Fitch Ratings released revised non-agency MBS surveillance criteria, but most of the changes had been implemented earlier and the updated procedures for reviewing credit ratings are not expected to have a material impact on existing deals. The rating service did note that it is in the process of developing a new nonprime MBS loan loss model that likely will have a negative impact on current ratings. The new nonprime model incorporates a new regression analysis and more conservative rating stress scenarios, Fitch said. The updated surveillance criteria include an updated model for prime MBS that was released in August 2011.

House Oversight and Government Reform Committee Chairman Darrell Issa, R-CA, released a report last week that took another look at Countrywide Financial’s “Friends of Angelo” and “VIP Program,” concluding that Countrywide used the latter to lobby policymakers as well as to strengthen its relationship with Fannie Mae. According to the report, Countrywide reached an exclusive agreement with Fannie in 1999 to sell the government-sponsored enterprise billions of dollars in mortgages at a discounted rate. “The agreement led to a period of codependence and mutual growth,” the report noted...

Credit Suisse last week issued its second non-agency MBS backed by prime jumbo loans, structuring slightly higher credit-enhancement levels than those seen on Redwood Trust jumbo deals. As was the case with its first jumbo MBS of 2012, the new Credit Suisse transaction (CSMC Trust 2012-CIM2) is backed largely by loans from the investment portfolio of MetLife Home Loans, which shut down its primary market originations activity early this year. The insurance company will continue to provide reps and warranty guaranties on MetLife loans, which accounted for 85.2 percent of the $425.1 million mortgage...

A subsidiary of Credit Suisse Group issued its second non-agency jumbo mortgage-backed security of the year last week. The transaction was backed by $425.09 million of jumbo mortgages, largely originated by MetLife Home Loans, which ceased originations at the beginning of this year. The privately-placed deal – CSMC Trust 2012-CIM2 – received AAA ratings from Standard & Poor’s and DBRS with credit enhancement of 8.25 percent on the AAA tranche. S&P also placed a AAA rating on CSMC Trust 2012-CIM1, the $741.94 million ...

Redwood Trust completed whole loan sales of jumbo mortgages during the second quarter of 2012, according to Mike McMahon, managing director of the real estate investment trust. Redwood also completed an issuance of a non-agency jumbo mortgage-backed security last week, the third of the year for the REIT. While Redwood’s two most recent non-agency securities have been backed by 30-year fixed-rate mortgages, the whole loan sales consisted of hybrid ARMs, according to McMahon. “We have completed some whole loan sales of ...

Delinquencies on home-equity loans increased in the first quarter of 2012 and industry analysts expect further increases even though first-lien mortgage performance has been improving. The top two holders of HELs have differing strategies on HEL originations, and some smaller banks are also pushing the products. The serious delinquency rate on HELs hit 2.83 percent in the first quarter of 2012, according to the Inside Mortgage Finance Bank Mortgage Database. Delinquencies increased 34.1 percent from the end of 2011 and ...

The Federal Deposit Insurance Corp. is revising its definition of subprime mortgages in an effort to better compare bank portfolios, according to analysts that worked on the rule proposed by the FDIC in March. Brenda Bruno, a senior financial analyst at the FDIC, said the regulator is looking to classify “the worst” of subprime mortgages as higher-risk. “We are looking at those assets that are really sort of the ‘bottom of the barrel’ type assets,” she said last week during a webinar sponsored by VantageScore Solutions ...

Lenders are potentially abusing reverse mortgage borrowers, according to the Consumer Financial Protection Bureau. Last week, the CFPB released a study on reverse mortgages and issued a request for information on the products along with threats of increased regulation. “In some situations the product can be misused in ways that harm borrowers,” said Richard Cordray, director of the CFPB. He noted the age of reverse mortgage applicants and lump sum payments to borrowers as particular concerns. The CFPB’s study ...

Default risk on non-agency jumbo mortgage-backed securities continues to improve gradually, according to economic risk factors applied to Fitch Ratings’ non-agency jumbo MBS loan loss model. The rating service released the economic risk factors for the second quarter of 2012 last week. Fitch said the improvement is tied to home price trends and it expects home prices to “touch bottom” in 2013. New Jersey and New York have the highest default risk in the country, with expected defaults well above ... [Includes three briefs]

Tentative signs of stability in home prices in early 2012 have yet to spur a rebound in home-equity lending, as the outstanding balance of second mortgages fell to its lowest level in seven years. According to the Federal Reserve, the supply of home-equity loans fell 2.7 percent in the first quarter of 2012 to just $849.5 billion. The home-equity market, which includes home-equity lines of credit and closed-end second mortgages, has shrunk by 24.9 percent since peaking...(Includes three data charts)