Mortgage industry veteran Lewis Ranieri says big banks will easily dodge the risk-retention requirements for mortgage securitizers that have been proposed by federal regulators. Issuers of non-agency mortgage securities that aren’t backed by “qualified residential mortgages” would have to retain a 5 percent interest in the transaction. In a joint comment letter submitted by Ranieri and Kenneth Rosen, chairman of Rosen Consulting Group, a real estate research firm, the pair warned that risk retention as proposed will benefit ...

Two Harbors Investment Corp. said this week it is “impressed with the investment opportunities” in the non-agency MBS sector, particularly over the next year and beyond and is pushing forward with its plans to begin a securitization program. Thomas Siering, president and CEO of the New York-based real estate investment trust, said during a conference call to discuss the firm’s second quarter earnings that despite the “challenging” non-agency environment in June, there is tremendous opportunity to profit from non-agency MBS issuance throughout the rest of this year into 2012. “The recent pullback in the non-agency market has created...

Equipment and automotive ABS issuance may flirt with new record highs this year or next as the 2008 market collapse fallout dissipates and the benefits of solid underwriting continue to accrue, some leading industry executives said this week. Equipment ABS has rebounded substantially, according to Julie Schlueter, who is responsible for issuance of structured products and unsecured bonds at Case New Holland Global, a major manufac-turer of agricultural and construction equipment, and its captive finance subsidiary, CNH Capital. In 2007, new issuance in the sector exceeded ...

While industry participants continue to debate the merits of high downpayment standards for qualified residential mortgages, the risk-retention treatment of seasoned securities and loans is also a major concern. In comment letters submitted to federal regulators, the American Securitization Forum and the Securities Industry and Financial Markets Association each called for time limits on the proposed risk retention required for non-QRMs. Under the current risk-retention proposal, SIFMA said financial institutions would be compelled to ...

Bucking a trend among non-agency players, Walter Investment Management last week ceased operating as a real estate investment trust. While a number of non-agency REITs have formed recently, with more likely going forward, most are focused on investments in non-agency mortgage-backed securities. Walter, meanwhile, emphasizes non-prime third-party servicing. The company dropped its REIT status after its acquisition last week of Green Tree Credit Solutions. Walter officials said the company’s REIT status had put the company at ...

An increasing number of credit unions and other lenders have recently started offering a mortgage that allows borrowers to adjust their interest rates as frequently as every 120 days. While many lenders have avoided alternative mortgages since the collapse of the non-agency market, credit unions have not shied away from offering innovative products. This week, for the first time, a HarmonyLoan borrower executed an interest rate reset without the expense and requirements of the traditional refinancing process. The borrower took out ...

Performance concerns prompted Moody’s Investors Service to downgrade the servicer quality ratings of two non-agency servicers recently and place a third servicer’s ratings on watch for possible downgrade. Last week, Moody’s downgraded the servicer quality ratings of JPMorgan Chase Bank and Chase Home Finance to SQ2 from SQ1 for subprime and prime loans. The rating scale ranges from SQ1 (strong) to SQ5 (weak). The downgrades were mainly due to the deterioration of the company’s collection metrics relative to some of its peers, a deterioration in ...

Facing a growing coalition of dissatisfied non-agency mortgage-backed security investors, Bank of America announced this week that it plans to settle a large portion of its non-agency MBS claims related to buybacks and servicing. The action sets a precedent for the sector, making settlements with other non-agency MBS issuers more likely. “Bank of America has charted...[Includes one graph]

The legacy of toxic subprime and Alt A MBS from Countrywide Financial continued to spread last week, with a California appeals court deciding to allow a class action involving a number of pension funds and other institutional investors against the lender to proceed. The plaintiffs allege that Countrywide and a number of its subsidiaries, officers and U.S. investment banks violated the Securities Act of 1933 by making materially false and misleading statements in over 450 prospectus supplements relating to the issuance of more than $300 billion in subprime and Alt A securities. Specifically, plaintiffs allege the defendants misrepresented the quality of...

Redwood Trust plans to issue two more jumbo mortgage-backed securities this year, the real-estate investment trust announced this month. Martin Hughes, president and CEO of the firm, said officials hope to issue a total of $800 million to $1.0 billion in jumbo MBS in 2011, including the $290.0 million security issued earlier this year. Officials at the REIT said they hope to issue their next jumbo security in the third quarter. At the end of April, Redwood had $87.0 million in loans purchased and held on balance sheet for future securitization along with a $200.0 million pipeline. Redwood is seeing strong demand from correspondent lenders looking to...