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Inside Nonconforming Markets

February 5, 2010

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HAMP for Second Liens to be a Major Factor In Non-Agency MBS Loss Mitigation Efforts

Loss mitigation efforts to address second liens advanced significantly last week as Bank of America became the first servicer to agree to join the second-lien component of the Home Affordable Modification Program. The majority of first liens in non-agency mortgage-backed securities have second liens behind them, according to estimates by Amherst Securities Group... [Includes one chart] Read More

Non-Agency Jumbo Growth Predicted for 2010

Originations of non-agency jumbo mortgages could increase in the second half of this year, according to recent projections by Bank of America Merrill Lynch Global Research. However, performance in the sector declined significantly in 2009 after holding up better than other non-agency products in recent years. The BofA analysts expect $102 billion in jumbo originations in 2010, accounting for... Read More

New HAMP Documentation Policy Matches Ocwen

Documentation adjustments made last week to the Home Affordable Modification Program endorse the practices of non-prime servicer Ocwen Financial. The Treasury Department said servicers must obtain key documents from borrowers before a HAMP evaluation can begin, no longer allowing for verbal information. “This more robust requirement of up-front documentation will make it easier and... Read More

OCC Prefers Underwriting Rules to Risk Retention

Comptroller of the Currency John Dugan this week urged the Obama administration to prescribe minimum underwriting standards for mortgages in lieu of mandated risk-retention for issuers of mortgage-backed securities. Dugan detailed his plan at the American Securitization Forum’s annual conference. “While lax underwriting is plainly a fundamental problem that needs to be addressed... Read More

Non-Agency MBS Dominate Early PPIP Purchases

Non-agency mortgage-backed securities account for approximately 87 percent of the purchases made by funds participating in the legacy securities Public-Private Investment Program. Meanwhile, critics warn that the Treasury Department has not done enough to regulate conflicts-of-interest for funds participating in the program. The Treasury last week reported that the total... [Includes one graph] Read More

PennyMac Laments Lack of Performing Assets

In its first five months of operating as a publicly traded real-estate investment trust, PennyMac Mortgage Investment Trust has been unable to turn a profit. PMT posted a $1.88 million loss for the period, including a $1.15 million loss in the fourth quarter of 2009.Stanford Kurland, chairman and CEO of PMT, said the REIT has focused on expanding operational... Read More

Option ARM Problems Far From Finished

Already high delinquency rates on option ARMs are expected to increase due to exceptionally high negative equity, according to Moody’s Investors Service. More than 70 percent of option ARMs securitized between 2005 and 2007 were made to borrowers in California, Florida, Arizona and Nevada, states that have suffered home price declines of close to 50 percent... [Includes one chart] Read More

News Briefs

State Street Bank and Trust agreed to a settlement with the Securities and Exchange Commission this... The Obama administration’s proposed budget for fiscal year 2011 could increase the costs borrowers... Of the 17 banks surveyed by the Federal Reserve that offer nontraditional mortgages... Read More

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