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Inside MBS & ABS

August 12, 2016

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SIFMA Seeks Reversal of New York Ruling in Case Involving ‘Gap’ Reps Provided by MBS Sponsor

A ruling late last year by a state appeals court in New York threatens to upend the practice of providing “gap” or “bridge down” representations and warranties on residential MBS, according to a brief submitted on behalf of the Securities Industry and Financial Markets Association. SIFMA asked the New York State Court of Appeals to reverse the lower court’s ruling in Bank of New York Mellon v. WMC Mortgage. Lawyers at the law firm of Stroock & Stroock & Lavan submitted an amicus brief to the N.Y. State Court of Appeals on behalf of SIFMA regarding the case. “The court’s resolution of this issue could have... Read More

No Word Yet on Angel Oak’s Second Nonprime MBS Deal, But Primary Market Originations on the Rise

Almost three months after word leaked out that Angel Oak Capital Advisors was working on a second nonprime MBS, the transaction has yet to come to market. Sources close to the company, maintain that a deal is still in the works – it’s just a matter of when. The company had planned to sell a roughly $150 million MBS backed by nonprime residential loans funded by affiliates Angel Oak Home Loans, a retail shop based in Atlanta, and Angel Oak Mortgage Solutions, a wholesaler that originates through loan brokers. Presently, the Angel Oak firms are churning out... Read More

GSE Mortgage Portfolios Continued to Shrink in 2Q16, Both Firms on Track for Conservatorship Targets

Fannie Mae and Freddie Mac continued to whittle away at their retained mortgage portfolios during the second quarter, keeping up a focus on shedding less-liquid assets. The two government-sponsored enterprises held a combined $637.0 billion of mortgage loans and mortgage securities at June 30, down 17.6 percent from a year ago. Under the current terms of their conservatorship, Fannie and Freddie are required to reduce their mortgage portfolios by at least 15.0 percent a year. By the beginning of 2018, each GSE portfolio is expected...[Includes one data table] Read More

Fannie Releases Modified Loan Historical Data to Support New MBS Program that May Become Significant Asset Class

Fannie Mae’s new securitization program for modified single-family mortgages could generate as much as $24 billion in issuance, according to an analysis by Bank of America Merrill Lynch. The program will create “an asset class meriting investor focus,” BAML noted. Fannie recently released... Read More

MBS and ABS Participants Push for Changes to Funding Ratio Requirements Proposed by Federal Bank Regulators

Federal banking regulators should make a number of adjustments to proposed net stable funding ratio requirements, according to the Structured Finance Industry Group and other industry participants. The Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency issued the NSFR proposed rule in April, following standards set by the Basel Committee on Banking Supervision. Comments on the proposed rule were due late last week. The NSFR addresses... Read More

JPMorgan, FDIC Near Settlement with Defunct WaMu, DOJ Asks Second Circuit for Another Shot at ‘HUSTLE’

JPMorgan Chase is a step closer to settling a dispute with Deutsche Bank and the Federal Deposit Insurance Corp. over certain mortgage securitization agreements in connection with the government’s takeover of failed mortgage lender Washington Mutual. According to Chase’s most recent 10-Q filing with the Securities and Exchange Commission, the firm, Deutsche Bank and the FDIC have signed a term sheet to resolve pending litigation brought by the German bank against Chase and the FDIC in relation to WaMu as well as Chase’s outstanding indemnification claims pursuant to the terms of the purchase-and-assumption agreement with the FDIC. The term sheet is subject... Read More

Dire Predictions of Soaring CMBS Delinquencies Prove False, So Far. But That Doesn’t Mean it Won’t be a Bumpy Ride

Although delinquencies on commercial MBS rose for a fifth straight month during July, predictions of a bust have not developed and many analysts are starting to feel more comfortable with the sector, especially in regard to multifamily credits. According to figures compiled by Trepp, the overall delinquency rate on U.S. CMBS increased 16 basis points during the month to 4.76 percent. The percentage of loans considered seriously delinquent increased 19 bps to 4.67 percent. This compares... Read More

Latest Batch of Documents Unsealed in GSE Shareholder Case Focuses on Treasury’s Control Over Fannie, Freddie

A federal judge rejected efforts by the government to keep a new batch of official memos and other documents from being disclosed in the ongoing legal war over the terms of the conservatorships of Fannie Mae and Freddie Mac. U.S. Court of Federal Claims Judge Margaret Sweeney released a new set of documents that included a brief excerpt of former White House housing policy expert Jim Parrott’s deposition from January, a presentation from the Federal Housing Finance Agency in 2008 and several memos dating back to 2008 and 2012. Sweeney rejected... Read More

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