Witnesses testifying before the Senate Banking, Housing and Urban Affairs Committee this week had diverse opinions about the effectiveness of the Dodd-Frank Act to protect investors, but one thing was clear: without the money, the Securities and Exchange Commission will never be able to get anything done. Republicans and Democrats in the committee were not-so-surprisingly at odds over the now one-year-old law. Sen. Tim Johnson, D-SD, urged members of the committee and the witnesses present to “give these provisions a chance to work.” Meanwhile, Sen. Richard Shelby, R-AL, argued that Dodd-Frank “has not ...

House Republicans this week pushed through six more bills designed to wind down Fannie Mae and Freddie Mac but not before Democrats debated and managed to pass a couple of speed-bump amendments. The focus in the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises thus far has been on an assortment of narrow measures that would continue to squeeze Fannie and Freddie’s activities and increase GSE oversight while in conservatorship. During a markup this week, Democrats and some disaffected GOP subcommittee members spent a substantial amount of ...

Fitch Ratings has updated its criteria for analyzing non-agency MBS for potential rating changes as well as criteria for determining whether cash flows from underlying residential mortgages are adequate to make payments on the rated non-agency MBS. Under the latest change to its surveillance process for non-agency MBS, Fitch said it will consider loan concentration risk as part of its surveillance analysis of pools that have a small number of mortgages remaining and lack certain structural features, such as sequential payment distribution or a subordination floor. Fitch’s latest criteria change will address ...

Investors who lost money in Countrywide Financial Corp. MBS after the 2007 market collapse suffered a possible blow of hundreds of billions of dollars in a Los Angeles court case last week. After initially seeking $351 billion in a lawsuit, the case was narrowed to $2.6 billion in bonds. U.S. District Judge Marianna Pfaelzer in the Central District of California had already narrowed the case once, saying investors can only sue for their own losses, not those related to all offerings that fell under the same guidelines. This ruling reduced ...

Federal Reserve Chairman Ben Bernanke this week endorsed the reduction in high-cost conforming loan limits set to be implemented in October. The Mortgage Bankers Association, meanwhile, called for an extension of the existing loan limits through the end of 2012. Major banks and other non-agency players are eagerly anticipating the decline in the top loan limit from $729,750 to $625,500. A number of banks have indicated that they are ready and willing to make non-agency jumbos. In separate testimony this week before two committees of Congress, Bernanke said lowering ...

New Penn Financial is offering mortgages with balances of up to $2.0 million along with a number of other non-agency lending options, the firm revealed this week. Shellpoint Partners, a specialty finance company, recently acquired New Penn, which previously focused predominantly on agency offerings. “There is a large segment of credit-worthy borrowers who cannot qualify for financing due to overly restrictive agency and government guidelines,” said Bob Wexler, vice president of New Penn’s financial services division. “We’re a portfolio lender focused on ...

The loss mitigation flexibilities enjoyed by banks and thrifts servicing mortgages held in portfolio have not led to markedly stronger performance compared with mods allowed by the more stringent government-sponsored enterprises. New data released this month by the Office of the Comptroller of the Currency and the Office of Thrift Supervision suggest that portfolio servicers’ emphasis on principal reduction has had limited benefits on overall mod performance. Banks and thrifts serviced $1.69 trillion in portfolio mortgages at the end of the first quarter of 2011, according to the Inside Mortgage Finance Bank Mortgage Database. The portfolio holdings were down by ... [contains one data chart]

Mortgage servicing, particularly by non-banks, will be a top priority for the Consumer Financial Protection Bureau, according to officials at the new regulator. The CFPB will take over authority to administer federal consumer financial protection laws on July 21. About half of the top 20 subprime servicers, and two of the top five – Ocwen Financial and American Home Mortgage Servicing – are non-banks. At a joint hearing last week by two subcommittees of the House Financial Services Committee, Raj Date, associate director of research, markets and regulations at the CFPB, said the agency “will use ...

While industry participants continue to debate the merits of high downpayment standards for qualified residential mortgages, the risk-retention treatment of seasoned securities and loans is also a major concern. In comment letters submitted to federal regulators, the American Securitization Forum and the Securities Industry and Financial Markets Association each called for time limits on the proposed risk retention required for non-QRMs. Under the current risk-retention proposal, SIFMA said financial institutions would be compelled to ...

Servicers have made little progress with three auxiliary programs to the Home Affordable Modification Program, according to newly available data. Activity remains limited in the Principal Reduction Alternative, Second Lien Modification and Home Affordable Foreclosure Alternatives programs. Last week, for the first time, the Treasury Department detailed activity in the non-agency exclusive PRA program. Between the program’s announcement in March 2010 and May 2011, some 21,299 PRA trial mods were started. The activity is relatively low compared with ... [includes one data chart]