One executive who’s involved with the working group said the new guidance from the due diligence firms will help the rating agencies identify "material" risk...
With the Consumer Financial Protection Bureau declining to provide any more formal guidance on legal liability for secondary market players when originators make errors in TRID mortgage disclosures, a group of due diligence firms is moving ahead with their own clarifications. High-level sources familiar with the matter, and who spoke to Inside MBS & ABS under the condition of anonymity, said the forthcoming clarifications have been vetted by legal counsel and are almost ready for viewing. Several top third-party review/due diligence firms are involved in the effort, including Clayton Holdings and Opus. All the major rating agencies are involved as well. “We’re working to calibrate our methodology, to bring it in line with the spirit of the CFPB letter,” said ...
In another legacy residential MBS legal action, the California Public Employees’ Retirement System this week reached a record $130 million settlement with Moody’s Investors Service over the ratings service’s allegedly erroneous ratings of AAA-rated structured investment vehicles in the run-up to the financial crisis. Back in 2009, CalPERS sued Moody’s – along with Standard & Poor’s and Fitch Ratings – after the pension fund claimed massive losses from investments in three structured investment vehicles that depended on the liquidity of assets that proved to be illiquid, such as subprime MBS, collateralized debt obligations and other ABS. In the lawsuit, CalPERS accused Moody’s of making “negligent misrepresentations” by assigning its highest credit rating to the investments. This caused significant losses as the market ...
After much discussion over the past two years, the Financial Industry Regulatory Authority put out a request for comment last week regarding its proposed amendments to shorten the settlement cycle for U.S. secondary market transactions from three business days to two business days by late 2017. Industry representatives said a shorter, two-day settlement timeframe will promote financial stability and significantly mitigate risks to the financial system. FINRA seeks specific input regarding the direct or indirect impacts that the change may have on investors. The last time the settlement cycle was shortened was in 1995, when it went from five business days after the trade date to the current three days. Since then, the Securities and Exchange Commission and financial services ...
The pessimistic pricing in the secondary market for jumbo mortgage-backed securities with exposure to the oil industry might be unwarranted, according to Standard & Poor’s. The rating service completed a stress test on the 59 jumbo MBS issued in 2012 and beyond. “Assuming the entire oil-sector workforce in three major oil-producing states defaults on their mortgages, even under extreme economic stress, the incremental collateral pool losses ... [Includes three briefs]
Mortgage M&A historians might recall that last decade, before the financial crisis struck, Countrywide Financial Corp. was in serious talks to buy PHH’s mortgage business...
With only a few isolated exceptions, VA and FHA lending was up sharply across the country last year, outstripping the private mortgage insurance business in nearly every state of the U.S., according to a new analysis by Inside FHA/VA Lending. Overall, FHA single-family mortgages securitized by Ginnie Mae increased 60.5 percent from 2014 and VA production was up 39.4 percent. Meanwhile, Fannie Mae and Freddie Mac posted a more subdued 26.2 percent increase in privately-insured loan volume. California remained the biggest mortgage market for the FHA, VA and private MIs, as well as uninsured mortgages. The FHA clearly won the mortgage insurance battle, boosting its share of insured loans in the Golden State from 41.1 percent in 2014 to 49.2 percent last year thanks to a whopping 89.8 percent jump in business. California had one of the highest concentrations of ... [ 3 charts ]
Private mortgage insurers have announced changes in their premium rate structure to make their pricing more risk-based. The question is would this drive borrowers with lower credit scores toward FHA? Lenders say that while the private MI rate changes appear to make it more expensive for borrowers with lower credit scores to obtain a conventional mortgage, FHA’s life-of-loan policy could also cost borrowers more in the end. Analysts, too, are confident that private MI risk-adjusted pricing will not have any significant impact on FHA, positive or otherwise. Six private mortgage insurers have updated their premium rate cards in keeping with the new capital requirements under the government-sponsored enterprises’ Private Mortgage Insurer Eligibility Requirements (PMIERs) that were implemented in January 2016. The proposed rate changes are subject to ...
A clause in a New York home-purchase contract excluding government-backed financing from seller consideration is raising potential disparate impact concerns. A residential-lending manager in Sarasota, FL, emailed Inside FHA/VA Lending a copy of the contract with the controversial language embedded in Section 8 under the heading “Mortgage Commitment Contingency.” The paragraph read in part, “… institutional lender agrees to make a first loan other than a VA, FHA or other governmentally insured loan, to purchaser …”. “The language makes clear that no government-backed loans such as VA, FHA or USDA are acceptable to the seller [of the property],” the lender, who requested anonymity, said. “It is pretty rampant as cash is king and no one on the selling side wants to wait for payment.” Apparently, such clauses are nothing new. In fact, they have been around for ...
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