Members of the Residential Mortgage-Backed Securities Working Group filed a lawsuit this week against Credit Suisse Securities and reached separate settlements last week with JPMorgan Securities and Credit Suisse. New York Attorney General Eric Schneiderman, a co-chair of the working group, said federal and state regulators are working on a number of other actions. “We’re a long way away from wrapping this up,” he said. The lawsuit against Credit Suisse was filed this week by Schneiderman, alleging that ...

A whopping 75.0 percent of eligible non-agency borrowers entering the Home Affordable Modification Program in September received principal reduction with their loan modification, according to the Treasury Department. The increased activity was prompted by higher incentive payments along with the $25.0 billion national servicing settlement, according to Treasury officials. Borrowers who meet general HAMP requirements and have a loan-to-value ratio greater than 115 percent are eligible for principal reduction ...

The five banks participating in the $25.0 billion national servicing settlement are on track to meet their obligations under the settlement – some two years ahead of the 2015 deadline – according to a report this week from the settlement’s monitor. Loss mitigation activity is focused on portfolio loans, though Bank of America has completed significant principal forgiveness on mortgages in non-agency mortgage-backed securities. The settlement requires $19.11 billion in consumer relief, and the participating servicers ...

Fannie Mae and Freddie Mac continued to trim their retained holdings of MBS and unsecuritized mortgages during the third quarter, but at a slower pace than in previous periods, according to an analysis by Inside MBS & ABS of earnings reports released this week by the two government-sponsored enterprises. One of the conditions of the conservatorships the GSEs entered four years ago was that they would reduce their retained mortgage portfolios by 10 percent a year. Those terms were revised in August to include a 15 percent annual wind-down, which would take each GSE’s investment portfolio down to $250 billion by the beginning of 2018, four years sooner than under the previous arrangement. As Freddie noted...[Includes one data chart]

The ACLU is calling for changes to federal anti-discrimination statutes to deter secondary mortgage market participants from engaging in business practices that might have a discriminatory impact on certain protected classes of borrowers. In a recent analysis of mortgage foreclosures, the ACLU said the origination and securitization of subprime and other high-risk mortgage products have hurt minority families and caused the loss of 3.5 million homes to foreclosure. The ACLU believes...

“The return of non-agency MBS for prime loans is a lot further along than market observers might think,” officials at Redwood Trust said last week. The company said its goal is to issue $900 million or more in non-agency MBS each quarter within the next 12-to-18 months and eventually finance mortgages for prime borrowers “who do not fit into today’s tight credit box.” Through 10 months in 2012, Redwood averaged $498.31 million in quarterly non-agency MBS issuance, according to the Inside Mortgage Finance ...

The Securities and Exchange Commission has been quietly meeting with investors in non-agency mortgage-backed securities looking for leads to bring regulatory actions. Reaction from investors to the SEC’s outreach has been decidedly mixed, though Reid Muoio, a deputy for the SEC’s structured and new products unit, said the SEC is working to improve regulation on behalf of investors. Speaking at the recent ABS East conference sponsored by Information Management Network in Miami, Muoio detailed an SEC outreach program that was apparently previously undisclosed. He said that a ...

A final rule from the Consumer Financial Protection Bureau defining “qualified mortgages” could come as soon as this month. Participants in the non-agency mortgage market appear to be anxiously awaiting the QM rule that will establish ability to repay standards and the related qualified-residential mortgage rule on risk retention for securitized mortgages. “At least tell us what the rules of the road are, then we can react,” Eric Kaplan, a managing director at Shellpoint Partners, said at the recent ABS East ...

Investors interested in buying new non-agency mortgage-backed securities suggest that the wide variety seen in the pooling and servicing agreements and reporting of vintage non-agency MBS is insufficient. Many investors at the recent ABS East conference in Miami sponsored by Information Management Network called for standardization. “Investors clearly welcome standardization,” said Dapeng Hu, a managing director at BlackRock, which manages more than $150.0 billion in MBS investments ...

If implemented as proposed, Basel III capital requirements would force major changes for bank lenders and servicers, according to industry participants. Originations of non-agency mortgages would remain limited, mortgage holdings would be sold and borrowers would face additional costs. Rules to implement Basel III were proposed in June by the Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency. Comments were due in October and some industry ...