One of the last non-agency jumbo mortgage-backed securities issued before the securitization market effectively closed in 2008 is the subject of similar lawsuits by the Department of Justice and the Securities and Exchange Commission. Bank of America issued the $855.7 million security in January 2008, as well as originated and serviced the loans included in the MBS. The regulators cite internal reports from BofA as well as email communications among employees to allege that BofA provided inadequate ...

Credit Suisse issued its latest non-agency jumbo mortgage-backed security last week and, in a change of pace, included a significant portion of 15-year fixed-rate mortgages in the deal. The $597 million CSMC Trust 2013-6 included mortgages that have seasoned for an average of three months with a weighted-average coupon of 3.56 percent, according to a rating report from DBRS. The seasoning on the mortgages wasn’t out of the ordinary compared with other recent issuance by Credit Suisse, but the average ...

The government-sponsored enterprises’ holdings of vintage nonprime mortgage-backed securities declined in the second quarter of 2013 due to sales as well as runoff. Fannie Mae and Freddie Mac are working toward the goal set by the Federal Housing Finance Agency to sell 5.0 percent of the non-agency and less liquid mortgage-related assets they held in their retained portfolios at the end of 2012. Combined, the government-sponsored enterprises held $96.48 billion in nonprime MBS as of ... [Includes one data chart]

A unique lawsuit against Morgan Stanley was recently allowed to move forward though legal analysts questioned the ruling. The lawsuit charges Morgan Stanley with racial discrimination, claiming that the investment bank violated the Fair Housing Act by encouraging New Century Financial to offer high-risk mortgages to African-American borrowers. Disparate impact cases typically target originators, but New Century is long out of business. Morgan Stanley was hit with the lawsuit because it was ...

Three non-agency mortgage-backed security trustees filed lawsuits this week against Richmond, CA, which plans to use eminent domain to purchase mortgages with negative equity. The city recently sent letters to servicers and trustees of non-agency MBS offering to purchase 624 mortgages. If the MBS trustees do not sell the loans for the offered price of 80 percent of the current value of the properties, Richmond Mayor Gayle McLaughlin, a member of the Green Party, said the city intends to ...

The question of whether the FHA should allow the refinancing of underwater mortgages seized through eminent domain has reemerged as a key issue following a recent decision by the city of Richmond, CA, to use its authority to take over distressed mortgages for restructuring. There is a new twist to the question, however. Could FHA’s refusal to refinance such mortgages be deemed discriminatory against cities and homeowners if eminent domain programs meet the requirements of the FHA Short Refinance program? Is that tantamount to redlining? A top executive of Mortgage Resolution Partners, which developed the eminent domain strategy to help underwater homeowners at risk of foreclosure, said ...

Fannie Mae, Freddie Mac and mortgage-backed securities trustees representing investors in non-agency MBS sued the city of Richmond, CA, this week to stop it from further implementing a plan to use eminent domain authority to seize and purchase performing underwater mortgages. Wells Fargo and Deutsche Bank, acting as trustees for a group of investors that includes BlackRock, Inc., Pacific Investment Management and the government-sponsored enterprises, filed the lawsuit in federal court in San Francisco at the behest of certificate holders. The plaintiffs are asking the court to declare the “Richmond Seizure Program” unconstitutional and in violation of California laws, and to order city officials to end the program. Securitizers and investors are...

Bank of New York Mellon has come under scrutiny for its actions in the proposed $8.5 billion settlement involving Bank of America and investors in 530 non-agency MBS issued by Countrywide Financial. A trial to approve the settlement regarding repurchase requests started in June and is on a break until early September. While the proposed settlement involves a payout from BofA, which acquired Countrywide, the settlement is an agreement between BNYM and 22 institutional investors represented by the law firm of Gibbs & Bruns. The agreement was reached under Article 77 which allowed BofA to have the settlement apply to all investors in the Countrywide securities in question. “I can honestly say...

New Penn Financial is one of the few lenders putting an emphasis on mortgages for borrowers that are foreign nationals. The company offers mortgages to non-U.S. citizens with rates and terms somewhat looser than those offered by other lenders operating in the niche market. “Our proprietary program offers flexibility and fewer restrictions,” New Penn said. While data on mortgages to foreign national borrowers are scarce, the loans largely appear to be a non-agency product, both held in portfolio and sometimes securitized ...

The non-agency jumbo mortgage-backed securities issued by Redwood Trust between March 2010 and November 2012 haven’t taken any losses, according to Kroll Bond Rating Agency. Delinquencies on the securities remain extremely low, and a significant portion of mortgages included in the MBS have prepaid. As of July, three of the nine non-agency jumbo MBS issued by Redwood from 2010 through 2012 had loans that were delinquent. However, the loans were only in the 30-day delinquency bucket ...