Although 22 large investors and Bank of America think they reached a reasonable deal to resolve massive buyback claims on some $221 billion of outstanding Countrywide non-agency MBS, some outside analysts and other investors aren’t so sure. The pending agreement, which has to be approved by the court, requires Bank of America to pay $8.5 billion that would be distributed according to the deals that suffered the biggest losses. In return, the bank would get significant ...

Fitch Ratings has updated its criteria for non-agency MBS, making changes to its standards for representations and warranties, due diligence and originator reviews to better determine credit risk for new issues. Three separate reports released last week revise existing criteria the rating agency created in 2008. “Originator reviews, loan-level due diligence results, and the quality of representations and war-ranties to a transaction are key elements of ...

There have been only a few non-agency MBS securitizations in 2011, and the remainder of the year is not expected to be any more fruitful, according to panelists at the American Securitization Forum annual conference held last week in Washington, DC. Fitch Ratings has rated only one RMBS transaction, said Douglas Murray, group managing director at Fitch Ratings, but there have been...

The strength of the non-agency market has become a major point of concern as a diverse coalition of market participants lobbies for changes to a proposed rule for mandatory risk retention. The impact on the non-agency market is second only to the group’s concerns about downpayment requirements in the qualified residential mortgage debate. “The proposed narrow QRM rule discourages...

The National Credit Union Administration’s lawsuits regarding non-agency mortgage-backed securities mark a shift in focus to misrepresentation rather than breaches of representations and warranties, according to industry attorneys. Last week, the NCUA filed lawsuits against JPMorgan Securities and RBS Securities claiming that misrepresentations as well as violations of federal and state securities laws caused...

Real estate investment trust Walter Investment Management Corp. announced late last week its closing of a $102 million private placement of non-agency MBS. The purpose of the transaction is to help pay for Green Tree Credit Solutions, which Walter Investment acquired in March for $1.065 billion. Green Tree carries a $37 billion servicing portfolio, mostly for other investors, according to Inside Nonconforming Markets, an affiliated newsletter. The notes were issued by WIMC 2011-1, which is a recently-formed statutory trust sponsored by Walter Investment. “As we near our anticipated early third quarter completion of...

Although the dollar volume of MBS and ABS deals rated by Standard & Poor’s in the first quarter was down from the same period in 2010, the company ranked as the top rating service in both markets, according to a new analysis by Inside MBS & ABS. S&P rated $5.80 billion of non-agency MBS during the first quarter, down 61 percent from its volume in early 2010. But that amounted to 66 percent of total issuance in the market – more than any of its competitors. Overall non-agency MBS issuance was down 50 percent from year-ago levels. Moody’s Investor Services ranked second with $4.5 billion in rated MBS, just over half of the market in... [Includes one data chart]

There is a huge disconnect between some members of Congress and the reality of the private market, that broad investor appetite for non-agency mortgage-backed securities is unlikely to rebound anytime soon, according to panelists at the American Securitization Forum annual conference. “Once you figure out how to get the government sector out of the market, [the belief is that] the private sector will step in and pick up all of that slack, and therefore they will do...

The Federal Reserve Bank of New York last week sold only $1.9 billion of the initial $3.8 billion of non-agency MBS up for auction out of its Maiden Lane II portfolio. On March 30, 2011, the NY Fed announced that through its investment manager, BlackRock Solutions, it would begin the process of selling assets in the MLII portfolio both individually and in segments “over time as market conditions warrant through a competitive sales process.” Maiden Lane was created to bail out American International Group during the financial crisis and acquired...

Most observers have focused on the impact the proposed risk-retention rule would have on non-agency MBS, but key industry groups say the proposed rule attempts to “fix” what isn’t broken – the relatively trouble-free non-mortgage ABS market. “If the risk-retention rules are not appropriately designed to accommodate existing market prac-tices, we risk an immediate and significant reduction in the availability of auto loans, student loans, credit cards and business credit throughout our country without gaining...