The average daily trading volume in agency MBS climbed to $201.4 billion in February, the best reading in nine months and a sign that investors will still flock to government-backed products in times of uncertainty, especially extreme uncertainty. Late this week, market watchers expressed their concerns about the terrorist bombings in Belgium as well as continued worries about China’s slowing economy and sagging oil prices. In short order, they piled into MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae. Barry Habib, who runs MBS Highway, a rate-lock service, told...

This week, the Supreme Court of the United States invited the U.S. Solicitor General to file a brief “expressing the views of the United States” in the Madden v. Midland Funding case, indicating the court is seriously considering taking the case. Assuming the Solicitor General obliges the high court, attorneys at the Pepper Hamilton law firm believe the brief likely will articulate the views of the primary banking agencies on whether SCOTUS should grant certiorari, along with their relative positions on the issues in the case. Madden involves...

Standard & Poor’s kept its position as the top provider of ratings for newly issued non-mortgage ABS last year, although the volume of deals the company rated fell 10.1 percent from 2014, according to a new Inside MBS & ABS analysis. S&P rated ABS bonds totaling $106.86 billion in new issuance in 2015, or 61.5 percent of deals for which rating information was available. That was down slightly from its league-leading 64.1 percent share of the rated 2014 ABS market. The company’s strong suits were credit card ABS and deals backed by vehicle loans and leases. Fitch Ratings finished...[Includes two data tables]

A federal appeals court in Washington, DC, ordered the transfer of a case challenging risk-retention rules to the district court because the petitioner sought review of an agency action “in the wrong court.” Writing for the majority, Judge Janice Brown of the U.S. Court of Appeals for the District of Columbia shifted the Loan Syndications and Trading Association’s (LSTA) challenge to the lower court for lack of statutory authorization to review the rule. “As it turns out, LSTA’s challenge on the merits will have to wait,” she wrote. Jointly prescribed by the Securities and Exchange Commission, Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, the credit risk-retention regulations required...

Proposed standards drafted by due diligence providers for how to handle TRID mortgage disclosure issues could be finalized as soon as next week, according to the Structured Finance Industry Group. TRID compliance violations uncovered by third-party due diligence firms are seen as a major contributor to the slowdown in non-agency mortgage-backed security issuance since the Consumer Financial Protection Bureau’s TRID rule took effect in October. And some have suggested ...

Originations of non-qualified mortgages remain suppressed and industry participants are divided on prospects for volume going forward. “We thought there would be significant non-QM activity by now,” said Chris Haspel, a director at Promontory Financial Group. He was speaking at the recent ABS Vegas conference produced by Information Management Network and the Structured Finance Industry Group. Haspel was a senior adviser for residential mortgage servicing and ...

CORRECTION: An update to a story in the March 11 issue of Inside Nonconforming Markets with the headline “Banks’ First-Lien Holdings Increase in 2015” is available at http://www.insidemortgagefinance.com. The story and accompanying ranking were revised because the ranking initially showed numbers from the second quarter of 2015 for the fourth quarter of 2014. Five Oaks Investment said it recently determined ... [Includes five briefs]

Despite efforts by the Department of Housing and Urban Development to prevent or mitigate fraud, waste and abuse in FHA loan programs, concerns remain about HUD’s resolve to take the necessary actions going forward to protect the FHA insurance fund. Testifying recently during a House appropriations hearing, HUD Inspector General David Montoya said HUD is often hesitant to take strong enforcement actions against lenders. Montoya blames HUD’s tentativeness in carrying out competing mandates of continuing FHA’s role in restoring the housing market and ensuring availability of mortgage credit, and continuing lender participation in the FHA program. For example, he said FHA has been slow in starting claims reviews. “The OIG has repeatedly noted in past audits and other types of lender underwriting reviews HUD’s financial exposure when paying claims on ...

For years, banks have had a losing record in FHA cases involving False Claims Act allegations. Hence, a federal appeals court’s decision to uphold dismissal of a $2.3 billion lawsuit against a major bank is a rarity. In U.S., ex rel. Advocates for Basic Legal Equality (ABLE) v. U.S. Bank, the U.S. Court of Appeals for the Sixth Circuit affirmed the dismissal of an FCA lawsuit against U.S. Bank because the conduct alleged by the qui tam relator had been previously disclosed publicly in a consent order with federal banking regulators. The court held that ABLE’s claims were barred because the conduct that allegedly violated the FCA had already been disclosed when the plaintiff filed suit in 2013. The Department of Justice declined to intervene. The relator suit alleged that U.S. Bank had a practice of initiating foreclosure on FHA-insured mortgages without complying with the ...

Although appraisals are mostly in line with contract prices, VA and FHA appraisals more often miss the contract price than appraisals for conventional home loans, according to real estate agents’ responses to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The difference gets no clearer than in California where many FHA and VA appraisals are coming in under the contract price. In contrast, appraisals for conventional mortgage loans are coming in as much as 10 percent higher, said a real estate agent in the Golden State. “FHA and VA appraisals are more conservative than conventional,” respondents observed. There are a number of reasons for FHA and VA appraisals coming in lower than conventionals, industry participants say. Although the appraisal process is the same for both government and conventional mortgage programs, FHA and VA appraisal rules require much closer scrutiny of the property to determine whether certain repairs must be made before it can be sold. In addition, no two appraisers are alike. Some appraisers will not give value to upgrades, such as granite countertops or hardwood floors, while others do.