High-risk mortgages securitized by Fannie Mae and Freddie Mac continued to drag down earnings for the government-sponsored enterprises in the first quarter of 2011, forcing the two GSEs to go deeper into debt to the federal government. Fannie and Freddie lost a combined $13.0 billion on their mortgage-backed security guarantee programs during the first quarter, a significant deterioration from the $6.6 billion the GSEs lost during the previous quarter, according to the Federal Housing Finance Agency’s latest conservatorship report. Since the beginning of 2008 through the first quarter of 2011, Fannie and Freddie have burned through...

Facing a growing coalition of dissatisfied non-agency mortgage-backed security investors, Bank of America announced this week that it plans to settle a large portion of its non-agency MBS claims related to buybacks and servicing. The action sets a precedent for the sector, making settlements with other non-agency MBS issuers more likely. “Bank of America has charted...[Includes one graph]

At least three lenders are looking to re-establish the market for non-prime lending. Two firms are hoping to attract additional funding and begin non-prime lending shortly, while a smaller player is already offering the loans. Shellpoint Partners has plans to expand the offerings of a recently acquired agency originator, New Penn Financial. Shellpoint is a specialty finance company and joint venture with Ranieri Partners. Lewis Ranieri, a co-founder of Shellpoint, said...

Subprime borrowers in rural areas have been significantly impacted by mandatory escrow requirements on higher-priced mortgages, according to community banks. The Independent Community Bankers of America is leading efforts by banks to limit or remove escrow requirements currently enforced by the Federal Reserve. The minimum period for mandatory escrow accounts for most first-lien higher-priced mortgages would be expanded...

The strength of the non-agency market has become a major point of concern as a diverse coalition of market participants lobbies for changes to a proposed rule for mandatory risk retention. The impact on the non-agency market is second only to the group’s concerns about downpayment requirements in the qualified residential mortgage debate. “The proposed narrow QRM rule discourages...

Trade groups representing home builders and real estate agents are warning Congress that a decrease in conforming loan limits will result in higher interest rates for borrowers and other less favorable loan terms. However, the housing advocates face a tough battle in extending temporarily elevated conforming loan limits. Without action from Congress, the high-cost loan limit for agency mortgages and the FHA will fall from $729,750 to $625,500 beginning Oct. 1. Some 5.25 million owner-occupied homes will no longer qualify...

Morgan Keegan, a brokerage subsidiary of Regions Financial, agreed to pay $200 million last week to settle fraud charges related to subprime mortgage-backed securities. The settlement was reached with the Securities and Exchange Commission, state regulators and the Financial Industry Regulatory Authority. The regulators accused Morgan Keegan of causing the false valuation of subprime MBS in five funds managed by Morgan Asset Management from January to July 2007. The settlement also states...

FHA jumbo originations took a 32.2 percent tumble during the first quarter of 2011 yet remained strong enough when combined with Fannie Mae and Freddie Mac’s jumbo numbers to beat non-agency jumbo originations for the quarter, according to a new Inside FHA Lending ranking and analysis. FHA, Fannie and Freddie accounted for $26.15 billion, or 15.7 percent, of all jumbo loans – those exceeding $417,000 – originated in the first quarter, compared to $25.0 billion in new non-agency jumbo loans produced during the same period, data from Inside Mortgage Finance show. During the first quarter, FHA jumbo production fell to... [Includes two data charts]

Real estate investment trust Walter Investment Management Corp. announced late last week its closing of a $102 million private placement of non-agency MBS. The purpose of the transaction is to help pay for Green Tree Credit Solutions, which Walter Investment acquired in March for $1.065 billion. Green Tree carries a $37 billion servicing portfolio, mostly for other investors, according to Inside Nonconforming Markets, an affiliated newsletter. The notes were issued by WIMC 2011-1, which is a recently-formed statutory trust sponsored by Walter Investment. “As we near our anticipated early third quarter completion of...