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Inside Nonconforming Markets

November 23, 2009

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House Committee Reduces Proposed Risk-Retention Requirement for MBS to 5 Percent

The House Financial Services Committee this week loosened a controversial proposed mandatory risk-retention requirement for mortgages sold to the secondary market. The change occurred during markup of H.R. 3996, the Financial Stability Improvement Act, which addresses systemic risk and institutions deemed too big to fail. As originally written, H.R. 3996 would have required... Read More

Dodd Bill Lacks Preemption, Has Risk-Retention

Financial reform legislation introduced last week by Sen. Chris Dodd, D-CT, could have adverse consequences for the mortgage industry and borrowers, according to the Mortgage Bankers Association. Dodd announced the legislation without support from Republicans. However, he suggested that he incorporated ideas from both sides of the aisle in the proposed legislation. Formal debate... Read More

Non-Prime Servicers Slow to Start HAMP Mods

Non-prime servicers continue to lag behind when compared to the mortgage industry’s overall efforts to implement the Home Affordable Modification Program. According to an Inside B&C Lending analysis of data released last week by the Treasury Department, most servicers that focus on non-prime mortgages are far behind the industry’s average for trial HAMP mods started... [Includes one chart] Read More

Alt A Holdings Continue to Hamper GSEs

Alt A mortgages, particularly whole loans, continue to account for a disproportionate share of the losses taken by Fannie Mae and Freddie Mac. The government-sponsored enterprises stopped purchasing Alt A mortgages at the beginning of this year but they still have large portfolios of the loans. According to an Inside B&C Lending analysis of the GSEs’ earnings... [Includes one chart] Read More

Complaints About New HOEPA Rules Continue

Rules recently implemented by the Federal Reserve for higher-priced mortgages are constraining lending beyond the subprime market, according to the American Bankers Association. In a recent letter to the Fed, Robert Davis, an executive vice president at the ABA, asked the regulator to “reexamine the applicability of the new rules” in light of “market disruptions” caused by... Read More

Outlook Dim for Jumbo MBS Performance

The delinquency rate on securitized jumbo mortgages has doubled in the past year, with little relief for jumbo borrowers in sight, according to Trevor Harris, an analyst at Moody’s Investors Service. He warned that most jumbo borrowers will not qualify for government-sponsored modification programs. “Until the economy sees a substantial rebound, they will be left with homes they cannot afford... Read More

PennyMac Waiting for Non-Agency Price Drop

Investors in distressed mortgages are currently over-valuing the collateral, according to executives at PennyMac Mortgage Investment Trust. “While some market participants have been willing to accept lower yields and bid more aggressively, we still believe that it is in the best interest of our shareholders over the long term to remain patient in... [Includes one graph] Read More

News Briefs

The U.S. Department of Justice recently issued its first fair lending settlement... Borrowers’ demands for nontraditional mortgages generally remained unchanged in the three months ending with October... Prices on subprime mortgage-backed securities issued after 2004 continue to stabilize, according to Fitch Solutions... The three major rating services all recently released separate guidelines regarding loss severities and expected... Read More

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