Bank of America and mortgage insurer Assured Guaranty last week reached the biggest settlement to date regarding the bond insurance industry and non-agency mortgage-backed securities. The settlement sets a high bar for future non-agency buyback claims, according to industry analysts. BofA estimates...

Non-agency participants – particularly mortgage-backed security investors – submitted “widely positive” comments regarding Fitch Ratings’ proposed model for rating jumbo MBS. While the Mortgage Bankers Association was critical of Fitch’s proposal to link MBS rating to home prices, Brian Bertsch, a Fitch spokesman, said...

The proposed ability-to-repay rule released this week by the Federal Reserve included special provisions regarding balloon mortgages. Small lenders operating predominantly in rural or underserved areas would be allowed to originate mortgages that would receive “qualified mortgage” protections. “This option is meant to...

Mortgage investors are beginning to pay more for seasoned non-agency mortgages and demand remains high, according to industry analysts. The sector was also helped by the Federal Reserve’s sale this month of up to $1.33 billion in non-agency mortgage-backed securities acquired from American International Group. “The opening salvo from...

Non-agency participants have expressed optimism that legislation to create a framework for covered bonds in the U.S. will be approved by Congress this year. Supporters note that the framework will bring more private capital into the mortgage market. At a panel discussion hosted this week by...

Strategic defaulters display a different type of credit behavior than distressed borrowers who miss payments, according to new research from FICO. “Strategic defaulters tend to be more savvy managers of their credit than the general population, with higher FICO scores, lower revolving balances, fewer instances of...

Jumbo mortgage originations held up better than the overall market in early 2011, but more of the strength in the sector came from agency programs, according to a new Inside Mortgage Finance ranking and analysis. Mortgage lenders originated an estimated $51.2 billion of new loans that exceeded the bench-mark $417,000 conforming loan limit during the first quarter of 2011. That was down 7.8 percent from the fourth quarter of last year, a much better showing than the 35.0 percent downturn in total mortgage originations during the same period. In fact, loans exceeding $417,000 accounted for...[includes two data charts]

Weichert Financial/Mortgage Access Corp., an agency/jumbo mortgage lender in 43 states, reached a settlement with the banking regulators of 10 states after a multi-state examination found numerous compliance and internal control deficiencies, including the use of an “interstate lending desk” to facilitate the origination or completion of mortgage applications by originators that were not licensed in the appropriate jurisdictions. “The multi-state mortgage examination program was initiated to enhance consumer protection, foster a culture of compliance within the industry, and hold...

The future size and form of the non-agency market continue to be debated even as a number of market participants take significant steps toward reviving issuance of non-agency mortgage-backed securities. One thing is certain: Redwood Trust is no longer alone in its efforts to revive the non-agency market.Goldman Sachs has reportedly acquired more than $1.0 billion in jumbo mortgages via the conduit it established last year. The investment bank is reportedly paying a premium for the loans and plans to issue a non-agency MBS this year. This week, Shellpoint Partners, a specialty finance company, acquired...

Risk-retention rules proposed by federal regulators could limit a popular form of non-prime risk retention, perhaps unintentionally. The treatment of excess spread on non-agency jumbo mortgage-backed securities is also a concern. Tom Deutsch, executive director of the American Securitization Forum, warned that excess spread retained by a deal’s sponsor would not count as risk retention under the qualified residential mortgage proposed rule. In securitizations of non-prime loans, the excess spread typically would be treated as the...