Officials at Redwood Trust, the real estate investment trust that made headlines last year by sponsoring the first non-agency securitization of newly originated mortgages since the financial crisis began in 2008, have a favorable outlook on the residential market – yet the biggest challenge right now remains the low volume of production. Redwood Trust is upbeat about the future, for a number of reasons, according to Brett Nicholas, executive vice president and chief investment officer. "Proposals to reform the government-sponsored enterprises issued in February 2011 call for phasing out Fannie Mae and Freddie Mac," he said during...

The Securities and Exchange Commission is reportedly looking into the securitization and put-back practices of Credit Suisse and JPMorgan Chase in connection with alleged recoveries from defective mortgages repurchased by originators from securitization trusts. Credit Suisse confirmed to Inside MBS & ABS a disclosure made by bond insurer MBIA Insurance Corp. that the Zurich-based bank had received a subpoena from the SEC seeking data on repurchases of certain defective loans. The disclosure was made in a lawsuit against three Credit Suisse units – Credit Suisse Securities, DLJ Mortgage Capital, Inc. and Select Portfolio Servicing – which MBIA filed with the New York State Supreme Court on April 29. The suit seeks to compel Credit Suisse to turn over data which MBIA believes would bolster its fraud and breach-of-contract claims against...

&PTop rating agencies continue to have different requirements for issuers to obtain the most favorable ratings on certain transactions, including the all-important criterion of credit enhancement. The latest manifestation of this dynamic involved a recent $1.45 billion servicer advance receivable transaction by American Home Mortgage Servicing Inc., a deal that passed muster with DBRS and Standard & Poor’s. But AHMS withdrew the deal from consideration at Fitch Ratings because of that company’s more conservative rating criteria. DBRS and S gave most components of the transaction a triple-A rating. That included two $325 million senior term notes and a $600 million senior variable funding note. The deal included subordinate term notes of $150 million and $50 million. The primary assets of...

The requirement from last year’s landmark financial services legislation that MBS issuers retain some of the risk associated with residential mortgages will raise the costs of securitizing them to prohibitive levels, discouraging the return of private capital and maintaining the market’s dependence on Fannie Mae and Freddie Mac, industry experts warn. The proposed definition of “qualified residential mortgages” under the terms of the Dodd-Frank Wall Street Reform and Consumer Protection Act was a major focus of concern raised during a webinar last week sponsored by Inside Mortgage Finance. “I think the big-picture news is that certainly the risk-retention regulations do what Dodd-Frank mandates that they do. But in some very important ways they go beyond that...

The battle over the Dodd-Frank-mandated risk-retention rules continues on Capitol Hill, with lawmakers rehashing concerns about either the detrimental or beneficial effects the proposed rule may have on the market. The Dodd-Frank Act required federal regulators to come up with a definition of “qualified residential mortgages” that would be exempt from a 5 percent risk-retention requirement when securitized. During a hearing this week in the House Oversight Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs, Republican lawmakers argued that transparency is a better solution to restoring investor confidence and reviving the non-agency MBS market. But according to Rep. Elijah Cummings, D-MD, lenders shouldn’t be let off the hook, and the risk-retention rules do furnish necessary...

Securitization markets would gain more certainty regarding securities issuance going forward under legislation passed out of a House subcommittee this week that would restore to credit rating agencies their previous exemption from expert liability under the Securities Act of 1933. The exemption was removed with...

Mortgage lenders and compliance experts are deeply concerned about the recently published risk-retention proposal and its impact on the availability of credit for eligible borrowers as well as the potential fair lending issues it may raise. Industry trade groups are especially worried about...

Securitization remained the dominant method of financing new residential mortgages during 2010 despite the fact that the non-agency MBS market remains in shambles. Some 84.9 percent of the $1.570 trillion of home loans originated last year were pooled...[Includes one data chart]

Fannie Mae and Freddie Mac purchases of distressed loans from mortgage-backed securities nearly offset the run-off of the GSEs’ retained MBS holdings in 2010, according to a new Inside The GSEs analysis. Fannie and Freddie held...[Includes one data chart]

The Massachusetts Supreme Judicial Court (SJC) handed the mortgage industry something to crow about regarding the validity of mortgage loan assignments in foreclosure cases – which, ironically, may not amount to a hill of beans beyond the Bay State, according to compliance experts. Contrary to claims of consumer victory and negative implications for the mortgage industry, the SJC in U.S. Bank National Association v. Ibanez held...