Assured Guaranty Municipal Corp. will terminate a lawsuit it has pending against Flagstar Bancorp and will not pursue any future related claims under a settlement agreement the two entities announced last week. Under the agreement’s terms, Flagstar will pay Assured $105 million to settle the suit filed by the Bermuda-based bond insurer in 2011 related to $902 million of non-agency MBS it insured in 2005 and 2006 that were backed by home-equity lines of credit. The suit claimed the HELOCs did not comply with the representations and warranties made by the bank. In February, a New York federal judge ruled...

“This has been a particularly challenging week,” said Peter Sack, a managing director at Credit Suisse, during a webinar hosted this week by Inside Mortgage Finance. The yield on the benchmark 10-year Treasury has increased significantly in the past month, making pricing on non-agency jumbo MBS unattractive for issuers. In addition to issuing its own jumbo MBS, Credit Suisse has served as an underwriter on a number of deals, including the non-agency MBS from Shellpoint Partners that priced this week after a slight delay due to rapidly increasing interest rates and other pricing metrics. Analysts at FBR Capital Markets said...

The SEC will push for admissions of guilt as part of settlements of lawsuits it files against private industry, including participants in the MBS market.

It appears that Cerberus is going down the mortgage aisle one more time. Let's hope it doesn't end like GMAC. Meanwhile, jumbo MBS market seizes up, temporarily.

Participants in the non-agency mortgage-backed security market are concerned about the strength of the sector as interest rates and other pricing metrics have increased significantly in recent weeks. “When the 10-year Treasury rate started to rise recently and the mortgage interest rate spread out by 20 basis points, the non-agency MBS market spread out by 50 basis points,” said Lewis Ranieri, chairman of Ranieri Partners, at a forum hosted by the Bipartisan Policy Center last week. “And given there’s ...

Shellpoint Partners issued its first non-agency jumbo mortgage-backed security this week, which differs in a number of ways from non-agency MBS issued since 2010. The deal is an attempt to loosen – slightly – non-agency MBS underwriting standards, although the rating services were critical of the originator, New Penn Financial. Shellpoint Asset Funding Trust 2013-1 was initially planned as a $261.58 million non-agency MBS, according to presale reports issued last week. The deal was reportedly restructured ...

The preferences of investors and the rating services play a significant role in the characteristics of mortgages included in non-agency jumbo mortgage-backed securities, according to industry participants. “The rating agencies are a first part of the analysis, but investors in these bonds are paying very careful attention to these loan characteristics, to credit exceptions and to who the lenders are,” Peter Sack, a managing director at Credit Suisse, said this week at a webinar ...

When interest rates rise rapidly – as they have the past two weeks – lenders suffer. But it appears the few dozen or so hard-money and subprime lenders operating quietly in the trenches are doing just fine and are even seeing an increase in loan requests. Mark Mozilo, a principal in CALCAP Advisors, told Inside Nonconforming Markets that his hard-money firm will fund 40 loans in the second quarter of 2013, its highest quarterly volume to date. The company is just a few years old. Mozilo added that ...

A bipartisan group of members of the Senate Banking, Housing and Urban Affairs Committee introduced legislation this week to reform the government-sponsored enterprises. However, industry participants and analysts predict that Congress is unlikely to pass GSE reform anytime soon. S. 1217, the “Housing Finance Reform and Taxpayer Protection Act,” would wind down Fannie Mae and Freddie Mac within five years of passage and replace their functions with a new government entity ...

Lenders that originate home loans to hold in portfolio are concerned about the regulatory consequences of originating non-qualified mortgages. While some have asked for a blanket exemption from liability for non-QMs held in portfolio, Democrats in Congress appear unlikely to approve such changes. “Congress should amend the ability-to-repay statute to grant QM status to all mortgage loans held in portfolio by community banks,” Charles Vice, commissioner of the Kentucky Department of ...