Subprime lending remained subdued in 2010, according to newly released data from the Home Mortgage Disclosure Act. Higher-priced mortgages – the Federal Reserve’s revised proxy for subprime mortgages – accounted for 3.2 percent of the number of loans originated in 2010. Some $7.14 billion in higher-priced mortgages were sold in 2010, according to a new analysis by Inside Nonconforming Markets. Ginnie Mae continued to account for the largest portion of the sales at 35.0 percent in 2010, up from 21.1 percent the previous year. ... [Includes one data chart]

Negative equity among jumbo borrowers with securitized mortgages is set to increase significantly, according to Fitch Ratings. This week, the rating service projected that half of non-agency jumbo borrowers will end up with negative equity, up from more than a third of such borrowers currently. ... [Includes three briefs]

Redwood Trust issued its second non-agency MBS of the year this week with just one rating, a sign of dramatic change in the role of credit ratings in the market. During the heyday of the non-agency MBS market, very few public deals went to market without at least two ratings and some transactions were rated by all three of the top credit rating services. Standard & Poor’s was the market leader for years, but Fitch has had a virtual monopoly on the jumbo MBS sector, which totals just two deals so far this year. S&P has effectively taken to the sidelines in rating non-agency MBS backed by new mortgages, according to...

The Securities and Exchange Commission is considering launching a civil injunctive action against Standard & Poor’s Rating Services, alleging violations of federal securities laws with respect to the company’s ratings for a 2007 collateralized debt obligation. According to a Form 8-K filing this week by McGraw-Hill, the rating service’s parent, the federal agency is looking into S&P’s rating of Delphinus CDO 2007-1, which was to be mostly backed by non-agency residential MBS. “In connection with the contemplated action, the [SEC] staff may recommend that the commission seek civil money penalties, disgorgement of fees and...

Redwood Trust is set to issue a non-agency mortgage-backed security backed by $375.2 million in jumbo mortgages, marking the issuer’s – and the mortgage market’s – second new jumbo deal this year. Fitch Ratings is giving a AAA rating based on its new tougher standards, though it remains unclear whether another service will rate the transaction. A presale report issued last week by Fitch noted the strong characteristics of Redwood’s Sequoia Mortgage Trust 2011-2. ...

Guarantee fees up, loan limits down. Reform of the government-sponsored enterprises is set to begin with subtle adjustments to Fannie Mae and Freddie Mac pricing, not with sweeping legislation from Congress. Federal Housing Finance Agency Acting Director Edward DeMarco noted that the guaranty fees charged by the GSEs have already started to increase, and further gradual increases will be implemented next year. ...

“Sept. 2 was the most significant day for mortgage crisis litigation since the onset of the crisis in 2007,” Isaac Gradman, managing member of IMG Enterprises, said in reference to the non-agency mortgage-backed securities lawsuits filed by the Federal Housing Finance Agency. He predicted that the involvement of the U.S. government in mortgage litigation will encourage more private litigants to file lawsuits seeking securities law claims and buybacks. Gradman, whose MBS consulting firm specializes in analyzing contractual rights, potential liabilities and MBS regulation, said the FHFA lawsuits could provide plaintiffs with a roadmap to recoveries. ...

Banks and thrifts appear to be replenishing their first lien portfolio holdings while not taking on major amounts of new servicing, according to the Inside Mortgage Finance Bank Mortgage Database. Banks and thrifts held $1.70 trillion in first-liens in portfolio at the end of the second quarter of 2011, up 0.2 percent from the previous quarter.Portfolio holdings were down 0.9 percent compared with the second quarter of 2010. Bank portfolios are largely being used to hold mortgages that meet underwriting guidelines for the government-sponsored enterprises ... [includes one data chart]

Restrictions by the government-sponsored enterprises have not stopped one company from offering Property Assessed Clean Energy program loans. FIGtree Energy Resource Company, a San Diego company, is offering the California PACE program – only for non-agency jumbo mortgages in certain jurisdictions. PACE programs offer loans for energy-efficiency home improvements. Beginning in July 2010, the GSEs stopped purchasing PACE-related mortgages that had automatic first lien priority over previously recorded mortgages. ...

The Treasury Department has not sufficiently enforced rules for newer components of the Home Affordable Modification Program, according to a review released last week by the Government Accountability Office. Treasury officials acknowledge that the agency has not met all of the GAO’s recommendations but made no guarantees of tighter enforcement. “Treasury has experienced challenges in implementing the newer Making Home Affordable programs,” the GAO said, citing problems with the Principal Reduction Alternative, Second Lien Modification and Home Affordable Foreclosure Alternatives programs.