President Obama this week endorsed a reduction in the FHA’s high-cost loan limits and called on the Federal Housing Finance Agency and the Department of Housing and Urban Development to consider further decreases to reduce conforming loan limits. The proposal was included in a fact sheet that accompanied Obama’s speech this week on housing. The FHA’s high-cost loan limits are scheduled to be reduced at the end of this year. “HUD and FHFA should closely examine using their existing authorities to reduce ...

One of the last non-agency jumbo mortgage-backed securities issued before the securitization market effectively closed in 2008 is the subject of similar lawsuits by the Department of Justice and the Securities and Exchange Commission. Bank of America issued the $855.7 million security in January 2008, as well as originated and serviced the loans included in the MBS. The regulators cite internal reports from BofA as well as email communications among employees to allege that BofA provided inadequate ...

Credit Suisse issued its latest non-agency jumbo mortgage-backed security last week and, in a change of pace, included a significant portion of 15-year fixed-rate mortgages in the deal. The $597 million CSMC Trust 2013-6 included mortgages that have seasoned for an average of three months with a weighted-average coupon of 3.56 percent, according to a rating report from DBRS. The seasoning on the mortgages wasn’t out of the ordinary compared with other recent issuance by Credit Suisse, but the average ...

The government-sponsored enterprises’ holdings of vintage nonprime mortgage-backed securities declined in the second quarter of 2013 due to sales as well as runoff. Fannie Mae and Freddie Mac are working toward the goal set by the Federal Housing Finance Agency to sell 5.0 percent of the non-agency and less liquid mortgage-related assets they held in their retained portfolios at the end of 2012. Combined, the government-sponsored enterprises held $96.48 billion in nonprime MBS as of ... [Includes one data chart]

The question of whether the FHA should allow the refinancing of underwater mortgages seized through eminent domain has reemerged as a key issue following a recent decision by the city of Richmond, CA, to use its authority to take over distressed mortgages for restructuring. There is a new twist to the question, however. Could FHA’s refusal to refinance such mortgages be deemed discriminatory against cities and homeowners if eminent domain programs meet the requirements of the FHA Short Refinance program? Is that tantamount to redlining? A top executive of Mortgage Resolution Partners, which developed the eminent domain strategy to help underwater homeowners at risk of foreclosure, said ...

Continued abuses has caused single-family loan originations to remain a top priority for reviews and targeted audits, according to the Department of Housing and Urban Development’s Office of the Inspector General. A specialized audit program has been developed to target lenders, considering a number of high-risk indicators, the OIG said. Although the agency did not elaborate, it did note Congress’ keen interest in FHA solvency and in eradicating policies and practices that contribute to the agency’s current financial woes. The OIG said it plans to ...

Federal prosecutors and members of the Justice Department’s Residential MBS Working Group are reportedly considering a new strategy for criminally charging Wall Street bankers for alleged fraud in their packaging and sale of MBS backed by subprime mortgages at the peak of the housing frenzy. According to Reuters, the members of the working group are eye-balling a shift in strategy that would involve moving away from the more widely used securities fraud charges to the less common offense of bank fraud. “Perpetrators of bank fraud can be charged up to 10 years after their crimes, compared with the five-year statute of limitations on securities fraud, which has already run out on most events leading up to the 2008 financial crisis,” Reuters reported. “A bank fraud conviction carries up to $1 million in fines and a maximum prison sentence of 30 years.” Laurence Platt, financial services practice leader in the Washington, DC, office of the K&L Gates law firm, said...

Small lenders have accounted for a growing share of contributions to non-agency jumbo mortgage-backed securities. Some deals have included more than 70 lenders, with most of the lenders contributing less than 5 percent of the volume of mortgages included in a security. While the lenders’ individual contributions to a particular jumbo MBS are small, they add up to significant market share, particularly when issuers don’t identify the lenders in prospectus documents filed with the Securities ... [Includes two data charts]

Rising interest rates haven’t stopped JPMorgan Chase and Redwood Trust from working on new non-agency jumbo mortgage-backed securities with loans originated in the lower-rate environment. Chase’s security will include mortgages with an average age of four months, while the mortgages in Redwood’s jumbo MBS are about two months old. The weighted average gross coupon on mortgages in Chase’s $345.05 million non-agency jumbo MBS is 3.79 percent, well below the average 4.68 percent interest rate quoted ...

First Republic Bank is one of the few bank originators of non-agency jumbo mortgages that has sold a significant share of its production in the secondary market in the past year. Officials at the bank said the sales have been driven by borrowers’ preference for 30-year fixed-rate mortgages and investor demand in the non-agency market, both of which have changed recently. In the first quarter of 2013, First Republic originated $2.32 billion of mortgages, including $1.85 billion in non-agency jumbo mortgages ...