Carrington Holding Company this week announced a partnership with Oaktree Capital Management to purchase up to $450 million in real estate-owned properties and offer them as rentals. The plan is not specific to loans owned by the government-sponsored enterprises, according to Carrington officials. “Whether this inventory comes from the GSEs, banks or directly from the [multiple listing service] isn’t a primary concern at the moment,” said Rick Sharga, an executive vice president at Carrington Mortgage. “We’ll put together the portfolio based on properties that meet the criteria we’ve established to ensure a reasonable return for the investors.” ...

Credit Suisse Securities won an auction this week for $7.01 billion in predominantly non-agency mortgage-backed securities sold by the Federal Reserve Bank of New York. The securities were part of the Maiden Lane assets the Fed acquired from AIG and the amount of the winning bid was not disclosed. The Fed halted sales of the assets last year after demand for the securities decreased. The sale this week of most of the remaining Maiden Lane II assets was prompted by an unsolicited offer from Goldman Sachs. The Fed decided to auction the MBS sought by Goldman and Credit Suisse won, also beating bids by Barclays Capital and Merrill Lynch ... [Includes three briefs]

Redwood Trust is getting ready to issue its first jumbo MBS of 2012 backed by a more diverse pool of prime mortgages than the company’s previous transaction. Fitch Ratings said it plans to give AAAsf ratings to the senior bonds in Sequoia Mortgage Trust 2012-1, which will enjoy 8.25 percent credit enhancement from subordinate classes. That’s a stiffer credit enhancement level than on Redwood’s two jumbo deals from last year, which had 7.40 percent and 7.50 percent support levels at issuance. Two factors appeared to play the biggest part in the higher credit support levels: more diverse collateral and more...

Issuance of non-agency mortgage-backed securities supported by newly originated mortgages will remain muted in 2012, according to industry analysts. A number of factors have combined to limit non-agency MBS issuance, including economic issues, regulatory issues and uncertainty regarding reform of the government-sponsored enterprises. Only two non-agency securities backed by new loans were issued last year – a total of $665.2 million in jumbo MBS from Redwood Trust. “The trickle of deals should continue into 2012,” according to analysts ...

The Congressionally-mandated increase in the guarantee fees charged by the government-sponsored enterprises and the FHA will not be enough to significantly shift activity to the non-agency market, according to industry analysts. One option for increasing non-agency activity has been an increase in GSE guarantee fees, but the 10 basis point increase approved by Congress in December does not appear to be enough for most products. “The argument that it will encourage homeowners to look for non-GSE/FHA loans is pretty silly and hides the foolishness of using housing to pay for payroll tax cuts,” said Adam Levitin, an associate professor of law at Georgetown University. ...

The Consumer Financial Protection Bureau announced this week that it will immediately begin supervision of non-bank servicers and lenders. The supervision became possible due to President Obama’s controversially executed appointment of Richard Cordray as director of the CFPB. “Since most of these businesses are not used to any federal oversight, our new supervision program may be a challenge for them,” Cordray said this week of non-banks. “But we must establish clear standards of conduct so that all financial providers play by the rules.” ...

The group of institutional investors that negotiated a potential $8.5 billion settlement with Bank of America has recently targeted other non-agency mortgage-backed security issuers. The move is the latest development in a number of ongoing claims regarding non-agency MBS. This week, the group led by the law firm of Gibbs & Bruns asked trustees to open investigations on more than $19.0 billion of non-agency MBS issued by Wells Fargo. The investors said they hold more than 25 percent of the voting rights in 48 trusts that issued the non-agency securities between 2005 and 2007. ...

In 2011, high-touch subprime servicer Carrington Mortgage Services significantly decreased its delinquency processing timelines and had its servicer rating confirmed at the end of the year. The servicer also made adjustments after facing criticism from non-agency mortgage-backed security investors who claimed that Carrington’s practices improperly favored investments made by the hedge fund that also owns the servicer. Carrington serviced $11.73 billion in subprime mortgages as of the end of the third quarter of 2011, according to estimates by Inside Nonconforming Markets. The servicer received a mid-range rating for subprime and special servicing from Fitch Ratings, with the rating service recently confirming that Carrington “demonstrates proficiency in overall servicing ability.” ...

Loan modifications with principal reduction have significantly increased in the past year, with servicers seeing improved performance compared with other types of mods. The mods remain concentrated on securitized non-agency mortgages as well as portfolio loans, but performance varies considerably. After falling to a 2.7 percent share in the fourth quarter of 2010, principal reduction mods have accounted for a growing share of bank and thrift mod activity, according to the Office of the Comptroller of the Currency. Principal reduction was used in 7.8 percent of the mods completed by nine major bank and thrift servicers in the third quarter of 2011. ...

Wells Fargo this week agreed to a $940,056 settlement with Maryland’s attorney general regarding option ARMs. According to the AG, Wachovia and Golden West – the lenders that offered the loans, which Wells purchased – did not fully explain the loans’ negative amortization option to borrowers. Wells agreed to modify Maryland borrowers with the loans via the Home Affordable Modification Program if possible or via the servicer’s proprietary mod program. ... [Includes three briefs]