A district court of appeals in Florida ruled in favor of a borrower this week in a case involving a foreclosure on a mortgage in a non-agency mortgage-backed security. The District Court of Appeal of the State of Florida, Fourth District, found that the trustee on a non-agency MBS issued by Bear Stearns in 2006 didn’t have the proper documentation to complete a foreclosure initiated in 2009. “An exhibit filed during the trial contained no indication that ... [Includes three briefs]

Ocwen Financial recently reported a large loss in the fourth quarter of 2015 along with investigations by a number of regulators, leading to a sharp decline in the company’s stock price and pressure to restructure its priorities. Ocwen took a pre-tax loss of $129.3 million for the fourth quarter of 2015. The biggest contributor to the loss was a non-cash charge of $101.9 million to establish a valuation allowance against deferred tax assets in the United States and the U.S. Virgin Islands ...

The subprime servicing sector is a shell of its former self, with the dollar volume of loans outstanding declining by 75.8 percent in the past nine years, according to a new ranking and analysis by Inside Nonconforming Markets. Loans originated during the subprime boom continue to pay off or go through foreclosure while new originations have been few and far between. An estimated $300.0 billion in subprime servicing was ... [Includes one data chart]

Major servicers participating in the non-agency portion of the Home Affordable Modification Program have improperly ended mods for a number of borrowers, according to data from the Treasury Department. The Special Inspector General for the Troubled Asset Relief Program is urging the Treasury to take actions to prevent servicers from terminating mods that meet HAMP guidelines. “Treasury’s findings in its on-site visits to the largest seven mortgage servicers in HAMP over ...

The Securities and Exchange Commission announced on Wednesday that Ocwen Financial agreed to a $2.0 million settlement. The agreement covers misstatements of financial results due to a “flawed” methodology to value mortgage servicing rights and conflict-of-interest issues involving William Erbey, the former executive chairman of Ocwen. “Ocwen released inaccurate financial statements because its internal controls were inadequate and its audit committee failed to scrutinize ...

Four nonprime MBS backed by newly-originated residential loans came to market during the last four months of 2015, but none of deals were rated, a situation that could change in the new year. In a recent interview with Inside MBS & ABS, John Hsu, head of capital markets for Angel Oak Capital, said his company hopes to get a rated deal done in 2016, believing such a milestone would help move the nascent market forward. “We need...

Servicers and borrowers with subprime adjustable-rate mortgages would benefit from a new type of loan modification, according to research recently published by the Federal Reserve’s division of research and statistics and division of monetary affairs. The researchers suggested that mods triggered when housing price declines exceed a certain percentage may reduce delinquency and foreclosure rates along with reducing servicers’ costs. The results were detailed in a paper titled ...

For a sector that originates, at best, $5 billion a year, the fledgling subprime mortgage industry is garnering a bit of attention these days, though most investors do not publicize their interest. One nonprime executive who has received funding and spoke under the condition his name not be used described his suitors as hedge funds, private-equity firms and real estate investment trusts. He also mentioned “rich” individuals looking to put money to work. To date, the largest investment in a subprime/non-agency lender appears...

Residential mortgages serviced by banks in top foreclosure states are getting hit with higher loss severities than those serviced by nonbanks, largely because banks have so far dealt with more repercussions from regulatory settlements, according to Moody’s Investors Services. Moody’s compared major servicers’ subprime loss severities for loans in the top three foreclo-sure states of Florida, New York and New Jersey, which collectively make up about 42 percent of all subprime mortgages in foreclosure in non-agency RMBS. The rating service found that loss severities on bank-serviced mortgages in Florida averaged 95 percent, versus 81 percent for nonbank-serviced mortgages. Drilling down in the data a bit to review the extremes, on one end of the continuum for banks was CitiMortgage, which ...

Delinquencies on subprime mortgages continued to decline in the third quarter of 2015, according to the Mortgage Bankers Association. The trade group said the non-seasonally adjusted serious delinquent rate for subprime mortgages hit 12.66 percent at the end of September, the ninth consecutive quarterly decline. The subprime serious delinquent rate was down from 13.40 percent in the second quarter of 2015, 15.52 percent in the third quarter of 2014 and 21.25 percent in ...