After suggesting that it would consider selling jumbos to investors via whole loan sales, Redwood Trust this week issued a $327.94 million non-agency jumbo mortgage-backed security. While the real estate investment trust has not ruled out whole loan sales, the issuance reflects confidence in the non-agency market – from Redwood and investors. Redwood’s latest security, Sequoia Mortgage Trust 2012-2, is similar to other recent non-agency MBS issuance by the REIT. Redwood has now issued five non-agency MBS deals since April 2010, the only non-agency MBS issuance backed by new originations since 2008. At the end of February, Redwood officials revealed that the REIT was considering bulk sales ...

The Securities and Exchange Commission and Wells Fargo are in a dispute regarding due diligence reports relating to almost $60.0 billion in non-agency mortgage-backed securities issued by Wells between September 2006 and early 2008. The SEC last week filed a subpoena enforcement action against Wells for failure to produce documents. The bank disputes the SEC’s account. The SEC said it has been seeking the documents since September. The regulator claimed that Wells agreed to produce the documents but has failed to do so. The SEC said its action relates to its investigation into whether Wells made material misrepresentations or omitted material facts on certain non-agency MBS issued by the bank ...

Iowa Attorney General Tom Miller downplayed concerns raised by investors in non-agency mortgage-backed securities regarding the pending $25.0 billion servicing settlement. “The current set of concerns aren’t particularly warranted,” he said this week during a webinar hosted by Inside Mortgage Finance Publications. The Association of Mortgage Investors has asked for a number of changes to the settlement, including a cap on the amount of principal reduction that can be completed on non-agency MBS to meet the participating servicers’ loss mitigation requirements. Miller said the AMI is the only group he is aware of that might challenge approval of the settlement by the U.S. District Court for the District of Columbia. “I think that their concerns are not going to be realized ...

An estimated 82.8 percent of single-family mortgages originated in 2011 ended up being financed through securitization, according to a new Inside MBS & ABS analysis. That’s the second highest level on record, falling slightly below the 84.4 percent securitization rate in 2009. Virtually all government-insured mortgages are securitized through the Ginnie Mae program, which securitized some $284.6 billion in newly originated FHA and VA loans last year. The big increase in securitization rate came in the conventional conforming market, where high loan limits have greatly expanded (Includes one data chart)...

A conservative, non-partisan public interest group has filed suit against the Federal Housing Finance Agency, claiming the FHFA has improperly denied the group’s request for documents relating to the Finance Agency’s decision to sue 17 financial institutions last fall on behalf of Fannie Mae and Freddie Mac over alleged misrepresentations of mortgage-backed securities.Last week, Judicial Watch filed its lawsuit in the U.S. District Court for the District of Columbia after the FHFA denied the group’s Freedom of Information Act request for documents related to the agency’s litigation. The Finance Agency argued that as private companies, FOIA requests do not apply to Fannie and Freddie.

Even though approximately $10.0 billion in non-agency representation and warranty payouts have already been included in proposed or completed settlements, another $34.0 billion in payouts are probably waiting in the wings, with Bank of America and JPMorgan facing the largest exposure by far, according to analysts at Barclays Capital. “Total payouts to non-agency investors from rep and warranty related recoveries will be $26.0 billion to $52.0 billion, using the $8.5 billion Countrywide settlement deal as a template. This corresponds to an average of 3-6 points of recoveries on non-agency securities...

The non-agency MBS market showed some spark as always-performing loans continued to improve in February and more nonperforming loans moved to the re-performing bucket, according to Amherst Securities Group’s latest analysis of the mortgage market. In its February report, Amherst said first-time defaults from the always-performing bucket dropped to 0.75 percent during the month from 0.82 percent in January. In dollar terms, new defaults constituted $4.0 billion, down from $4.4 billion the previous month, the firm reported. On a year-over-year basis, always-performing loans were down to $525.6 billion from...

The documents governing a proposed $25.0 billion settlement involving five major banks include greater incentives for principal reduction loan modifications on portfolio loans rather than loans in non-agency mortgage-backed securities. However, non-agency MBS investors remain concerned that they could take losses due to the settlement. The consent judgments against Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo were filed in federal court this week, a month after the settlement was announced by 49 state attorneys general and the federal government ...

Beginning June 1, the non-agency portion of the Home Affordable Modification Program will include a “Tier 2” with expanded eligibility requirements and adjusted incentives. The Treasury Department released the details last week, officially making changes first announced in January. The changes to HAMP include eligibility for certain rental properties, less stringent debt-to-income ratio requirements, a loosening of the short sale and deed-in-lieu of foreclosure requirements and an extension of all HAMP programs through the end of 2013. HAMP was initially scheduled to expire at the end of this year ...

Nationstar Mortgage announced last week that it plans to acquire the $63.0 billion mortgage portfolio and certain other assets from Aurora Bank, a subsidiary of Lehman Brothers. The acquisition includes co-investment by a real estate investment trust affiliated with the owner of Nationstar and continues Nationstar’s rapid nonprime servicing growth. The high-touch servicer said it expects the long-pending sale by the bankrupt Lehman to close during the second quarter of 2012. A number of other servicers had expressed interest in bidding on the Aurora portfolio, including Ocwen Financial ...