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Inside Nonconforming Markets

March 27, 2009

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Federal Government’s $1 Trillion Investment Program to Focus on ‘High-Risk Mortgages’

A federal program aimed at increasing liquidity for distressed mortgage loans and mortgage-backed securities could revive the non-prime market. The Public-Private Investment Program seeks to leverage up to $100 billion of federal aid from the Troubled Asset Relief Program to support new investment funds that would buy “legacy” loans and securities from banks and thrifts... Read More

House Democrats Introduce Predatory Lending Bill

Democrats in the House introduced strong anti-predatory lending legislation this week. The House Financial Services committee is scheduled to markup the bill next week. Reps. Brad Miller, D-NC, and Mel Watt, D-NC, along with House Financial Services Committee Chairman Barney Frank, D-MA, introduced H.R. 1728, “The Mortgage Reform and Anti-Predatory Lending Act of... Read More

GSEs Take Massive Losses on Non-Prime Holdings

Fannie Mae and Freddie Mac all but avoided non-prime acquisitions in 2008 and still took a combined $11.25 billion in impairments on their non-agency mortgage securities holdings during the fourth quarter. The government-sponsored enterprises continue to focus on subprime and Alt A loss mitigation as non-prime delinquencies increase. Combined, the GSEs were... [Includes one chart] Read More

Lender-Opposition Stalls Cramdown Vote in Senate

Cramdown legislation in Congress lost some momentum this month as the mortgage industry has led efforts to delay a vote in the Senate. The Senate originally planned to consider cramdown legislation as early as last week, but the Mortgage Bankers Association said “concerns have surfaced,” delaying a vote, possibly until as late as mid-April. On March 5, the House passed H.R. 1106, “The... Read More

MBA Questions ASF’s Non-Prime Mod Standards

A major proposal to increase transparency in the non-agency mortgage-backed security market ran into opposition from the Mortgage Bankers Association this week. And questions remain about servicers’ willingness to implement the Obama administration’s loan modification program. The American Securitization Forum recently proposed increasing disclosures to allow MBS... Read More

FDIC Criticizes IndyMac, Completes Sale

Last week, the Federal Deposit Insurance Corp. completed the sale of IndyMac Federal Bank to a consortium of private investors. The bank, renamed OneWest Bank, will continue to focus on mortgage lending, including jumbo originations. The investor group IMB HoldCo – consisting of Dune Capital Management, J.C. Flowers & Company, hedge fund Paulson... [Includes one graph] Read More

Lenders Struggle to Make Non-Prime Mortgages

Federal banking regulators and members of Congress continue to push lenders to originate mortgages for creditworthy borrowers, but non-prime mortgage originations remain few and far between. Borrowers blame the lack of originations on lenders while lenders blame federal regulators, according to Rep. Barney Frank, D-MA, chairman of the House Financial Services committee. Only an estimated... Read More

Nonprofits Seen as Receivers for Servicers’ REOs

Nonprofit organizations are eager to purchase real-estate owned and foreclosed properties from servicers, according to the Office of the Comptroller of the Currency. In some cases, servicers can even fulfill Community Reinvestment Act obligations by selling REOs to nonprofits. The OCC’s March Insights publication detailed servicers’ efforts to partner with community... Read More

Reverse Mortgage Growth Less Certain in 2009

Even with a large increase in loan limits, reverse mortgage originations could plateau in 2009. Industry participants discussed the outlook for reverse mortgages, and particularly the FHA’s Home Equity Conversion Mortgage product, during a recent audio conference sponsored by Inside Mortgage Finance Publications. Brett Carter, president of Next Generation Financial Services, noted that... Read More

News Briefs

Moody’s Investors Service and Fitch Ratings each increased their loss estimates on prime jumbo mortgage-backed... The Federal Trade Commission will soon begin drafting new rules prohibiting unfair and deceptive mortgage lending acts... A unit of American International Group sued Bank of America’s Countrywide Financial last week alleging that Countrywide... Read More

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