More than 1,800 comment letters were apparently not enough. The Consumer Financial Protection Bureau reopened the comment period last week on the pending ability-to-repay rule, with an emphasis on data relating to debt-to-income ratios. The rule will define “qualified mortgages” and the Dodd-Frank Act mandates that it be finalized by January 21, 2013. Data on agency mortgages helped prompt the request for comments, and the CFPB said it is hoping for similar data on mortgages in non-agency mortgage-backed securities ...

Non-agency mortgage-backed security investors and politicians on both sides of the aisle were critical this week of the recent $25.0 billion servicing settlement. The settlement requires principal reduction loan modifications on mortgages held in five banks’ portfolios and allows the servicers to receive credit for reducing principal on mortgages in non-agency MBS. Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, noted that the Association of Mortgage Investors is not opposed to principal reduction mods ...

Walter Investment Management is scheduled next week to begin subservicing the first batch of up to 30,000 mortgages in non-agency mortgage-backed securities for Bank of America. The transfer will mark the latest shift from BofA to subservicers as part of a still-disputed $8.5 billion proposed settlement with non-agency MBS investors. Nine subservicers were approved as part of the settlement: Acqura Loan Services, Bayview Loan Servicing, FCI Lender Services, Nationstar Mortgage, Residential Credit Solutions ...

Mortgage industry participants support a new proposed definition of subprime consumer loans for banks with more than $10.0 billion in assets. However, some raised concerns that the Federal Deposit Insurance Corp.’s proposal could unnecessarily impact holdings of nontraditional mortgages. In March, the FDIC proposed a revised definition of “higher-risk” consumer, commercial and industrial loans and securities for the large bank pricing model, which determines deposit insurance rates. Instead of defining subprime loans based ...

Moody’s Investors Service announced last week that it is reviewing $47.5 billion in outstanding non-agency mortgage-backed securities for possible rating action. In a change of pace, however, most of the securities are being reviewed for potential upgrades. A whopping 78.3 percent of the combined subprime, Alt A, option ARM and jumbo MBS in question could potentially be upgraded. “The upgrade reviews are due to significant improvement in collateral performance and/or faster-than-expected pay-down on ...

Most major non-agency servicers met the June 1 deadline for the start of Tier 2 of the Home Affordable Modification Program, according to the Treasury Department. While overall HAMP performance has improved, some non-agency servicers have more improvements to make. HAMP Tier 2 was designed to help borrowers with debt-to-income ratios below 31 percent as well as those with rental properties. The Treasury this week revealed the HAMP Tier 2 progress for 18 servicers. Bank of America, Green Tree Servicing and ...

If investors in non-agency mortgage-backed securities had easy access to the addresses of mortgages included in non-agency MBS, the sector’s market share would increase, according to a new proposal by the Reason Foundation, which promotes libertarian principles. “Ignorance of the borrower’s address and identity is a major disadvantage for the residential MBS investor or anyone trying to analyze residential MBS deals,” according to Marc Joffe, a research associate at the Reason Foundation and Anthony Randazzo ...

BDO Consulting wa selected this week to serve as the primary professional firm to help oversee the recent $25.0 billion servicing settlement. More than 30 BDO professionals will work with the settlement’s monitor to oversee the settlement. BDO is a professional services firm providing assurance, tax, financial advisory and consulting services. The company has worked with large retail mortgage lenders and financial institutions, and conducted related assessments and investigations ... [Includes four briefs]

In a move intended to maintain the integrity of data that helps guide the decisions of MBS investors, the Financial Industry Regulatory Authority last week fined Citigroup Global Markets $3.5 million for allegedly providing “inaccurate mortgage performance information, supervisory failures and other violations” in connection with subprime residential MBS. “Citigroup posted data for its RMBS deals that it should have known was inaccurate; and even after they learned that the data was inaccurate, Citigroup did not correct the problem until years later,” said Brad Bennett, FINRA executive vice president and...

Improved subprime performance and a lack of new originations have prompted major nonbank firms involved in subprime servicing to expand their portfolios with acquisitions of nonperforming agency mortgages. Ocwen Financial, Nationstar Mortgage and Walter Investment Management, among others, have all recently acquired large volumes of nonperforming agency mortgages. An estimated $525.0 billion in subprime mortgages were outstanding as of the end of the first quarter of 2012, according to an Inside Nonconforming Markets analysis ... [Includes one data chart]