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Inside Nonconforming Markets

May 8, 2009

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Servicer Safe-Harbor Clears the Way for Wide-Spread Subprime Modifications

Servicers are set to receive broad freedom to implement loan modifications as the Senate approved a mod safe-harbor this week, following similar action by the House. The Senate also defeated an amendment to the legislation which would have allowed cramdowns.The Senate approved S. 896, “The Helping Families Save Their Homes Act,” on a 91-5 vote. The House passed companion... Read More

Subprime Mods Steady in 1Q09, Ready to Increase

An average of 90,000 subprime modifications were completed each month in the first quarter of 2009, with little variance seen between months. However, servicers are expected to increase their mod efforts due to a safe harbor approved by Congress this week and further implementation of the Home Affordable Modification program.Some 270,000 subprime... [Includes one chart and one graph] Read More

House Approves HOEPA-Like Lending Reform Bill

The House this week approved anti-predatory lending legislation that largely mirrors the changes taking effect later this year under the Federal Reserve’s revision of the Home Ownership and Equity Protection Act. The House approved H.R. 1728, “the Mortgage Reform and Anti-Predatory Lending Act,” on a 300-114 vote. Last week, the House Financial Services Committee agreed to key changes... Read More

Second Liens, H4H Refis Get HAM Incentives

Additional financial incentives for servicers introduced last week by the Treasury Department to the Home Affordable Modification program are likely to increase modifications and HOPE for Homeowners refinances, analysts suggest. Under the second lien program, when a HAM mod is initiated on a first lien, second lien servicers will receive a payment for reducing payments due on the associated... Read More

Adoption of ASF’s Non-Agency Revival in Flux

Implementation of the American Securitization Forum’s effort to revive the non-agency mortgage-backed security market could be delayed beyond January 2010. The ASF’s Project on Residential Securitization Transparency and Reporting seeks to increase disclosures for new non-agency MBS issuance as well as outstanding MBS. The group originally planned on implementing an increased... Read More

Non-Agency Originator REITs Fizzle Out

The bankruptcies of Accredited Home Lenders and Thornburg Mortgage effectively end the run of real estate investment trusts that originated non-agency mortgages. New Century Financial and American Home Mortgage met similar fates in 2007 while Saxon Capital, MortgageIT, Fieldstone Investment, and Encore Credit were acquired and eventually ceased originations. The REIT structure likely... Read More

Congress Considering Anti-Mod Fraud Legislation

Federal and state regulators need more authority to prevent loan modification fraud, according to some Democrats in Congress. However, the Mortgage Bankers Association this week argued against increased regulation regarding mortgage fraud. At a hearing this week by the House Financial Services Subcommittee on Housing and Community Opportunity, House members... Read More

SEC Charges Former Alt A Lender with Fraud

Two executives at American Home Mortgage Investment Corp. allegedly engaged in accounting fraud in early 2007, according to charges filed by the Securities and Exchange Commission last week. The lender filed for bankruptcy in August 2007 and is in the process of liquidating. WL Ross & Co. purchased $42 billion of servicing rights from American Home Mortgage in 2007 and operates a... Read More

News Briefs

Wilbur Ross is leading an effort to invest $1.0 billion in “legacy” loans and securities via the federal government’s Public-Private... About 65 percent of the 25 banks that originated nontraditional mortgages during the quarter reported having tightened their... The EARN Group, a developer of real estate financing tools, has teamed with a nonprofit group to help San Francisco Bay... Read More

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