A federal court ruled that GSE shareholders can no longer sue Fannie Mae’s accounting firm, Deloitte & Touche, and that the Federal Housing Finance Agency will take over as plaintiff in the Edwards et al v. Deloitte & Touche case. The ruling, handed down last week in the U.S. District Court of Florida, distanced shareholders from the case, and said any claims against Deloitte are the sole responsibility of ...

The Supreme Court of the United States ruled last week that Fannie Mae does not have the right to automatically transfer a case from state court to federal court under the “sue-and-be-sued” clause. In the ruling from the Lightfoot v. Cendant Mortgage Corp. case, the court rejected an argument stating that the GSE’s federal charter creates federal jurisdiction. The case was argued in November. The ruling by Justice Sonia Sotomayor reversed an earlier Ninth Circuit Court decision which stated that Fannie’s sue-and-be-sued clause in the charter enabled it to transfer state-filed lawsuits against it to federal court. But that’s not the case anymore. “Fannie Mae’s sue-and-be-sued clause is most naturally read not to grant...

With the Trump administration now officially in office, GSE shareholders are optimistic about their cases against Fannie Mae and Freddie Mac being resolved. Investors Unite hosted a call last week during which legal experts weighed in on the outlook for GSE shareholder cases. Plaintiffs have been arguing that a government bailout of the GSEs and the subsequent Treasury sweep were unnecessary and illegal. John Yoo, Heller Professor of Law at the University of California Berkley School of Law, said he thinks the election makes a big difference because it gives an incoming president the opportunity to review the constitutional claims of the last president and decide whether to change them.

Securitization of commercial mortgages was down slightly in 2016 as a result of a sharp drop in the non-agency commercial MBS market, according to a new Inside MBS & ABS analysis. Meanwhile, the agency multifamily MBS platforms cranked out record new issuance last year. In total, some $209.03 billion of commercial-property MBS were issued last year, a 3.1 percent drop from 2015. It still ranked as the second most-productive year in commercial MBS issuance since 2007, the year before the financial market meltdown. But non-agency CMBS issuance fell...[Includes one data table]

This year, the commercial MBS market will see the influence of the newly effective Securities and Exchange Commission rule on CMBS risk retention, which likely will mean higher credit quality but also a degree of unpredictability when it comes to issuance, according to industry analysts. At Wells Fargo Securities, analysts who cover the CMBS space are forecasting non-agency issuance of $65.0 billion in 2017. “While CMBS issuance has historically grown with the economy, this is not exactly the typical cycle,” they said in a recent client note. “Economic growth has been uneven and property fundamentals seem to be maturing.” Requiring CMBS issuers to retain at least 5 percent of the credit risk adds...

Three of the nation’s most active nonprime mortgage originators – Citadel Loan Servicing, Angel Oak and Deephaven Mortgage – are all working on new MBS deals, a bullish sign for a market that has been mostly dormant for years. Executives at all three shops confirmed to Inside MBS & ABS this week their intention to bring new MBS to market – most likely through rated transactions. As for details, that’s a different matter. All three are...

Higher capital charges and the cost of capital associated with risk retention mandated by the Dodd-Frank Act will make commercial MBS less competitive with portfolio lending for loans backed by high-quality collateral, according to a new report from Moody’s Investors Service. The report stems from a Moody’s fourth-quarter 2016 analysis of three conduit transactions that were structured to comply with risk-retention prior to its implementation on Dec. 24, 2016. In each of the transactions, issuers retained 5 percent of either the securities or the collateral pool’s cash flows. In addition, the Moody’s report noted...

Marketplace lenders could benefit from the development of special-purpose national bank charters for financial technology companies under consideration by the Office of the Comptroller of the Currency, according to ABS participants. However, the proposal has been met with strong opposition from state regulators, as it would preempt state oversight of certain nonbanks. In December, the OCC requested comments about a potential special-purpose national bank charter for so-called fintech companies, including marketplace lenders. The Structured Finance Industry Group endorsed...

The subprime auto lending market is stable and the underwriting is strong, but delinquencies are up, according to credit bureau experts speaking at the American Financial Services Association’s vehicle financing conference. The auto financing industry is coming off another record year of sales, according to Chris Stinebert, president and CEO of AFSA. He added that it’s important for credit reporting agencies to set the record straight on the health of the subprime auto finance market. “The fact is...

Should the CFPB fail to convince the court for a rehearing, or win a rehearing but lose the argument at that point, it would unlikely be able to receive the authorization needed from the Trump administration’s Office of Attorney General to appeal to the U.S. Supreme Court.