The National Credit Union Administration this week announced settlement agreements with Deutsche Bank Securities and Citigroup stemming from their roles as underwriters that sold non-agency MBS to credit unions that eventually failed. Deutsche Bank is paying the bigger amount, $145.0 million, while Citis payment will be $20.5 million. Neither firm admitted fault as part of the settlement. The proceeds from the settlements will be used to offset assessments that the NCUA has levied against credit unions to pay the cost of cleaning up the failures of...
The high-cost loan limits for FHA mortgages will be re-elevated to $729,750 through at least the end of 2013 while the government-sponsored enterprises loan limits will remain unchanged under appropriations legislation approved by Congress this week. Industry participants suggest that the FHAs newly higher loan limits will have little impact on non-agency jumbo activity. The revised FHA loan limits were included in mini-bus appropriations legislation for the Department of Housing and Urban Development and other federal agencies. The bill which also contained a Continuing Resolution to avoid a government shutdown was...
The National Credit Union Administration this week reached settlements with two underwriters of non-agency mortgage-backed securities. The settlements also have implications for non-agency MBS issuers and underwriters facing lawsuits from the Federal Housing Finance Agency. Deutsche Bank Securities agreed to pay the NCUA $145.0 million to reduce losses associated with five failed credit unions. Citigroup also agreed to pay the NCUA $20.5 million to settle similar charges. The settlements included terms stating that the issuers did not admit fault. NCUA Board Chairman Debbie Matz warned that the settlements are...
The Federal Housing Finance Agencys recent proposal to revamp servicer compensation has received mixed reactions from non-agency participants. High-touch servicers approve of the landscape-shifting fee-for-service proposal but analysts suggest that the system would be much more difficult to establish for non-agency mortgages than for agency loans. Ocwen Financial and other servicers that predominantly handle delinquent mortgages favor the FHFAs proposal that would significantly increase the fees paid to service delinquent loans and lower the base servicing fee for performing loans, perhaps to...
A number of real estate investment trusts besides Redwood Trust are hoping to issue non-agency mortgage-backed securities in the coming years. PennyMac Mortgage Investment Trust and Two Harbors Investment have taken two significantly different strategies to reach that goal. PennyMac has focused on investing in non-performing whole loans and has established a correspondent lending platform, including some jumbo activity. The REIT is also establishing warehouse lending capabilities, with a roll-out planned by mid-2012. In the near-term...
Recent modifications on non-agency mortgages performed relatively well but mod activity is slowing down, according to new data. The relative lack of activity applies to both the Home Affordable Modification Program and proprietary non-agency mod efforts. About 33.5 percent of non-agency mortgages were delinquent as of the third quarter of 2011, according to LoanPerformance, and 46.0 percent of all non-agency borrowers have negative equity. However, Fitch Ratings found that only 24.0 percent of outstanding non-agency mortgages (measured by loan balance) have been modified at least once, up from 20.0 percent at the...
Two new bills aimed at increasing non-agency activity were introduced in the Senate last week. One would wind down the government-sponsored enterprises while the other would establish a framework for covered bonds. S. 1834, The Residential Mortgage Market Privatization and Standardization Act introduced last week by Sen. Bob Corker, R-TN, would gradually reduce the portion of the mortgage-backed security guarantee provided by Fannie Mae and Freddie Mac. Within 180 days of the bills enactment, the GSEs could only issue MBS with a guarantee for 90 percent of a bond. The guarantee on...
Republican Sen. Bob Corker this week introduced legislation that would wind down Fannie Mae and Freddie Mac in part by limiting their new MBS issuance to a declining share of total new mortgage securitization. The Tennessee lawmakers Residential Mortgage Market Privatization and Standardization Act would responsibly unwind the government-sponsored enterprises by gradually reducing their portfolios of guaranteed mortgage-related assets while taking steps to bring uniformity and transparency to the housing market so that private capital can begin to replace the GSEs. The Corker bill would annually reduce the...
Fannie Mae and Freddie Mac lost a combined $9.2 billion during the third quarter mostly due to writedowns on derivatives transactions while the two government-sponsored enterprises continued to watch their massive MBS holdings decline. As of the end of September, Fannie and Freddie held a combined $754.54 billion of MBS in their retained portfolios, down 1.1 percent from the second quarter and a decline of 7.4 percent from the same July through September period last year. Fannies holdings of non-agency MBS fell 2.2 percent to $77.1 billion during... (Includes one data chart)
Recent non-agency mortgage loan modifications are showing better results compared to earlier private-label modifications despite a continued slowdown in new modification activity, according to a new Fitch Ratings analysis. While the number of completed modifications dropped, transactions completed in the past 18-24 months have improved slightly over earlier programs as a result of standardized guidelines, the recent Fitch report said. Patterned on the Home Affordable Modification Program, the standardized guidelines helped to focus attention on creating more sustainable modifications. These features included...