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Inside Nonconforming Markets

August 20, 2010

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Resurgence of Non-Agency Originations and Securitization Tied to the Future of the GSEs

Any resurgence in non-agency mortgage-backed security issuance will have to wait until the federal government decides what to do with Fannie Mae and Freddie Mac, according to industry experts. Panelists at a recent conference hosted by Moody’s Investors Service on the future of mortgage finance projected... [Includes one graph] Read More

Redwood Aiming for Jumbo MBS Issuance in 4Q10

Redwood Trust is stockpiling jumbo mortgages with the hopes of another non-agency mortgage-backed security issuance in the fourth quarter of this year. The real-estate investment trust is looking to invest in first-loss tranches of non-agency jumbo MBS and created a conduit business to... Read More

GSEs Still Purchasing Some Alternative Mortgages

While Fannie Mae and Freddie Mac largely stopped acquiring subprime and Alt A mortgages by 2009, the government-sponsored enterprises have not completely abandoned the alternative mortgage sector. The volume of purchases by the GSEs of ARMs and investor mortgages is below peak levels, but... [contains one data chart] Read More

New Disclosures Required for Alt Mortgages

The Federal Reserve this week issued an interim rule that revises the disclosure requirements for alternative mortgages. The Fed also proposed stronger disclosure-related protections for borrowers and issued a final rule requiring the disclosure of the sale or transfer of a borrower’s mortgage. The rules revise... Read More

Fed Proposes New Rules for Reverse Mortgages

The Federal Reserve this week proposed tough new rules for reverse mortgages as well as additional disclosure requirements for the mortgages as part of a revision of its Regulation Z. The Fed said the proposed rules for reverse mortgages were necessary because disclosures alone were not sufficient to protect borrowers from... Read More

Fed Issues Wide-Ranging Ban on YSPs

The Fed issued a final rule this week prohibiting yield-spread premiums – a loan originator compensation method that consumer advocates claim helped fuel subprime lending. The ban applies to most mortgages, higher-priced or otherwise. The final rule implements provisions in the Truth in Lending Act and Home Ownership and Equity Protection Act and applies to... Read More

Fed Proposes Revision of ‘Higher-Priced’ Definition

The Fed this week proposed revising the definition of a “higher-priced mortgage” in an effort to ensure that prime loans are not improperly classified as such loans and subject to tougher rules under the Home Ownership and Equity Protection Act. The Fed said it proposed the change due to... Read More

Fortress to Acquire American General Finance

American International Group announced last week that it will sell 80 percent of its subprime mortgage business, American General Finance, to Fortress Investment. “AGF is an exceptional franchise with a strong management team and a leading platform for serving the financing needs of... Read More

Fed Proposes Looser Escrow Rules for Jumbo Mortgages

The Federal Reserve this week proposed loosening required escrow standards for jumbo mortgages. The Fed proposed that lenders must establish an escrow account for property taxes and insurance for jumbo mortgages with an annual percentage rate of 2.5 percent and above the applicable prime offer rate (APOR). Currently, the escrow requirement applies to... Read More

News Briefs

Fewer than half of the respondents to the Federal Reserve’s senior loan officer survey for the second quarter of 2010 indicated that their bank originated nontraditional mortgages. Of 22 banks offering nontraditional mortgages, nearly all reported... Read More

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