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Inside Nonconforming Markets

May 22, 2009

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Non-Prime Mortgages – Especially Alt A – Drive Losses at Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac took massive losses on their non-prime mortgage holdings in the first quarter of 2009, due in large part to Alt A mortgages. The government-sponsored enterprises discontinued their purchases of such mortgages during the quarter as losses on the holdings continued to pile up. Last week, Freddie reported a $6.9 billion loss for... [Includes one chart and one graph] Read More

Anti-Predatory Lending Bill Not a Senate Priority

The current lack of subprime lending could delay the Senate’s consideration of anti-predatory lending legislation. Sen. Chris Dodd, D-CT, chairman of the Senate Banking, Housing and Urban Affairs Committee, last week said his committee will “eventually” consider anti-predatory lending legislation. However, Dodd said anti-predatory lending legislation is not on his must-do list, which... Read More

HAM Incentives Expected to Increase Short Sales

Foreclosure-alternative incentive payments under the Home Affordable Modification program should lead to lower loss severities on subprime mortgages, according to analysts at Barclays Capital. Last week, the Treasury updated the HAM program to include payments of up to $1,000 to servicers for a short sale, and if that is unsuccessful, a deed-in-lieu of foreclosure. Borrowers may also... Read More

Jumbo Sector Stagnant, Conforming or Otherwise

High interest rates, increased underwriting standards and a lack of involvement from the secondary market have combined to severely limit jumbo mortgage originations. Even Fannie Mae and Freddie Mac have shied away from the conforming jumbo products created especially for them last year. According to the Inside Mortgage Finance MBS Database, Fannie issued $1.31 billion of conforming... Read More

Mass. AG Continues to Combat Subprime Sector

A $60.0 million settlement last week with Goldman Sachs was the latest step in Massachusetts Attorney General Martha Coakley’s battle with the subprime market. Coakley warned that she will continue “to address the fallout from the subprime lending crisis.” Goldman agreed to provide $50 million in loan restructuring on its mortgages held by Massachusetts... Read More

Ocwen Expects ‘Significant’ HAM Revenue in 3Q09

Incentive payments from the Home Affordable Modification program will positively impact servicers’ earnings, according to Ocwen Financial. “Beginning in the third quarter, we expect to receive significant revenues from this program,” said William Erbey, the special servicer’s chairman and CEO. Although Ocwen is looking to aggressively implement the HAM program, mods must pass a... Read More

Fannie Tightens Nontraditional Credit Standards

Fannie Mae recently adjusted its standards for borrowers with nontraditional credit scores. In some cases, mortgages with nontraditional credit scores will face increased pricing. The changes detailed in Announcement 09-12, issued this month, are effective for all whole loans purchased or mortgage-backed security pools with issue dates on or after Aug. 1, 2009... Read More

Fannie Takes Loss on IndyMac/FDIC Settlement

Fannie Mae and Freddie Mac last week revealed details on their settlements with the Federal Deposit Insurance Corp. relating to mortgages serviced by former Alt A titan IndyMac Bank. Fannie said it received “significantly less” than it had requested for repurchase requests. Fannie had an estimated $1.0 billion repurchase request pending with IndyMac before the... Read More

News Briefs

The House this week voted to accept the Senate’s version of the “Helping Families Save Their Homes... The number of non-prime loan modifications completed by servicers for Fannie Mae and Freddie Mac... DBRS downgraded 1,441 classes from 195 residential mortgage-backed securities transactions last week... Read More

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