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Inside Nonconforming Markets

August 14, 2009

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Alt A Mortgages Causing a Disproportionate Amount of the GSEs’ Credit-Related Losses

Fannie Mae and Freddie Mac essentially eliminated their new Alt A purchases by the second quarter of 2009 but the loans continue to account for nearly half of the government-sponsored enterprises credit-related losses. The GSEs pin the problems on home-price declines and borrowers’ negative equity. According to an analysis of the GSEs’ second quarter earnings... [Includes one chart] Read More

Non-Agency Revival Proposals Continue, Conflict

Following efforts by the American Securitization Forum, the Mortgage Bankers Association last week released a proposal aimed at helping revive the non-agency market. However, lenders and mortgage investors continue to disagree on the best way to revive the sector.The MBA said it hopes its draft purchase and sale agreement for whole loans “will become the... Read More

Negative Equity to Hit Most Non-Agency Borrowers

The vast majority of mortgages in non-agency mortgage-backed securities could experience negative equity by the first quarter of 2011, according to projections by analysts at Deutsche Bank Securities. Negative equity and increasing unemployment are expected to drive down non-agency MBS ratings. If home prices do not stabilize until the first quarter of 2011... [Includes one graph] Read More

Servicers’ Initial HAMP Mod Efforts Mixed

The Obama administration claims it is making progress on the number of loan restructurings being offered under the Home Affordable Modification Program while urging servicers to increase their efforts. Meanwhile, vital details on the program – announced in March – continue to emerge. As of the end of July, the 38 servicers participating in HAMP started 235,247 trial modifications... Read More

Ocwen Focuses on Mods, Opportunities for Growth

Implementation of the Obama administration’s Home Affordable Modification Program slowed Ocwen Financial’s mod efforts in the second quarter of 2009, but the servicer remains optimistic enough to keep buying distressed assets. Ocwen recently reported net income of $17.8 million for the second quarter of 2009 compared with a net loss of $2.7 million for the same period in... Read More

Mods Encouraged Regardless of Other Liens

Federal regulators moved last week to increase loan modifications by reminding servicers of mod guidelines, especially regarding second liens. The loans are a major impediment to widespread loan modifications, according to Democrats in Congress and Obama administration officials. The Federal Financial Institutions Examination Council – an umbrella group for federal... Read More

Subprime MBS Price Rebound Short-Lived

Prices on subprime mortgage-backed securities fell this week after showing signs of life, increasing by more than 20.0 percent since June. Analysts warn that investor interest in subprime MBS is likely fleeting as the outlook for the collateral is dim. Prices on subprime MBS increased from mid-June until early August, according to the ABX indices, which track about 20 percent... Read More

MBA Pushes for Permanent Jumbo Loan Limits

The Mortgage Bankers Association is lobbying to make the temporary conforming jumbo loan limits permanent. Meanwhile, investor groups recently decided to maintain limits on the amount of conforming jumbos that can be pooled in mortgage-backed securities, going against many lenders’ wishes. The current maximum single-family loan amount for Fannie Mae, Freddie Mac and FHA business... Read More

News Briefs

The 60+ day delinquency rate on non-prime mortgages serviced for Fannie Mae and Freddie Mac increased to... At the end of July, the Federal Deposit Insurance Corp. initiated its first test of the Legacy Loans... A lawsuit recently filed by the Illinois Attorney General alleges that Wells Fargo steered African Americans... Read More

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