The Securities and Exchange Commission published interpretive guidance last week regarding references in federal regulations to ratings of mortgage-backed securities. Even though the Dodd-Frank Act mandated that such references be changed by July 20, the SEC’s guidance will keep the references intact until the federal regulator and others can establish new standards of creditworthiness. The Office of the Comptroller of the Currency and the National Credit Union Administration have also ... [Includes three briefs]

Portfolio lenders as well as those looking to issue non-agency mortgage-backed securities cautioned the Consumer Financial Protection Bureau against setting specific thresholds for debt-to-income ratios on “qualified mortgages.” Some non-agency MBS investors countered that a bright line DTI ratio would be useful. In June, the CFPB reopened the comment period on the pending ability-to-repay rule, with an emphasis on data relating to DTI ratios. The deadline for comments was last week. The Clearing House Association ...

The Consumer Financial Protection Bureau last week released its long-pending proposal for combined mortgage disclosures, with an emphasis on characteristics common in nonconforming mortgages. “In particular, explanations of how rates and payments can change over time are not always made clear [from current disclosures],” said Richard Cordray, director of the CFPB. Currently, the Real Estate Settlement Procedures Act and the Truth in Lending Act require different disclosures for borrowers. As directed by the Dodd-Frank Act ...

The vast majority of repurchase requests on mortgages in non-agency mortgage-backed securities were in dispute in the first quarter of 2012, according to an Inside Nonconforming Markets analysis of Securities and Exchange Commission 15Ga disclosures. However, industry analysts expect settlements to increase during the second half of this year. Securitizers reported $29.03 billion in mortgages in non-agency MBS with repurchase demands in the first quarter of 2012, with 98.6 percent of the volume classified as in dispute ... [Includes one chart]

Principal reduction loan modifications completed by five major banks as part of the national servicing settlement have not been applied disproportionately to mortgages in non-agency mortgage-backed securities, according to Fitch Ratings. Non-agency MBS investors have raised concerns that servicers that agreed to the recent $25.0 billion settlement will complete their mandated principal reduction mods on non-agency MBS instead of on portfolio loans. “Although still early, there has been no evidence of ...

Mortgage-backed security investors continue to claim that a proposal in San Bernardino County to seize certain mortgages in non-agency MBS via eminent domain is unconstitutional. They also warn that if the “Homeownership Protection Program” is implemented there will be negative consequences. “It could severely negatively impact the value of your home, it could scare away jobs from the desert, it could scare away new construction, it might even result in the inability to get a mortgage or financing anywhere in the county ...

Manipulation of the London Interbank Offered Rate could have resulted in lower interest rates for subprime ARM borrowers, according to Laurie Goodman, a senior managing director at Amherst Securities Group. Interest rates on close to 80.0 percent of subprime ARMs outstanding in May were linked to LIBOR, according to data from Lender Processing Services, whose data covers about two-thirds of outstanding mortgages. As of the end of May, 70.3 percent of eligible second liens have received a modification via ... [Includes six briefs]

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 ...