The withdrawal of one of the biggest opponents to Bank of America’s pending $8.5 billion settlement with non-agency mortgage-backed security investors will not necessarily speed approval of the deal, according to industry analysts. Last month, the hedge fund Baupost (known as Walnut Place in the lawsuit) dropped its objections to the settlement and moved to sell some its holdings on Countrywide Financial non-agency MBS. A number of other entities continue to oppose the settlement, including AIG and ...

Chicago is the latest municipality to consider using eminent domain to seize mortgages from non-agency mortgage-backed securities in an effort to help borrowers with negative equity. Meanwhile, the conservator of two of the largest holders of non-agency MBS joined other investors in raising concerns about the plan and industry analysts suggest the plan has serious defects. Chicago will hold hearings to consider the eminent domain plan proposed by Mortgage Resolution Partners. In June, San Bernardino ...

A proposal by Sen. Jeff Merkley, D-OR, to help refinance non-agency borrowers with negative equity has support from the Obama administration and could begin tests without action from Congress. The proposed “Rebuilding American Homeownership” has been characterized as a Home Affordable Refinance Program for non-agency mortgages. “I think the policy is very good; it’s very well designed,” Treasury Department Secretary Timothy Geithner said in testimony last week before the Senate Committee on Banking, Housing and Urban Affairs ...

Performance data from mortgages serviced for the government-sponsored enterprises would be included in non-agency servicer ratings under a proposal by Moody’s Investors Service. In July, the rating service proposed a major overhaul of its servicer rating process. Loan-level data submitted to Moody’s as part of the “Servicer Quality Assessment” rating process would be supplemented with data from securitization trusts, as well as GSE performance data “as needed.” The data from securitization trusts – which Moody’s noted ...

The Securities and Exchange Commission published interpretive guidance last week regarding references in federal regulations to ratings of mortgage-backed securities. Even though the Dodd-Frank Act mandated that such references be changed by July 20, the SEC’s guidance will keep the references intact until the federal regulator and others can establish new standards of creditworthiness. The Office of the Comptroller of the Currency and the National Credit Union Administration have also ... [Includes three briefs]

The non-agency MBS market could be headed toward its worst year ever for new issuance, and that’s saying something given its post-apocalyptic performance since 2007. New issuance of non-agency MBS totaled just $3.47 billion during the second quarter, a 31.2 percent drop from the first three months of the year, according to the Inside Mortgage Finance MBS Database. It wasn’t the slowest quarter ever, but it left the market at just $8.51 billion through the midway point in 2012, down 64.2 percent from last year’s level. Unless issuance picks up significantly in the second half of the year, 2012 will fall well short of the record low set in 2011. Although resecuritization activity picked up in the second quarter, posting a 30.7 percent gain from the first three months of the year, year-to-date issuance of these deals was down...[Includes three charts]

California’s San Bernardino County Board of Supervisors has yet to decide if it wants to go ahead with a controversial proposal to seize performing underwater non-agency mortgages via eminent domain, repackage them and sell them to new investors. But just the fact they’re considering it has compelled some secondary mortgage market representatives to call in the big guns of the federal government to squash the notion. Late last week, Securities Industry and Financial Markets Association President and CEO Tim Ryan wrote to Treasury Secretary Tim Geithner, Federal Reserve Chairman Ben Bernanke, and Department of Housing and Urban Development Secretary Shaun Donovan to raise his membership’s concerns about the proposal and called on them to oppose it. “We believe that efforts by municipalities to employ the power of eminent domain to seize mortgage loans are...

Moody’s Investors Service proposed a significant overhaul to ratings for non-agency MBS servicers late last week. Among other new metrics, the rating service is planning to incorporate performance data from mortgages serviced for the government-sponsored enterprises. Currently, servicers submit loan-level portfolio data to Moody’s as part of the rating service’s “servicer quality assessments.” The data would be augmented with data from securitization trusts, which is available more quickly, as well as GSE performance data “as needed.” Data from securitization trusts will receive...

New home loan originations in the second quarter of 2012 were up 5.2 percent from the first three months of the year, according to a new Inside Mortgage Finance ranking and analysis. Production trends varied significantly among the top lenders, however, and early estimates suggest that lenders further down the food chain may be picking up market share. Wells Fargo is still effectively lapping the field with more than double the origination volume of its nearest rival, but the industry leader managed a relatively modest 0.8 percent increase in production while its three closest competitors all reported double-digit gains. Although Wells may be mothballing some firepower by shutting down its wholesale broker business, the company was...[Includes two data charts]

Securitization representatives are forcefully pushing back against a proposal under review by three jurisdictions in California to use eminent domain to seize performing, underwater mortgages out of non-agency MBS pools, renegotiate them on terms more favorable to the borrowers, and repackage and sell them off to another group of private investors. Last Friday, a joint powers authority created by San Bernardino County and two of its cities, Ontario and Fontana, formally convened for the first time for an organizational meeting. Two groups that represent the securitization industry, the American Securitization Forum and the Securities Industry and Financial Markets Association, expressed their opposition during the meeting. The ASF said that “this inappropriate use of government power,” which is based on a plan by San Francisco-based Mortgage Resolution Partners, a private investment firm, was “designed...