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.

The stigma once associated with nonconforming mortgages appears to be fading as another originator is touting its nonconforming offerings. Last week, NexBank was the latest lender to detail its nonconforming products, including jumbos and conforming balance options. “By expanding our balance-sheet offerings to include loans down to $250,000, the Mortgage Connect program allows us to serve the funding needs of most homeowners in the North Texas market,” said Jed Meaux, vice president and head of NexBank’s mortgage division. ...

“Unwarranted and false public allegations” have prompted Michael Perry, the former chairman and CEO of IndyMac, to mount a defense via a new website. His “Not Too Big to Fail” site offers “the facts about Mike Perry and IndyMac.” On the site, Perry takes aim at lawsuits against him by the Securities and Exchange Commission and Federal Deposit Insurance Corp. as well as private litigation and audits by the Office of the Inspector General of the Department of Treasury. ...

Interest rates on jumbo mortgages are the latest addition to the data page that is published in each issue of Inside Nonconforming Markets. The average interest rates and points for jumbos are tracked via the Inside Mortgage Finance Weekly Sample of Mortgage Rates and the Mortgage Bankers Association. ... [includes four briefs]

Standard & Poor’s and Fitch Ratings have announced separate ratings of two new non-agency MBS over the past two weeks, making a little noise in the long slumbering non-agency MBS market. Fitch this week released a presale report on Redwood Trust’s next prime jumbo transaction, while S&P rated a securitization of seasoned subprime mortgages that drew flak because it got higher grades than the agency gave the U.S. government. The new Redwood transaction, Sequoia Mortgage Trust 2011-2, looks a lot like the company’s last issuance back in February. It’s backed by $375 million of squeaky-clean prime jumbo mortgages, most of which were originated by...

Mortgage securitization rates remained at record levels through the first half of 2011, reflecting a sharp decline in new primary market production and a surge of agency issuance early in the year. A new Inside MBS & ABS analysis reveals that mortgage securitization activity in the first half of 2011 equaled 96.0 percent of loans originated during the same period. That compares to an 84.9 percent securitization rate for all of 2010 and an 85.6 percent rate – the record high – back in 2009. Because it can take weeks or even months before a newly originated mortgage hits the capital markets as collateral backing an MBS, there is a significant slippage between... [Includes one data chart]

The ongoing debate over the need for a government guarantee to sustain the benefits of the to-be-announced MBS market moved this week to the Senate Housing, Banking and Urban Development Committee, where researchers covered both sides of the issue for a group of lawmakers who aren’t likely to act on their counsel any time soon. “Proponents of privatization ignore that the jumbo market does benefit from a government guarantee indirectly in multiple ways,” said Adam Levitin, professor of law at Georgetown University. “The jumbo market has long aped the standards set by the [government-sponsored enterprises] in the conforming market, including...

The Federal Housing Finance Agency’s legal action late last week against many of the nation’s largest financial institutions on the grounds they misled Fannie Mae and Freddie Mac about the quality of subprime and Alt A MBS purchased by the government-sponsored enterprises has few positives but plenty of negative potential consequences for the market, experts say. The 17 separate lawsuits filed by the FHFA seek unspecified damages on $196 billion in mortgage securities the two GSEs purchased, mostly between 2005 and 2008. The agency conducted extensive loan-level reviews that allegedly revealed widespread discrepancies between... [Includes two pages of data]