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]
Ocwen Financial is preparing to enter a settlement with state regulators similar to the $25 billion national servicing settlement. A person with knowledge of the negotiations said regulators are working on settlements with individual servicers as opposed to the multi-servicer agreement with five banks announced last year. We look forward to finalizing this process, which we expect will occur very soon, Ronald Faris, Ocwens president and CEO, said last week during an earnings call. The servicer said ...
A unique lawsuit against Morgan Stanley was recently allowed to move forward though legal analysts questioned the ruling. The lawsuit charges Morgan Stanley with racial discrimination, claiming that the investment bank violated the Fair Housing Act by encouraging New Century Financial to offer high-risk mortgages to African-American borrowers. Disparate impact cases typically target originators, but New Century is long out of business. Morgan Stanley was hit with the lawsuit because it was ...
Three non-agency mortgage-backed security trustees filed lawsuits this week against Richmond, CA, which plans to use eminent domain to purchase mortgages with negative equity. The city recently sent letters to servicers and trustees of non-agency MBS offering to purchase 624 mortgages. If the MBS trustees do not sell the loans for the offered price of 80 percent of the current value of the properties, Richmond Mayor Gayle McLaughlin, a member of the Green Party, said the city intends to ...
Carrington Mortgage Services recently reversed its response to a survey regarding accounting for principal forbearance. The servicer initially told Fitch Ratings that it reported all forbearance amounts as losses on modifications and will continue to report forbearance mods as losses at the time of modification. However, near the end of July, Carrington said it has approximately $300 million in principal forbearance amounts that havent been reported as losses ... [Includes four briefs]
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 FHAs 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 ...
A federal district court in New York last week ruled that a landmark discrimination lawsuit, the first to connect racial discrimination to the securitization of mortgage-backed securities, can move forward against Morgan Stanley. A July 25 ruling by the U.S. District Court for the Southern District of New York in Adkins v. Morgan Stanley denied in part the investment banks motion to dismiss the case, which alleges violations of the Fair Housing Act and the Equal Credit Opportunity Act. The putative class-action suit was filed...
New Penn Financial is one of the few lenders putting an emphasis on mortgages for borrowers that are foreign nationals. The company offers mortgages to non-U.S. citizens with rates and terms somewhat looser than those offered by other lenders operating in the niche market. Our proprietary program offers flexibility and fewer restrictions, New Penn said. While data on mortgages to foreign national borrowers are scarce, the loans largely appear to be a non-agency product, both held in portfolio and sometimes securitized ...
The non-agency jumbo mortgage-backed securities issued by Redwood Trust between March 2010 and November 2012 havent taken any losses, according to Kroll Bond Rating Agency. Delinquencies on the securities remain extremely low, and a significant portion of mortgages included in the MBS have prepaid. As of July, three of the nine non-agency jumbo MBS issued by Redwood from 2010 through 2012 had loans that were delinquent. However, the loans were only in the 30-day delinquency bucket ...
Federal prosecutors and members of the Justice Departments 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...