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Inside Nonconforming Markets

October 1, 2010

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Risk Retention on Non-Agency MBS Required Beginning in January 2011 Due to FDIC Rules

The Federal Deposit Insurance Corp. seems to have won the race among federal regulators to set risk-retention requirements for non-agency mortgage-backed securities. Beginning Jan. 1, 2011, insured depository institutions that issue non-agency MBS must retain a five percent share of the issuance, according to... Read More

Dodd-Frank Underwriting Rules to Start by 2014

The announcement last week of the Bureau of Consumer Financial Protection’s designated transfer date provides some guidance on when non-prime mortgage regulations must be implemented. While regulations relating to securitization have to be implemented by 2012, new underwriting standards do not have to be in place until... Read More

GSE Reform Intertwined with Non-Agency MBS

Eventual reform of the government-sponsored enterprises will have a profound effect on the non-agency mortgage-backed security market, according to panelists at a House Financial Services Committee hearing this week on GSE reform proposals. Tom Deutsch, executive director of the American Securitization Forum, urged Congress to... Read More

Second-Mortgage Performance Improves in 2Q10

The overall performance of second mortgages held by banks and thrifts improved slightly in the second quarter of 2010 compared with the previous quarter, according to federal regulators. Banks and thrifts have also recognized and reserved for a sufficient amount of losses on... [Includes one data chart] Read More

FTC Proposes Ban on Deceptive Non-Prime Ads

The Federal Trade Commission last week proposed tighter regulations for mortgage advertisements, including a ban on tactics used to push non-prime mortgages. The proposal would allow the FTC and states to seek civil penalties for violations of the rules. The rules would apply to lenders, brokers, servicers, real estate agents and... Read More

Few Higher-Priced Mortgages Under New Rules

A change in the definition of “higher-priced loans” last year resulted in reduced market share for such mortgages, according to Home Mortgage Disclosure Act data released last week by the Federal Reserve. Industry participants had warned that the revised proxy for subprime mortgages would capture an increased share of... [Includes one graph] Read More

Joint Center Defends Non-Prime Lending, Products

Non-prime lending and nonconforming mortgage products were put to an unfair test a few years ago and deserve a second chance, according to a report released this week by the Joint Center for Housing Studies of Harvard University. Eric Belsky, managing director of the Joint Center, and Nela Richardson, a researcher at the Joint Center, authored... Read More

GAO: Non-Prime Problems Far from Finished

While non-prime foreclosures decreased last year, delinquencies continued to rise, signaling ongoing problems in the non-prime market, according to a report released last week by the Government Accountability Office. “The persistently weak performance of non-prime loans suggests that... Read More

News Briefs

Congress this week approved legislation to keep the conforming loan limit at $729,750 in high-cost areas through September 2011. Without the extension, the loan limit would have fallen to $625,500 at the beginning of 2011. The extension was included in H.R.3081, a continuing appropriations bill. The Senate approved... Read More

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