An Iowa-based investor in government-sponsored enterprise common stock this week asked a federal court in the Hawkeye State to give “no weight” to a ruling earlier this month by a Washington, DC, federal judge who dismissed litigation against the government by other GSE shareholders, including Perry Capital and Fairholme Funds. Continental Western Insurance Co. filed papers in U.S. District Court for the Southern District of Iowa Central Division arguing that Judge Royce Lamberth was “simply wrong” in his interpretation of the Housing and Economic Recovery Act of 2008 and his HERA-based rationale to shut down shareholders’ suits in DC. An investor in GSE stock, Continental’s counsel in the case is...

Waiting several years to unify Fannie Mae and Freddie Mac securities into a single MBS could pose a huge risk to its successful completion, warned the mortgage banking industry, but Wall Street thinks it’s worth the wait to get market participants totally behind the move. The Federal Housing Finance Agency’s proposed single security for the government-sponsored enterprises met with conflicting views as the comment period ended this week. The proposal is aimed at eliminating Freddie’s pricing disadvantage and improving liquidity in the to-be-announced market. The Securities Industry and Financial Markets Association urged...

New issuance of non-mortgage ABS faltered again in the third quarter of 2014, slipping 5.4 percent from the second quarter, according to a new Inside MBS & ABS ranking and analysis. Issuers produced $46.48 billion of new ABS during the third quarter. While that marked the second straight quarterly decline after the robust $53.44 billion issued in early 2014, current issuance levels remained relatively high for the post-crisis period. Through the first nine months of 2014, new ABS issuance totaled...[Includes three data charts]

Subprime loans are accounting for a larger share of auto ABS issuance and losses on auto ABS are increasing. However, rating services suggest that the trends aren’t too worrisome, with ratings performance on track to record one of the best years ever. Some $66.9 billion in auto ABS were issued this year through September, up 26.8 percent from the same period in 2013. Subprime deals accounted for 25.8 percent of auto ABS issued this year, and volume ($17.0 billion) was down slightly from a year ago. But subprime auto loans also show up...

The liquidity coverage ratio rule recently finalized by federal regulators will hinder the revival of the non-agency MBS market, according to industry participants. Non-agency MBS are not counted as high-quality liquid assets (HQLA) under the rule, reducing incentives for banks to hold the securities. The Structured Finance Industry Group and others raised concerns about the lack of an HQLA designation for non-agency MBS at a time when the Obama administration is working to revive the non-agency MBS market. “There are...

The Consumer Financial Protection Bureau was critical this week of aspects of the student loan securitization process as well as servicer performance as it issued its latest annual report on private student-loan borrowing. The report analyzed more than 5,300 private student loan complaints between Oct. 1, 2013, and Sept. 30, 2014, an increase of 38 percent over the previous year. “Lending practices in the private student-loan market in the years preceding the financial crisis shared...

Investors have bid up the value of MBS the past two weeks, with agency product hitting new 52-week highs. This development benefits investors as long as interest rates don’t fall dramatically enough to spark prepayment concerns. In particular, analysts are paying close attention to publicly traded mortgage real estate investment trusts that hold agency MBS. According to figures compiled by Inside MBS & ABS, REITs held $286.3 billion of MBS at the end of June after increasing their holdings by 9.7 percent during the second quarter. Now, those bets are paying off...

GSE shareholder advocates remain undeterred following a federal judge’s decision late this week to deny a former Fannie Mae executive access to confidential evidence unearthed as part of the discovery process in an investors’ lawsuit against the government. Earlier this year, Fairholme Funds hired former Fannie Chief Financial Officer Timothy Howard as a consultant to assist its law firm Coopers and Kirk. Lawyers for the government want to deny Howard access to some 800,000 pieces of discovery in investors’ litigation challenging Uncle Sam’s “net-worth sweep” of GSE profits.

State regulators recently proposed expanding the data that state-licensed lenders must report on the Nationwide Mortgage Licensing System and Registry’s mortgage call report. The State Regulatory Registry said the data help state regulators supervise licensees, determine examination schedules, monitor compliance and calculate assessments. The SRR was established by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. The SRR owns and operates the NMLS and has required state-licensed lenders to submit quarterly call report data since 2011. On Oct. 1, the SRR proposed...[Includes one data chart]

The Consumer Financial Protection Bureau last week proposed two narrow revisions to its complex mortgage origination disclosure rule, leaving the industry guessing what further changes could come as lenders gear up to implement a massive rule known as TRID: the Truth-in-Lending/Real Estate Settlement Procedures Act integrated disclosure. For most lenders, the most significant proposed change would relax the requirement that lenders provide a revised loan estimate on the same day that a consumer’s rate is locked. After considering industry feedback, CFPB staff concluded that such a short turnaround may be challenging for lenders that allow consumers to lock interest rates late in the day or after business hours. This could mean...