Two Harbors Investment Corp. said this week it is “impressed with the investment opportunities” in the non-agency MBS sector, particularly over the next year and beyond and is pushing forward with its plans to begin a securitization program. Thomas Siering, president and CEO of the New York-based real estate investment trust, said during a conference call to discuss the firm’s second quarter earnings that despite the “challenging” non-agency environment in June, there is tremendous opportunity to profit from non-agency MBS issuance throughout the rest of this year into 2012. “The recent pullback in the non-agency market has created...

Serious delinquency rates on home-equity loans held by banks and thrifts continued to decline in the first quarter of 2011, according to the Inside Mortgage Finance Bank Mortgage Database. However, the improved performance was led by home-equity lines of credit as the non-accrual rate on closed-end seconds increased compared with the previous quarter. The HEL serious delinquency rate (90+ days late plus non-accrual) and net charge off rates for combined HELOC and closed-end second portfolios was 2.09 percent at the end of the first quarter of 2011. That was down ... [includes one data chart]

The Federal Housing Finance Agency this week filed suit against UBS Securities and various related entities as well as former top officials of the firm over alleged misrepresentations on subprime and Alt A MBS sold to Fannie Mae and Freddie Mac. The two government-sponsored enterprises bought some $4.5 billion of non-agency MBS issued on two UBS shelf registrations between September 2005 and August 2007. The deals included single-seller and conduit transactions with mortgages originated by ...

The government program that came out of the Troubled Asset Relief Plan to provide liquidity for the non-agency MBS market by partnering with private investors was less profitable during the second quarter, according to a Treasury Department report released last week. The Public-Private Investment Program was created to invest in non-agency MBS that other banks couldn’t hold after the economic collapse. Non-agency MBS account for 79 percent of the assets acquired by the eight public-private investment funds, with commercial MBS making up the rest. Almost half of the MBS are ...

The Consumer Financial Protection Bureau issued an interim final rule last week that the new federal regulator said prevented significant disruption of the origination and modification of alternative mortgages – including ARMs. However, the interim final rule also narrowed the definition of “alternative mortgage transactions” that are eligible for preemption from state laws. The interim final rule temporarily updated the Alternative Mortgage Transaction Parity Act as required by the Dodd-Frank Act. “Without this interim rule implementing the AMTPA amendments, state lenders would lose ...

Analysts and legislative history suggest that Congress could still act to keep the “temporary” high-cost conforming loan limit at elevated levels. Advocates of the non-agency market have long-anticipated the drop in the loan limit, currently set to occur in October without further action from Congress. An extension of the $729,750 loan limit this year seems unlikely with the Obama administration supporting a decline to at least $625,500. Many Republicans also support a decrease in the role ...

Lenders and even consumer advocates are pushing for expansions to proposed streamlined refinance standards for “qualified mortgages.” Federal regulators proposed an exception to the QM ability-to-repay requirements for refis of “non-standard mortgages” into standard mortgages. “MBA urges the CFPB to revisit these criteria so more borrowers qualify for streamlined products and such products are treated as QMs,” the Mortgage Bankers Association said in a comment letter sent to the Federal Reserve. The comment period on the proposed rule ...

The Federal Reserve last week fined Wells Fargo & Co. $85.0 million, alleging that a non-bank subsidiary of Wells steered prime borrowers to subprime mortgages. The consent order is the first formal enforcement action taken by a federal bank regulatory agency to address alleged steering of borrowers into high-cost subprime mortgages. The civil money penalty is also the largest the Fed has assessed in a consumer-protection enforcement action. In addition to the civil money penalty, the order requires that Wells compensate more than ...

The Federal Housing Finance Agency this week filed a lawsuit against UBS Americas alleging misstatements and omissions on non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac. FHFA Acting Director Edward DeMarco warned that further action against other non-agency MBS issuers is likely. “From the issuance of 64 subpoenas last year to the filing of this lawsuit and further actions to come, we continue to seek redress for the losses suffered by ...

An increasing number of non-agency mortgage-backed security investors have opposed Bank of America’s proposed $8.5 billion settlement related to buybacks and servicing. The proposed settlement announced last month was seen as a precedent for the sector, though final approval remains far from certain. MBS investors have raised concerns about the settlement price, conflicts of interest and second liens, among other issues. If approved, the settlement would apply to all investors in the 530 Countrywide Financial securities in question, not just to the 22 large firms represented by ...