventory was ...
Berkshire Hathaway and other new bidders are circling around the assets of Residential Capital, setting the stage for a showdown at the Southern District of New York Bankruptcy Court after the court approved the current way the mortgage unit is operating in bankruptcy. In a turn of events that has shaken the stability of ResCaps initial bankruptcy plan that includes $8.7 billion to settle MBS investor lawsuits, Berkshire Hathaway objected to the current sale procedures in place, which have yet to be approved in court, in lieu of its own offer. The Nebraska-based conglomerate set the wheels in motion...
The booming market for rental housing and efforts to resolve the massive foreclosure inventories of Fannie Mae, Freddie Mac and the FHA has sparked investor interest in single-family rental securitization, according to credit rating agencies. Credit rating agencies have begun looking at real estate owned conversions to rental properties and the potential for securitizing cash flows from REO-to-rent securitizations. Based on initial assessments, the rating services see a promising, emerging asset class. REO-to-rent securitizations could take a number of forms, any of which can offer advantages to...
A handful of critical lawsuits stemming from the mortgage market collapse may yield meaningful legal precedents for the securitization markets as 2012 unfolds, according to a legal observer. Were finally getting to the point where there can be meaningful precedent established, said Isaac Gradman, a managing partner at IMG Enterprises. For the last three or four years, there has been a wide gap in the claims banks have made and the claims monolines and investors have made as to the merits of these suits. What comes from the courts will become the standards by which the new MBS market...
Manhattan District Attorney Cyrus Vance has charged Abacus Federal Savings Bank and a group of its former employees in a massive mortgage fraud scheme for allegedly originating and selling fraudulent mortgage loans to Fannie Mae over a five-year period. The Manhattan-based bank, which provides loans and other banking services in New York Citys Chinatown, as well as 19 former employees, were charged with residential mortgage fraud, securities fraud, grand larceny, conspiracy and falsifying business records. Eleven of the banks employees were indicted in state court two weeks ago, while eight waived indictment and admitted guilt, according to the DAs 184-page indictment.
Non-agency mortgage-backed security investors are hoping to influence the implementation of the recent $25 billion foreclosure settlement and ward off similar agreements in the future. They raised concerns this week at a hearing before the House Financial Services Committees Subcommittee on Capital Markets and Government Sponsored Enterprises. As it stands, it will damage residential MBS markets further, said Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, on behalf of the Association of Mortgage Investors. By adding yet another risk premium to government intervention, it will further...
A federal judge in Los Angeles has dismissed a number of claims in an American International Group lawsuit against Bank of America over mortgage securities issued by Countrywide Financial, although AIG has promised to continue its legal efforts to recoup more than $10 billion in MBS losses. U.S. District Judge Mariana Pfaelzer of the Central District of California in a new ruling dismissed AIGs federal securities-law claims because they were filed too late more than three years after the MBS were first sold. AIG filed suit against BofA as Countrywides owner and Merrill Lynch in New York state court...
The settlement baked into the Residential Capital bankruptcy agreement is facing new challenges, including one from Warren Buffets Berkshire Hathaway and another from unsecured creditors. When ResCap announced its bankruptcy last month, it did so with a plan to sell its mortgage origination platform and servicing rights to Nationstar Mortgage, a division of Fortress Investment Group, for $4 billion and its portfolio loans to its parent company Ally Financial. Part of the deal is a release of legal liability for Ally, which will pass along some of its lingering obligations like follow through on the...
Non-agency mortgage-backed security investors and politicians on both sides of the aisle were critical this week of the recent $25.0 billion servicing settlement. The settlement requires principal reduction loan modifications on mortgages held in five banks portfolios and allows the servicers to receive credit for reducing principal on mortgages in non-agency MBS. Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, noted that the Association of Mortgage Investors is not opposed to principal reduction mods ...