Industry analysts predict that the New York ruling will limit rep-and-warrant claims on vintage non-agency MBS as well as future claims on recently issued jumbo MBS.
The statute of limitations for filing representation-and-warranty claims on non-agency MBS starts when a deal is issued, not when a defective loan isn’t cured, according to a recent ruling by the appellate court in New York. Industry analysts suggest that the ruling will limit rep-and-warrant claims on vintage non-agency MBS as well as future claims on recently issued jumbo MBS. In December, the appellate division of New York’s Supreme Court dismissed ACE Securities Corp. v. DB Structured Products. The lawsuit was brought by a trustee on behalf of investors against Deutsche Bank, the issuer of ACE 2006-SL2, a non-agency MBS issued in 2006. The investors, along with HSBC Bank, the trustee, were looking to enforce rep-and-warrant claims in 2012. New York imposes...
The Dutch State Treasury Agency this week is auctioning $4.3 billion in non-agency MBS once held by ING, which will leave the government entity still holding about $2.2 billion of securities. The sale represents less than 1.0 percent of outstanding non-agency MBS, and it was expected to have little impact on pricing for these assets. Bids on the portfolio were...
Citadel Loan Servicing, arguably the largest active originator of nonprime mortgages, plans to move forward with its first non-agency MBS by the middle of this year. Company founder and CEO Dan Perl told Inside MBS & ABS that the firm has already picked a custodian as well as what he calls a “watchdog” to review the collateral. The watchdog in question appears to be Clayton Holdings, said one source, but officials at both firms would not discuss the matter. Perl declined...
Banks with the capacity to hold jumbo mortgages in portfolio were major contributors to jumbo mortgage-backed securities issued in 2013, according to a new ranking and analysis by Inside Nonconforming Markets. Fixed-rate mortgages also dominated the population of loans bundled into jumbo MBS last year. First Republic Bank was the biggest originator of securitized jumbos in 2013, with a market share more than double the next closest lender. Some $2.16 billion in originations from [Includes two data charts]
Issuance of jumbo mortgage-backed securities has ground to a halt recently but that hasn’t stopped lenders that were participating in the jumbo MBS market from originating loans. Instead, some have shifted their output of jumbos to whole-loan sales. PrimeLending, W.J. Bradley Mortgage and other jumbo lenders whose loans helped fuel the surge in jumbo MBS issuance in the first half of 2013 have shifted to selling whole loans directly to investors, often banks. Scott Eggen, director of capital markets at PrimeLending ...
While many major banks plan to offer mortgages that don’t meet qualified mortgage requirements, the originations will largely be limited to interest-only mortgages for well-heeled borrowers. A handful of smaller players have plans to offer a different sort of non-QM, aimed at borrowers with higher debt-to-income ratios or via hybrid adjustable-rate mortgages. Among the firms targeting the non-QM space beyond IOs is Fenway Summer, headed by Raj Date, the former deputy director at the CFPB ...
A significant number of lenders report that the liability posed by loans that don’t meet qualified-mortgage standards is so large that they won’t offer non-QMs. Others would like to offer non-QMs but can’t at the moment because they don’t have portfolios and a secondary market for non-QMs has yet to develop, due at least partly to liability concerns. “The risks of liability and protracted litigation are greatest for these loans where there is no presumption of compliance and there is a strong ...
The Home Affordable Modification Program’s second-lien loss-mitigation program has seen increased activity in recent months and is poised for further growth as agency mortgages were recently added to the program. About $2.5 billion in outstanding second-lien balances have been forgiven via the program. Some 123,714 HAMP Second-Lien Modification Program mods were active as of the end of November, according to the Treasury Department. Through 11 months in 2013, 21,000 2MP mods had been started ...
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