A U.S. district court judge in New York has certified a class of investors to move forward with mortgage-related fraud claims they have brought against three large banks. MBS investors led by plaintiff New Jersey Carpenters Health Fund sued units of Wells Fargo that were acquired from Wachovia Capital Markets, Royal Bank of Scotland and Deutsche Bank that helped underwrite $7.7 billion of MBS issued by failed subprime lender NovaStar Mortgage. The plaintiffs accused...

An increase in interest rates could take place “relatively soon,” if incoming economic data warrant it, Federal Reserve Chair Janet Yellen told members of Congress last week. Then again, maybe not. The Fed has held off...

Fairholme Funds officials this week continued to press their case for restoring shareholder rights for private investors in Fannie Mae and Freddie Mac, expressing hope that the incoming Trump administration will be friendlier to their cause. In Fairholme Funds Inc. v. United States, et al, the plaintiffs argue that the net worth sweep imposed by the Treasury Department and Federal Housing Finance Agency was illegal and that the two government-sponsored enterprises were not in a “death spiral” at the time of the bailout as the government claims. During a conference call this week, Fairholme CEO Bruce Berkowitz said...

New derivative rules requiring daily posting of two-way variation margin on affected derivatives could create uncertainties for structured finance transactions, warned Fitch Ratings in a recent analysis. U.S. banking regulators and the Commodity Futures Trading Commission have adopted the uncleared swap margin rules for covered swap entities. Specifically, registered swap dealers and all end users of derivative contracts must comply with margin collection, posting, segregation, and documentation requirements by March 1, 2017. New swaps executed after the 2017 effective date would...

The settlement noted that the subprime MBS from ResCap included mortgages with looser underwriting standards than the underwriting guidelines that were disclosed to MBS investors.

The MBA is considering its options to appeal the FTC's decision regarding the trade group's request for a mortgage-servicing exemption under the Telephone Consumer Protection Act.

The CFPB’s appeal asserts that the court’s ruling on the constitutionality of the agency’s structure ought to be reconsidered because it “sets up what may be the most important separation-of-powers case in a generation.”

Freddie Mac is set to issue a $459.92 million Whole Loan Securities transaction, according to a presale report from Moody’s Investors Service. The firm didn’t rate the senior tranche of the deal but did place a Baa1 rating on a mezzanine tranche of Freddie Mac Whole Loan Securities 2016-SC02. The government-sponsored enterprise priced the latest WLS transaction this week, with the deal expected to close next week. “We are pleased with the pricing levels and depth of investor participation in the WLS program,” said Kevin Palmer, senior vice president of credit risk transfer at Freddie. “We look forward to continued issuance in 2017.” Freddie has issued...

Investors are trying to make sense of the new political/economic landscape following the election of Donald Trump to be the next president, and how best to navigate his uncertain, and at times contradictory, signals during his campaign. Much of the conversation over the last week has focused on the likely effect the new regime will have on the Federal Reserve and its chair, Janet Yellen. Trump, who has been a fierce critic of the U.S. central bank, has indicated he won’t outright replace Yellen, but neither will he nominate her for a second term. And of course, what happens with the Fed will spill over, one way or the other, into the financial markets. “The Fed will normalize...

The government-sponsored enterprises’ credit-risk transfer programs have been wildly popular with investors and many policymakers, but other industry observers see problems. One of the most outspoken critics is Tim Howard, a former Fannie Mae CFO, who sees a big difference between today’s CRT programs and the GSEs’ traditional method of laying off credit risk before they were taken into government conservatorship. “When I was at Fannie, the companies purchased...