Both Fannie Mae and Freddie Mac continued to shrink their mortgage portfolios as required by government regulators during the first quarter of 2011 even as the two government-sponsored enterprises posted dramatically different earnings reports for the first three months of the year. Under the terms of the purchase agreement with the Treasury Department and under Federal Housing Finance Agency regulation, both Fannie and Freddie’s mortgage-related investments portfolio are subject to a cap that decreases by 10 percent each year until each portfolio reaches $250 billion. By Dec. 31, 2011, neither company will be able to hold an unpaid principal balance for mortgage-related investments that exceeds $729 billion. “FHFA has stated that we will not be a substantial buyer or seller of mortgages for... [Includes one data chart]

The requirement from last year’s landmark financial services legislation that MBS issuers retain some of the risk associated with residential mortgages will raise the costs of securitizing them to prohibitive levels, discouraging the return of private capital and maintaining the market’s dependence on Fannie Mae and Freddie Mac, industry experts warn. The proposed definition of “qualified residential mortgages” under the terms of the Dodd-Frank Wall Street Reform and Consumer Protection Act was a major focus of concern raised during a webinar last week sponsored by Inside Mortgage Finance. “I think the big-picture news is that certainly the risk-retention regulations do what Dodd-Frank mandates that they do. But in some very important ways they go beyond that...

A handful of high-profile developments on the representations and warranties front over the last few months is prompting non-agency investors to contemplate whether they should start pricing in the benefits associated from repurchases. A few weeks ago, Bank of America and mortgage insurer Assured Guaranty reached a...

The city of Los Angeles on Wednesday filed a civil lawsuit against Deutsche Bank and its subsidiaries for failing to maintain the properties of loans that were pooled in non-agency MBS for which the company served as trustee. City Attorney Carmen Trutanich filed the over 200-page complaint, which accused the bank of...

Some investors are ready to resume participation in the non-agency market while most others will take a wait-and-see approach, based on comments made at the secondary market conference sponsored by the Mortgage Bankers Association this week in New York City. Steve O’Connor, senior vice president of public policy and...

“The [jumbo] market is much bigger than the banks’ balance sheets,” according to Randy Robertson, a managing director and co-head of securitized products at BlackRock. The firm’s jumbo mortgage real-estate investment trust has been operating for four months and aims to help re-establish the...

Mandatory risk-retention requirements will severely limit non-agency mortgage originations and securitization, according to market participants. Even portfolio originations could be hindered due to the pending rule from federal regulators. “Loan availability is likely to be quite restricted in the...

Purchases of mortgage-backed securities via the Public-Private Investment Program have resulted in returns of about 27.0 percent for taxpayers, according to figures reported by the Treasury Department. However, the impressive profit is based on return on equity alone, excluding loans made to... [Includes one graph and one data chart]

While working to establish a jumbo whole loan conduit, PennyMac Mortgage Investment Trust has been able to turn profits by investing in distressed mortgages. The real-estate investment trust avoided purchases of mortgage-backed securities during the first quarter of 2011 and increased its profits due to...

The House Financial Services’ Subcommittee on Capital Markets and Government Sponsored Enterprises this week approved a mark-up of H.R. 940, “the U.S. Covered Bond Act of 2011.” The mark-up was approved by a voice vote, including two amendments, and is scheduled to receive consideration by the...