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Inside Nonconforming Markets

August 29, 2008

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Subprime Originations All But Vanished in 2nd Quarter of 2008

There’s almost nowhere else for subprime originations to go but up. Subprime production hit a new low in the second quarter of 2008, according to Inside B&C Lending. An estimated $4.0 billion in subprime mortgages were originated during the period as most lenders have abandoned the sector. That’s down 60.0 percent from the anemic volume posted in the... [Includes one chart] Read More

Without Subprime, Wilshire Focuses on Special Servicing

A lack of subprime originations has not slowed the servicing efforts of Merrill Lynch’s servicer Wilshire Credit. Even though the investment bank ceased subprime production last year, Wilshire continues to expand, focusing on special servicing for Merrill and third-party investors. A report on the servicer by DBRS suggests that Wilshire’s survival could serve as a... Read More

FDIC’s Mod Plan a Possible Model for Subprime Servicing

A loan modification program implemented this month for IndyMac Bank by the Federal Deposit Insurance Corp. could help guide subprime loss mitigation. However, analysts note that a number of impediments, including second liens and pooling and servicing agreements, could hinder any major progress in the subprime sector.The FDIC said its program is designed to achieve affordable and... Read More

Subprime Litigation Could Result In Large Settlements

A subprime class action securities lawsuit settled in Canada this year could be the “canary in the coal mine” for the hundreds of subprime lawsuits pending in the U.S. It was the largest settlement in a class action securities case in Canadian history. None of the securities lawsuits that have been filed in the current litigation wave in the U.S. have been settled. Kevin LaCroix... Read More

Poor Subprime Performance Forces MBS Rating Changes

As subprime mortgage-backed security performance is in a seemingly unending freefall, the rating services recently adjusted their outlook for the sector. Approximately 18.0 percent of 2006 subprime mortgage-backed securities are 60+ days delinquent, nearly 2.5 times higher than the 7.3 percent rate seen at the same point in the 2005 vintage. And 2007 subprime MBS issuance is faring even worse... Read More

Predatory Lending a Concern At Political Conventions

Many within the mortgage industry are concerned that the Federal Reserve’s revision of the Home Ownership and Equity Protection Act was not the final word regarding predatory lending. In fact, Democrat leaders in Congress have vowed to pass even tougher rules in the near future. In a letter to the Democratic and Republican National Committees this month, the Mortgage Bankers... Read More

Troubled Borrowers Get Help Connecting with Servicers

Vendors are stepping up efforts to help servicers contact troubled borrowers and vice versa. The efforts range from a Web site that allows borrowers to interact with servicers to field outreach programs. Computer Sciences Corp. this month launched “Borrower Inquiry,” a Web site that allows borrowers facing foreclosure to track the status of requests for help from servicers. The site... Read More

ABX Trading Dries Up, Performance Declines

A seasonal uptick in subprime mortgage performance was squashed this month as mortgages backing the ABX indices deteriorated. And investors have nearly abandoned the index, putting one more nail into the subprime market’s coffin. The 30-day delinquency bucket, the leading indicator of ultimate defaults, resumed its upward trend after several months of mixed... Read More

B&C News Briefs

Fannie Mae will follow Freddie Mac and not purchase or securitize any mortgage that meets New York... Only 7.3 percent of the 1.1 million subprime ARMs scheduled for reset this year have been modified... North Carolina last week enacted laws that will ban yield-spread premiums on subprime loans and offer... Read More

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