The challenges confronting the recovery of the non-agency MBS market are many, but legacy issues, such as representations and warranties, are the cause of huge frustration in the industry, according to panelists at the American Securitization Forum this week. “Some of these legacy issues have very far-reaching tentacles,” observed Mani Sabapathi, principal at Prudential Fixed Income. The housing finance world has been bracing for the coming risk-retention rule with great apprehension, he said, raising the possibility that reps and warrants could be included as a part of it. “I think it can be an important aspect to the extent that if you have these loans that don’t meet...

The securitization industry is largely supportive of fails-charge recommendations by the Treasury Markets Practice Group to help reduce fails in the agency debt securities and agency MBS markets, but did offer a number of “constructive considerations” for the group to review. The Securities Industry and Financial Markets Association told the TMPG, an advisory group of market representatives sponsored by the Federal Reserve Bank of New York, that its members share concerns about elevated levels of settlement fails in MBS markets, which the TMPG is trying to address in the recommendations it released in late April. “SIFMA members agree that...

The government’s top securities industry regulator rejected some of the pushback against the huge volume of new regulations for the MBS and ABS market, while reporting that officials are working to address some major concerns as they finalize the rules. “Efforts to implement the reforms that would bring investors back to the markets are being met with strong and what I believe to be short-sighted resistance,” said Mary Schapiro, chairman of the Securities and Exchange Commission, during a speech at this week’s American Securitization Forum annual meeting. “In the aftermath of the crisis, would-be investors are waiting for needed reforms in...

Real estate investment trust Walter Investment Management Corp. announced late last week its closing of a $102 million private placement of non-agency MBS. The purpose of the transaction is to help pay for Green Tree Credit Solutions, which Walter Investment acquired in March for $1.065 billion. Green Tree carries a $37 billion servicing portfolio, mostly for other investors, according to Inside Nonconforming Markets, an affiliated newsletter. The notes were issued by WIMC 2011-1, which is a recently-formed statutory trust sponsored by Walter Investment. “As we near our anticipated early third quarter completion of...

Although the dollar volume of MBS and ABS deals rated by Standard & Poor’s in the first quarter was down from the same period in 2010, the company ranked as the top rating service in both markets, according to a new analysis by Inside MBS & ABS. S&P rated $5.80 billion of non-agency MBS during the first quarter, down 61 percent from its volume in early 2010. But that amounted to 66 percent of total issuance in the market – more than any of its competitors. Overall non-agency MBS issuance was down 50 percent from year-ago levels. Moody’s Investor Services ranked second with $4.5 billion in rated MBS, just over half of the market in... [Includes one data chart]

It was a bad litigation week for MBS issuers after a federal regulator and a federal judge filed lawsuits and certified a class action, respectively, on behalf of institutional investors that lost billions of dollars when the collateral underlying the securities dropped in value. On June 20, the National Credit Union Administration, acting as liquidating agent for five failed credit unions, filed lawsuits against JPMorgan Securities and RBS Securities for allegedly misrepresenting the risks of MBS investments and systematically disregarding underwriting guidelines. The NCUA is seeking to recover more than $800 billion in MBS losses that led to...

Mortgage servicers are being squeezed by inadequate compensation, intense scrutiny and a surge of new regulation, but Fannie Mae and the Treasury Department say they are trying to even the score. Servicers no longer see their job as financially rewarding and have been leaving their positions accordingly, claimed Diane Pendley, managing director of Fitch Ratings, during a panel session at this week’s annual meeting of the American Securitization Forum. “We’re seeing them fighting – they’re coming out swinging, just really to get some balance,” echoed Gwen Muse-Evans, vice president and chief risk officer at Fannie Mae. “There’s definitely a perception that...

The Federal Housing Finance Agency is working on the double to come up with written policies and procedures for its consumer complaints process, as well as a thorough assessment of the staff and resources needed to implement the new functions by the end of the year following a very public rebuke by the Finance Agency’s watchdog.In a report released this week, the Office of the Inspector General of the FHFA said its audit of Freddie Mac and Fannie Mae’s regulator found the Finance Agency’s oversight of the receipt, processing and disposition of consumer complaints to be a “significant deficiency” in its internal controls.

While overall governance of the 12 Federal Home Loan Banks passed muster in 2010, the Federal Housing Finance Agency’s annual examination identified a number of “shortcomings” that should be addressed during the coming year.“In 2010, FHFA has a concern about the level of experience and expertise of certain executives and executive turnover at some FHLBanks,” said the FHFA’s annual report to Congress. “While board and management oversight generally improved during 2010 at most FHLBanks, there remains room for improvement at some FHLBanks.”

Earnings reports from nine mortgage banking operations suggest that servicing operations played a major part in the industry’s sharp downturn in profitability during the first quarter. But a new Inside Mortgage Trends analysis also identifies weakness in loan production operations and declining origination volume as key factors. The nine lenders, including the three largest firms and seven of the top 10 originators, posted a combined $1.726 billion in net servicing income during the first quarter of this year. That was down ... [includes one data chart]