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Inside Nonconforming Markets

July 17, 2009

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Banks’ Relatively Healthy Closed-End Second Portfolios Targeted for Loan Modifications

Second liens remain a major impediment to widespread loan modifications, according to Democrats in Congress and Obama administration officials. However, delinquency rates on closed-end seconds, or CES, are relatively low, according to a new ranking and analysis by Inside B&C Lending. As of the end of the first quarter of 2009, 6.41 percent of closed-end... [Includes one chart] Read More

Industry Argues for Alternative Mortgages, Choice

Congress’ consideration of the Consumer Financial Protection Agency continued this week with a number of hearings on the proposal. The Treasury Department defended the CFPA as representatives from the mortgage industry strongly opposed portions of the proposal. Last week, Rep. Barney Frank, D-MA, introduced H.R. 3126, “the Consumer Financial Protection Agency Act,” which largely mirrors the Obama... Read More

Non-Agency MBS Investors Shift Risks to Lenders

Any revival of the non-agency mortgage-backed security market will be preceded by increased disclosures to investors and increased risk-retention by lenders, based on the latest standards developed by the American Securitization Forum. The industry group this week unveiled the latest steps in its Project on Residential Securitization Transparency and Reporting... Read More

Federal MBS Purchase Program Scaled Way Back

Citing improved market conditions compared with the first quarter of this year, the Obama administration shrank the planned Public-Private Investment Program last week. Outlined in March as a scheme to purchase up to $1.0 trillion in “legacy” assets, the program will initially purchase up to $40.0 billion in assets over the course of three years. Further limiting the PPIP, the initial... Read More

Citi Limits Re-Defaults with Cautious Mods

Re-default rates on modified mortgages for some servicers have hit 80.0 percent, but CitiMortgage has managed to keep re-defaults relatively low, in part by not taking loss mitigation actions on the vast majority of its non-prime portfolio. According to a recent loss mitigation report by the servicer, Citi’s re-default rate did not exceed 24.0 percent for mortgages modified... [Includes one graph] Read More

‘Preventable’ Foreclosures Might be Over-Stated

New research by Federal Reserve economists counters a number of common assumptions about loss mitigation, including a finding that the number of easily “preventable” foreclosures may be far smaller than many believe. The researchers note that self-cure risk – while rarely mentioned in the loss mitigation debate – makes mods less appealing to servicers. In a study released last week... Read More

Proposal Could Extend Foreclosure Timelines

Rep. Barney Frank, D-MA, is looking to revive a federal assistance program from the 1970s that would require borrowers to allow the government a lien on their home in exchange for a short-term loan. The program aims to prevent foreclosures on borrowers who don’t qualify for other federal mortgage relief because they are unemployed. The program could also extend... Read More

News Briefs

Non-prime delinquencies and foreclosures at Fannie Mae and Freddie Mac increased in April, according to a report released this week by the Federal Housing Finance Agency. The 60+ day... Changes in the method and assumptions used by Standard & Poor’s to project losses for residential MBS have resulted in higher loss assumptions for deals backed by subprime and Alt A... Read More

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