U.S. Bank, as trustee for a mortgage loan trust, has sued Citigroup in New York state court to force the financial giant to cure or repurchase defective loans from a securitized pool. In a separate case, a federal court in New York dismissed a shareholder action against Citigroup in connection with certain residential MBS. At issue in the first case is a pool of 4,792 mortgage loans that Citigroup Global Markets Realty Corp. purchased and securitized in May 2007. Citigroup sold the loans to Citigroup Mortgage Loan Trust, which, in turn, deposited the loans into the trust and assigned its rights to U.S. Bank. The trust then issued the MBS. According to the court summons and notice, Citigroup conducted...
The risk-retention rule re-proposed by federal regulators in September needs significant adjustments, according to issuers of collateralized loan obligations and asset-backed commercial paper. Investors are largely happy with the re-proposed rule, and issuers concede that the re-proposed rule significantly improved on the rule initially proposed by federal regulators in 2011. The Dodd-Frank Act requires federal regulators to establish risk-retention requirements for certain securities that don’t meet qualifying standards. Issuers of such securities will generally be required to retain at least 5.0 percent of the risk from such issuance. “We remain concerned...
There was no surprise about why. Fannie Mae, Freddie Mac and Ginnie Mae securitized a total of $41.71 billion of refinance loans in October, down 22 percent from the previous month.
Glenn Costello, a senior managing director at KBRA, said the securitization of non-QM loans will require additional credit enhancement relative to QMs.
The bipartisan Senate blueprint for secondary mortgage market reform includes several key provisions designed to facilitate small-lender access when Fannie Mae and Freddie Mac are no longer around.
Industry observers doubt the White House’s commitment to replace the current interim head of the Federal Housing Finance Agency, despite louder recent lip service, following an embarrassing, if not unexpected, rejection last week by the Senate of the Congressman who would be the new FHFA director. On Oct. 31, Senators voted 56 to 42 to limit floor debate on the nomination of Rep. Mel Watt, D-NC. The final tally was well below the 60-member supermajority required to invoke cloture and shutter any potential filibuster under current Senate rules.
The Federal Housing Finance Agency spent the last two weeks racking up several legal settlements in its massive litigation action against some of the nation’s financial institutions. Look for more to come predict industry analysts. On Oct. 25, JPMorgan Chase agreed to pay $4.0 billon to settle claims on $33.8 billion of non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac.
Depending on how the Senate’s housing finance reform legislation comes out in the end, the Federal Home Loan Banks could play an even larger role in helping smaller lenders successfully access the secondary market, Richard Swanson, president and CEO of the Des Moines Bank, said this week. Testifying before the Senate Banking, Housing and Urban Affairs Committee, Swanson said that the secondary mortgage market, as envisioned by S. 1217 by Sens. Bob Corker, R-TN, and Mark Warner, D-VA, would allow the 12 FHLBanks to serve in an expanded role as mortgage aggregators.
Freddie Mac’s “account balance” with the U.S. Treasury will go into the black by yearend – thanks to stellar third-quarter earnings – and Fannie Mae likely will accomplish the same by the end of March 2014. But mortgage bankers shouldn’t pop any champagne. That’s the view of Dave Stevens, president of the Mortgage Bankers Association who worked at Freddie once and also served as FHA commissioner. Stevens believes that despite their strong performance in the third quarter and beyond, both are just “insurance brokers” that have benefitted from the Federal Reserve buying their mortgage-backed securities. [Includes one data chart.]
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