Officials with Bank of America maintain that a proposed $8.5 billion settlement related to non-agency buybacks and servicing is fair, even as opposition continues to mount. BofA also continues to take action to distance itself from “legacy” assets acquired from Countrywide Financial. “Obviously there aren’t many days when I get up and think positively about the Countrywide transaction in 2008,” BofA’s CEO Brian Moynihan said this month in a conference call with investors. “In each quarter, we continue to put risk behind us ...

The amount of subprime mortgages outstanding as of the second quarter of 2011 has declined by nearly 50 percent compared with the market’s peak of $1.0 trillion in the second quarter of 2007, according to an analysis by Inside Nonconforming Markets. However, subprime servicers have reasons to be optimistic, according to industry analysts.Subprime mortgage delinquencies increased in the first and second quarters of 2011 after declining throughout 2010 ... [includes one data chart]

Walter Investment Management is looking to capitalize on its recent acquisition of special servicer Green Tree and continue to grow. Officials with Walter said the company currently services a $40 billion portfolio and is on pace for a servicing portfolio of at least $60 billion by the end of this year. “We feel very good about our ability to get our fair share and more of what’s available in the market,” said Denmar Dixon, vice chairman of the board and executive vice president at Walter. ...

One of PennyMac Mortgage Investment Trust's primary goals is to increase jumbo correspondent lending activity, according to David Spector, president and COO of the real estate investment trust. Stanford Kurland, chairman and CEO of PennyMac, noted that banks have reduced correspondent activity due to impending risk-retention rules and other regulatory issues. “PennyMac has great potential to bridge the significant gap that exists in the origination market, which will likely grow with the expansion of the prime non-agency market as the agencies’ conforming loan limits are reduced,” Kurland said this month. ...

After negotiations related to losses deadlocked, American Home Mortgage Servicing this week filed a lawsuit against Lender Processing Services and its affiliate, DocX. The non-prime servicer is seeking to recover losses from LPS relating to faulty assignments of non-agency mortgages set for foreclosure. The lawsuit follows more than a year of negotiations between the companies as American Home attempted to recover millions of dollars in losses. LPS said it was surprised by the lawsuit and that American Home had refused to provide evidence of actual losses suffered. ...

The massive losses taken by the government-sponsored enterprises on their non-prime holdings are not over yet. Fannie Mae and Freddie Mac warned this month that they expect greater credit losses for 2011 than the hits they took last year, largely due to the continued poor performance of legacy non-prime acquisitions. The GSEs had a combined $430.51 billion in non-prime holdings as of the second quarter of 2011, according to a new ranking and analysis by Inside Nonconforming Markets. ... [includes one data chart]

Non-agency servicers are increasingly turning to short sales as a better option than foreclosure for borrowers, mortgage-backed security investors and servicers, according to industry analysts.“In addition to helping to sell the property at a higher price, a short sale can also lower loss severities by shortening the amount of time over which expenses can accrue, by reducing the total amount of principal and interest that the servicer must advance on the loan, and by eliminating legal costs associated with foreclosure,” according to Moody’s Investors Service. ...

Non-agency mortgage-backed security investors frustrated with the lack of buybacks on non-agency MBS are being encouraged to explore servicer termination. The tactic is less expensive and less burdensome than researching potential buybacks, according to Steve Ruterman, an independent consultant to non-agency MBS investors.“While much of the focus in recent years has been on enforcing put-back rights, there has been talk of broader efforts to replace servicers,” he said. “Creditors would be wise to make better use of this complementary strategy going forward.” ...

The Department of Justice is reportedly investigating Standard & Poor’s and Moody’s Investors Service regarding the ratings the firms placed on non-agency mortgage-backed securities. The increased attention on the rating services follows S&P’s recent downgrade of the credit rating for the U.S., revelations by a former Moody’s employee and numerous other investigations that found problems with the ratings on non-agency MBS. In a letter sent this month to the Securities and Exchange Commission, William Harrington, a former senior vice president at Moody’s, alleged that the rating service knowingly published “worthless opinions” on non-agency MBS. ...

Springleaf Financial reportedly plans to issue a $292 million mortgage-backed security backed by seasoned subprime mortgages. Fortress Investment Group acquired an 80 percent stake in the company – formerly known as American General Finance – from American International Group in August 2010. ... [includes three briefs]