The top three rating services continued to dominate the new issuance market in non-mortgage ABS during the first nine months of 2012, according to a new Inside MBS & ABS analysis, but the biggest player in the non-agency MBS market was DBRS. Moody’s Investors Service rated 69.7 percent of the non-mortgage ABS issued in 2012 as of the end of the third quarter, down slightly from its 70.4 percent share of the 2011 market. The company’s strengths were in vehicle finance and business loan ABS, where it captured more than three-quarters of new issuance by dollar volume. Standard & Poor’s ranked...[Includes two data charts]

Redwood Trust issued a $301.46 million non-agency jumbo mortgage-backed security last week with the shortest seasoning period yet on the real estate investment trust’s post-crisis issuance. Loans included in the MBS were seasoned an average of 1.1 months due to Redwood’s increased loan purchase activity. Average loan seasoning on the eight other non-agency jumbo MBS deals issued by Redwood since 2010 has varied from 8.6 months on a deal in 2011 to 1.9 months on the deal Redwood issued in October ...

Members of the Residential Mortgage-Backed Securities Working Group filed a lawsuit this week against Credit Suisse Securities and reached separate settlements last week with JPMorgan Securities and Credit Suisse. New York Attorney General Eric Schneiderman, a co-chair of the working group, said federal and state regulators are working on a number of other actions. “We’re a long way away from wrapping this up,” he said. The lawsuit against Credit Suisse was filed this week by Schneiderman, alleging that ...

JPMorgan Securities and Credit Suisse Securities have agreed to pay more than $400 million combined to settle government charges that they misled investors in offerings of non-agency MBS from 2005 to 2010, according to the Securities and Exchange Commission. The SEC, working with the federal-state Residential MBS Working Group, reached separate settlement agreements with the two financial institutions after filing a complaint and issuing a cease-and-desist order. Neither JPMorgan nor Credit Suisse admitted to or denied the findings against them or any of their affiliates. The SEC alleged...

The Consumer Financial Protection Bureau announced this week that the implementation date for certain mortgage disclosures will be delayed beyond Jan. 21 to allow for coordination with the pending integrated Real Estate Settlement Procedures Act and Truth in Lending Act disclosures. Chimera Investment announced last week that it will miss reporting deadlines for its quarterly report for the third quarter of 2012. The real estate investment trust said the report required by the ... [Includes two briefs]

Investors in non-agency MBS raised concerns about principal forgiveness required by the $25 billion national servicing settlement agreed to earlier this year by five banks. While most of the banks claimed they would focus the efforts on their own portfolio holdings, MBS investor concerns appeared to have been realized as Bank of America said about half of the principal it has forgiven was tied to mortgages in non-agency MBS. However, Shaun Donovan, secretary of the Department of Housing and Urban Development, noted this week that investors in Bank of America’s non-agency MBS agreed to allow principal reductions on their holdings. “We knew from the beginning, that because Bank of America had...

Federal regulators revealed this week that they are considering changing proposed Basel III capital requirements for available-for-sale securities. Banks have raised concerns about the proposed treatment of available-for-sale securities, which could cause capital volatility and force sales of debt tied to the government-sponsored enterprises and the Treasury Department. In June, federal regulators proposed changes to the treatment of accumulated other comprehensive income that would require unrealized gains and losses on available-for-sale securities to flow through to regulatory capital as opposed to the current treatment, where unrealized losses generally do not affect a bank’s regulatory capital. At a Senate Banking, Housing and Urban Affairs Committee hearing this week, Michael Gibson, director of the Federal Reserve’s division of banking supervision and regulation, indicated...

The latest planned non-agency jumbo MBS from Redwood Trust will have lower credit enhancement levels than other recent deals issued by the real estate investment trust, according to presale reports released this week. The AAA tranche on Redwood’s sixth non-agency MBS issuance of the year will have credit enhancement of 7.05 percent, down from 7.30 percent on the three previous deals issued by Redwood. Officials at Redwood along with others interested in non-agency MBS have suggested that credit enhancement levels required by the rating services have been too high. The credit enhancement for Sequoia Mortgage Trust 2012-6 will be the lowest on a non-agency MBS backed by new loans since the MBS issued by Redwood in 2010 had 6.50 percent credit enhancement on the AAA tranche. Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service are set...

Recent procedural rulings in Federal Housing Finance Agency lawsuits against non-agency MBS issuers and underwriters again favored the conservator of the government-sponsored enterprises, prompting some to speculate that issuers will move to settle the lawsuits. Meanwhile, a number of other MBS-related litigation developments continue to pile up. U.S. District Judge Denise Cote is overseeing 16 cases filed by the FHFA against non-agency MBS issuers and underwriters regarding non-agency MBS purchased by the GSEs between 2005 and 2007. The FHFA alleges misrepresentations by the issuers and underwriters on the MBS. Last week, Cote dismissed...

Two Harbors Investment and PennyMac Mortgage Investment Trust have seen healthy returns on their previous investments in vintage non-agency mortgage-backed securities but the real estate investment trusts have recently turned to other investments. Two Harbors has concentrated on agency MBS purchases while slowly ramping up jumbo loan purchases with an eye toward issuing its own MBS. PennyMac, meanwhile, shifted away from non-agency MBS purchases to correspondent lending and investing in ...