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Inside Nonconforming Markets

July 3, 2008

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B&C News Briefs

Inside B&C Lending has discontinued its subprime mortgage interest rate survey until further... CIT Group this week agreed to sells its servicing and lending business to Lone Star Funds... Subprime loss mitigation reported by the Hope Now Alliance for May received a strong rebuke this week from... Read More

States Looking to Tighten Subprime Lending Laws

A number of states have implemented – or are working toward – tougher laws for subprime lenders as federal legislation this year looks unlikely. More than 12 states have passed tightened lending laws in recent years, and community advocates are calling for California, the subprime epicenter, to do the same. New York is the latest state to tackle subprime regulation. Last week, the State... Read More

Payment Shock Not the Only Subprime ARM Problem

Interest rate cuts in the past year by the Federal Reserve have diminished payment shock for subprime hybrid ARM borrowers, but the loans continue to perform poorly. The Federal Deposit Insurance Corp., meanwhile, warned that federal regulators are closely monitoring the disclosures of subprime lenders still making such loans. Less than five percent of subprime... Read More

Housing Bill Delayed in Senate but Expected to Pass

Legislation that would create a new program to be administered by the FHA to bail out troubled homeowners was delayed in the Senate last week. The legislation is expected to pass, though it still faces a veto threat from President Bush. A compromise negotiated by Sens. Chris Dodd, D-CT, and Richard Shelby, R-AL, brought the “Foreclosure Prevention Act of 2008” close to passage in the... Read More

HUD, Fed Clash Over RESPA And HOEPA Revisions

The Federal Reserve said it will issue a revision of its rules implementing the Home Ownership and Equity Protection Act this month, though a lack of coordination with the Department of Housing and Urban Development is a cause for concern for the subprime industry.At Mealey’s Subprime Mortgage Litigation and Insurance Coverage Conference in June in Arlington... Read More

Distressed Mortgage Investing Requires Good Servicing

“Modifications are going to be a big business but nobody knows how to do them yet,” according to Robert Kapito, president of BlackRock. Speaking at the Securities Industry and Financial Markets Association’s MBS due diligence conference last week in New York, Kapito warned that servicing is the key concern when investing in distressed mortgages. “Sometimes things that are distressed can... Read More

Litton Sued for Borrower Outreach by Third Party

Subprime servicer Litton Loan Servicing was hit with a potential class-action lawsuit in June regarding its use of a third party to help contact delinquent borrowers. Many subprime servicers use the vendor, Titanium Solutions, or its competitors, to reach out to more borrowers. The lawsuit was filed by Camille Gburek in the U.S. District Court of the Northern District of... Read More

Majority of Subprime MBS Downgraded, AAAs Hold On

After years of stability, AAA-rated subprime mortgage-backed securities took major downgrades at the end of last year and early this year. However, according to an analysis by Inside B&C Lending, investment-grade tranches have held up fairly well compared with all other subprime MBS classes. Standard & Poor’s, Moody’s Investors Service and Fitch Ratings have... [Includes one chart] Read More

Loan Mod Accounting a Concern For Subprime MBS Investors

The modification and accounting practices on loans in subprime mortgage-backed securities serviced by Ocwen Financial unveiled last month are a concern for investors. Some servicers have employed similar tactics, but at this point it is unclear whether the practice will continue going forward. Barclays Capital found that Ocwen had modified up to 25 percent of the loans per year... Read More

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