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Inside Nonconforming Markets

January 8, 2010

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Option ARM Delinquency Rates Doubled In a Year; Mod Performance Improving

The serious delinquency rate on option ARMs serviced by banks and thrifts more than doubled in the third quarter of 2009 compared with the same period in 2008, according to federal regulators. The banks and thrifts surveyed by the Office of the Comptroller of the Currency and the Office of Thrift Supervision account for most of the estimated $500 billion in outstanding... [Including one chart] Read More

Changes to Federal Mod Programs Anticipated

The federal government will likely enhance existing modification programs this year to address the failures of the Home Affordable Modification Program, according to industry participants. A panel of mortgage industry experts is reportedly advising the Treasury Department on what to include in a potential so-called HAMP2. The new program will likely address principal forgiveness... Read More

Non-Agency MBS Outlook Poor for 2010

Issuance of non-agency mortgage-backed securities will remain limited in 2010, and the sector’s performance will continue to decline, according to analysts at Fitch Ratings. Non-prime originations have been almost non-existent since the evaporation of a securitization market for such loans. “While restoring investor confidence in an asset class that badly underperformed in recent... Read More

Fed Proposal Could Overstate High-Cost Loans

A proposal by the Federal Reserve to increase disclosures on closed-end mortgages could inflate the number of mortgages subject to strict regulations and sway borrowers away from ARMs, according to lenders. State regulators generally favor the proposal, suggesting that borrowers and lenders would benefit from the changes. In July, the Fed detailed its proposed... Read More

GSEs Account for Most Non-Prime HAMP Mods

Fannie Mae and Freddie Mac account for the majority of Home Affordable Modification Program activity on non-prime mortgages. However, they also seem to lag behind the modification actions taken on non-agency mortgage-backed securities and portfolio mortgages. According to data recently released by the Office of the Comptroller of the Currency and the Office of... [Includes one chart] Read More

Subprime Foreclosure Mediation a Lengthy Process

Mandatory mediation conferences for subprime borrowers facing foreclosure in New York City have been ineffective, according to an analysis of the proceedings. The conferences are supposed to help facilitate loan modifications, but servicers, borrowers and the courts were generally unprepared for the conferences, causing lengthy delays. Beginning in September 2008... [Include one graph] Read More

Boston FHLB Tightens Non-Agency Policies

The Federal Home Loan Bank of Boston recently increased the haircut it requires member institutions to take on subprime and nontraditional mortgages posted as collateral for FHLBank advances.Lenders classified as “blanket” members that do not provide loan-level data have to take a 28 percent haircut on nontraditional and 40 percent reduction on subprime mortgages, up from 25 percent... Read More

News Briefs

The Treasury Department is reviewing all non-agency Home Affordable Modification Program... The TCW Group this week withdrew from the legacy securities Public-Private Investment... Investors are currently bidding on Thornburg Mortgage’s $11 billion servicing... A federal judge this week dismissed the City of Baltimore’s lawsuit against Wells Fargo... Outstanding Alt A mortgage-backed securities are expected to return to... Read More

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