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...

Communication among investors in non-agency MBS as well as between issuers and investors has been inadequate, according to industry participants. Trustees and others are working to address the issues, both with new jumbo MBS and vintage non-agency MBS. Investors cite problems with data availability, consistency, timing and quality. Paul Burke, head of North American agency and trust sales at Citibank, said the communication system currently used for non-agency MBS leaves something to be desired. Communication regarding potential votes for action on non-agency MBS, due to a perceived breach of representations and warranties, for example, is generally funneled...

Residential mortgage delinquency rates have turned around nicely from their worst levels in the wake of the financial crisis, but mortgage servicer timelines continue to increase, according to recent findings by industry analysts. “The improvement in the broad U.S. economy in general, and the steady decline of the unemployment rate and the strong rebound of the housing market in particular, have significantly reduced the residential mortgage serious-delinquency rate across all credit spectrums,” Deutsche Bank analysts said in a report issued last week. Delinquency rates have declined...

Seven different issuers generated a relatively strong $3.94 billion in jumbo non-agency MBS during the third quarter, but the sector’s resurgence in 2013 seemed to be losing steam and faces an uncertain future. Jumbo MBS issuance declined 9.1 percent from the second quarter and one transaction – Shellpoint’s second of the year – was pulled back as September came to a close. Redwood Trust managed $1.18 billion in new issuance, a 34.1 percent drop from the second quarter, while the two other jumbo veterans, Credit Suisse and JPMorgan Chase, saw reduced production as well. Industry participants are divided...[Includes three data charts]

Investors at the ABS East conference in Miami this week had a positive outlook for most structured finance investment options, such as vintage non-agency MBS, auto and credit card ABS, collateralized loan obligations and esoteric assets. They were less bullish about new jumbo MBS. More than 3,500 people registered for the conference this year including more than 1,000 investors. Jade Friedensohn, a senior vice president at Information Management Network, the event sponsor, said it was the biggest turnout for ABS East since before the financial crisis. “In the short term things are...

The nation’s top court this week may have sent a subtle hint to the more than dozen big bank defendants being sued by the Federal Housing Finance Agency when it flatly declined to receive their petition to dismiss their cases, notes a legal expert. The 13 financial institutions – including Bank of America, Deutsche Bank, Goldman Sachs and JPMorgan Chase – sought to argue before the Supreme Court of the United States that the FHFA waited too long when it filed suit against the banks in 2011 over non-agency MBS the government-sponsored enterprises purchased prior to the 2008 financial crisis. SCOTUS said...

Reforms seen in the new era of non-agency jumbo MBS issuance aren’t enough to prompt significant investor participation, according to John Gidman, president of the Association of Institutional Investors. At a hearing this week by the Senate Committee on Banking, Housing and Urban Affairs, Gidman and others called for a number of changes to the non-agency market. “The fundamental structural and process weaknesses for non-agency residential MBS securitization have not been fixed in the current private-label securities market,” Gidman said. “The issuance process itself is very opaque. Ratings continue to be shopped, issuers are still incentivized to water down representations and warranties, and continued variability in structures and documentation make the market more challenging for investors and raise the costs of funding.” He acknowledged...

Clayton Holdings has long cooperated with members of the Residential MBS Working Group, but a change in personnel at the interagency group and a wide-ranging subpoena have strained the due diligence firm’s relationship with prosecutors, according to court filings. The U.S. Attorney’s Office for the District of Connecticut, on behalf of the RMBS Working Group, is seeking an order to compel Clayton to cooperate with a subpoena issued in early July. The subpoena relates to an investigation into 16 firms that participated in the issuance and underwriting of non-agency MBS from 2005 through 2007. The RMBS Working Group is looking into possible violations of the Financial Institutions Reform, Recovery and Enforcement Act. The subpoena essentially seeks...

Non-agency MBS investors are still unhappy with how negotiations for the $25 billion national servicing settlement were handled and are concerned that the federal government will pull a similar move in settlement negotiations with JPMorgan Chase. John Gidman, president of the Association of Institutional Investors, said non-agency MBS investors weren’t involved in negotiations for the national servicing settlement and haven’t been involved in ongoing discussions regarding Chase. He said using funds from non-agency MBS to remedy allegations of inappropriate, unlawful or illegal behavior on behalf of an issuer or servicer makes it harder for investors to price risk. “This consequently makes...