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Inside Nonconforming Markets

October 17, 2008

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GSEs Eye Subprime and Alt A MBS Purchases; TARP Shifts Focus

Fannie Mae and Freddie Mac will reportedly return to the non-agency mortgage-backed security market as investors in securities backed by subprime or Alt A mortgages under the direction of the Federal Housing Finance Agency. The move coincides with a $250 billion capital injection for struggling banks in lieu of MBS purchases by the federal government’s Troubled... Read More

IndyMac Mods a Success, FDIC’s Program a Model

Initial efforts by the Federal Deposit Insurance Corp. to modify troubled loans acquired from IndyMac Federal Bank have largely been successful, according to the federal regulator. Pressure continues to mount on servicers to use the program as a model for helping troubled borrowers. IndyMac had 60,000 delinquent mortgages in its portfolio when the bank was seized by... Read More

Alternative Mortgage Sales to GSEs Consolidate

In the third quarter of 2008, the top four sellers of alternative mortgages to Fannie Mae and Freddie Mac accounted for 70.2 percent of such sales, according to a new ranking and analysis by Inside B&C Lending. The government-sponsored enterprises pooled $17.24 billion of interest-only mortgages, jumbo mortgages and 40-year mortgages in their... [Includes one chart and one graph] Read More

Treasury Looks to Start MBS Insurance Program

The Treasury is looking for quick feedback on a new insurance program for troubled assets created by the Emergency Economic Stabilization Act of 2008. While the program is not expected to create much new non-agency mortgage-backed security issuance, it could provide another level of credit enhancement for such collateral. The ESSA requires the Treasury to establish a program... Read More

HUD Guidance Due for Areas Lacking Appraisers

The Department of Housing and Urban Development is hustling to issue guidance relating to a provision in the HOPE for Homeowners program that caught the agency off guard. The guidance will clarify how to handle the increasing volume of FHA business in areas where there are few FHA-certified appraisers. As with all FHA loan programs, only appraisers on the FHA Appraiser Roster may perform... Read More

Fannie, Chicago FHLBank Team on ‘MPF Xtra’

The Federal Home Loan Bank of Chicago, taking one step closer to the secondary market, hopes to resurrect its moribund Mortgage Partnership Finance Program with a new variation, MPF Xtra. The bank recently struck a deal to have Fannie Mae purchase the mortgages. The move to call in Fannie is an ironic twist for the Chicago FHLBank and the MPF program, as the MPF program was... Read More

Ameriquest Wins Appeal of Harsh Court Ruling

A $750,000 penalty against former subprime lender Ameriquest Mortgage Company levied on behalf of a troubled borrower was overturned this month. The U.S. Court of Appeals for the First Circuit suggested that the fine – including $250,000 for “emotional distress” – was based more on the bankruptcy court’s sympathy for troubled borrowers than the bankruptcy code. The Bankruptcy Court... Read More

Loss Mitigation Hinges on Borrower Mentality

Successful loss mitigation efforts require servicers to focus on borrowers who are current on their loans, not just those who are delinquent, according to a new Inside Mortgage Finance Publications-sponsored study of mortgage borrower behavior during periods of financial stress. Borrowers are much more willing to take steps to avoid foreclosure before they get behind... Read More

REX Agreements, a HELOC Alternative, on Hold

A program that allowed borrowers to convert their equity into cash without taking on debt has been suspended due to trouble in the financial markets. Real Estate Equity Exchange, more commonly known as REX, had developed a program which allowed homeowners to borrow money interest free and pay it back after the sale of their home, eradicating the need for a monthly payment. Struggling financial... Read More

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