JPMorgan Chase’s settlement with the Federal Housing Finance Agency regarding representation and warranty claims on non-agency mortgage-backed securities could prompt large settlements by other banks, according to industry analysts. Chase agreed last week to pay $4.0 billion to settle claims on $33.8 billion of non-agency MBS purchased by Fannie Mae and Freddie Mac. The securities were issued between 2004 and 2007 by Chase, Bear Stearns and Washington Mutual. The settlement sets a “relatively high bar” for ...

Shellpoint Partners this week pulled the plug on its second jumbo non-agency MBS issuance of the year and will instead sell the mortgages as whole loans. Shellpoint Asset Funding Trust 2013-2 was initially offered as a $308.64 million deal in September. The company then reduced the offering to a $250.85 million securitization with a number of tweaks aimed at attracting investors. In the end, the company couldn’t structure...

Bank of America is putting up a strong defense and plans on whittling down the settlement price in a Federal Housing Finance Agency non-agency MBS fraud case against the company, sources close to the matter told Inside MBS & ABS. One official close to the due-diligence team working for BofA said the regulator seeks a $13 billion payment to settle charges that the bank and two companies it bought during the housing meltdown – Countrywide Financial Corp. and Merrill Lynch – sold faulty nonprime MBS to the government-sponsored enterprises. This source, who spoke under the condition his name not be published, said...[Includes one data chart]

The securitization of income-property mortgages in 2013 remains on track to be the best year since the financial market meltdown, but new issuance dropped sharply during the third quarter. A total of $33.16 billion of commercial MBS – including agency MBS backed by multifamily mortgages – were issued during the third quarter of 2013, a new Inside MBS & ABS analysis reveals. That was down 24.5 percent from the second quarter, but it brought year-to-date issuance to $123.89 billion, just shy of the total securitized in all of 2012. Commercial mortgage securitization through the first nine months of 2013 was...[Includes one data chart]

Lenders continue to originate non-agency jumbo mortgages, but few are likely to be securitized in the coming months due to more favorable economics for banks retaining the loans in portfolio. Longer term, many investors suggest they won’t return to the non-agency mortgage-backed security market until issuers standardize their offerings. The ABS East conference sponsored by Information Management Network last week in Miami presented a tale of two markets: jumbo MBS and everything else ...

The jumbo mortgage-backed security market showed some signs of life this week as Shellpoint Partners offered its second deal of the year, a restructured and downsized version of the transaction targeted for late September. The $250.85 million deal is set to receive a triple-A rating with credit enhancement of 7.10 percent on the top-rated tranche, according to Kroll Bond Rating Agency. The $308.64 million deal Shellpoint was preparing in September was set to have credit enhancement of 7.90 percent ...

First Republic Bank was the top contributor to jumbo mortgage-backed securities through the first three quarters in 2013, according to a new ranking and analysis by Inside Nonconforming Markets. Meanwhile, underwriting trends for the sector were mixed. Some $2.10 billion in originations by First Republic were included in jumbo MBS this year, as of the end of September. The loans accounted for 17.2 percent of all non-agency jumbos securitized, more than double the next closest lender ... [Includes two data charts]

The qualified residential mortgage requirements recently proposed by federal regulators could force banks to retain mortgages in portfolio instead of issuing non-agency mortgage-backed securities, according to industry participants. The Dodd-Frank Act requires that non-QRMs be subject to required risk retention of at least 5 percent. In August, federal regulators proposed aligning the definition for QRMs with the definition for qualified mortgages established by the Consumer Financial Protection Bureau ...

Underwriting standards for jumbo mortgages decreased slightly in September compared with the previous month, according to a Mortgage Bankers Association analysis of data from AllRegs... Joseph Smith, the monitor for the $25 billion national servicing settlement with five banks, released a report this week detailing for the first time how the servicer loss mitigation actions have been credited. While the banks reported $38.72 billion in gross relief via loss mitigation and refinances through the end of 2012 ...

MBS issuers and investors endorse many aspects of the revised qualified residential mortgage requirements recently proposed by federal regulators, but there are concerns about requirements for other asset classes included in the new risk-retention proposal. Issuers of non-agency MBS, ABS and commercial MBS backed by collateral that doesn’t meet certain qualifying requirements will have to retain risk on at least 5 percent of the deal, as required by the Dodd-Frank Act. Major industry groups have asked the regulators for more time to weigh the new proposed rule, which set a public comment period that ends Oct. 30. Richard Johns, executive director of the Structured Finance Industry Group, offered...