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Inside Nonconforming Markets

April 10, 2009

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Holders of Non-Agency Mortgages Unlikely to Benefit Significantly from Accounting Guidance

Guidance finalized this week by the Financial Accounting Standards Board was “one step forward and two steps backward,” according to Jim Gross, associate vice president of accounting, tax and bank regulation at the Mortgage Bankers Association. The changes could also limit participation in the federal government’s Public-Private Investment Program. FASB released updated... Read More

Frank Vows to Move Predatory Lending Bill

Rep. Barney Frank, D-MA, said this week that he plans to push ahead with a controversial new bill to stiffen laws against predatory mortgage lending in early May so that the legislation can be ready for President Obama to sign by the end of the year. The House Financial Services Committee was originally scheduled to mark-up H.R. 1728, the Mortgage Reform and Anti-Predatory Lending... Read More

Holdings of Closed-End Seconds Decrease in 2008

Bank and thrift holdings of closed-end second mortgages declined in 2008, according to a new ranking and analysis by Inside B&C Lending. The industry held $228.3 billion of these loans in portfolio at the end of the year, down from $262.5 billion at the start of the year.Production of closed-end second mortgages used to help finance a home purchase or refinancing... [Includes one chart] Read More

Servicers Pressured to Participate in HAM Program

Federal banking regulators and the Treasury Department are pressuring servicers to participate in the Obama administration’s Home Affordable Mortgage program. During an audio conference on the program sponsored by Inside Mortgage Finance Publications last week, Donald Lampe, a partner at Womble Carlyle Sandridge & Rice, said some servicers perceive the program as less than voluntary... Read More

Large Non-Prime Servicers’ Mod Efforts Mixed

The servicing efforts of non-prime servicers resulted in a mixed-bag in 2008, according to new data from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. While non-prime servicers decreased foreclosure actions in the fourth quarter of 2008, re-default rates increased throughout the year as most completed... [Includes one graph] Read More

Ocwen Optimistic Despite Servicing Environment

Executives at Ocwen Financial touted the special servicer’s bright future even in the face of rising subprime delinquencies and a lack of subprime originations. William Erbey, Ocwen’s chairman and CEO, said the firm expects to participate in the Home Affordable Modification program and benefit significantly from the program’s financial incentives. Ocwen reported net income of... Read More

Regulators Target Foreclosure-Rescue Scams

Federal and state regulators this week unveiled a coordinated effort to protect troubled borrowers from loan modification fraud and foreclosure-rescue scams. The Treasury Department, the Department of Justice, the Department of Housing and Urban Development, the Federal Trade Commission and a number of state attorneys general will increase enforcement actions and undertake other borrower-protection... Read More

Thornburg Discontinues Operations, Liquidates

Thornburg Mortgage last week said it expects to file for Chapter 11 bankruptcy protection. The prime jumbo ARM specialist was not able to survive without the currently frozen non-agency mortgage-backed security market. “The credit crisis has turned out to be far bigger than Thornburg Mortgage, and we could not overcome its challenges,” said Larry Goldstone... Read More

ABX Seen as Faulty Barometer of Subprime Prices

The index established to track the value of subprime mortgage-backed securities does not appropriately account for liquidity risk and risk appetite, according to analysts at the Bank for International Settlements. The analysts’ research follows similar criticism of the ABX index by other MBS analysts, but the indices remain the only widely available gauge of subprime valuations. The ABX... Read More

News Briefs

Fitch Ratings may require higher credit enhancement levels on prime mortgage-backed securities... Subprime lenders did not discriminate by race, ethnicity, or gender regarding initial interest... The U.S. District Court for the District of Minnesota last week dismissed a putative... The trustee of bankrupt New Century Financial sued the defunct lender’s... Read More

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