Federal and state enforcement agencies late last week launched a broad new initiative to investigate and develop litigation on fraud and misconduct in the non-agency MBS market, issuing civil subpoenas to 11 financial companies. The RMBS Working Group is being co-chaired by five officials: two assistant attorneys general in the Justice Department, the head of enforcement at the Securities and Exchange Commission and state attorneys general from New York and Colorado. Some 55 DOJ officials are participating, including 15 attorneys and 10 Federal Bureau of Investigation agents, with 30 more attorneys...
While a major regulatory concern of the past few years the risk-retention rule has yet to be resolved, the industry is squaring its shoulders for new challenges: the so-called Volcker Rule, a proposal on conflicts of interest in securitization and new bank capital requirements regarding market risk. These projects could do enormous or irreparable damage to the industry, and entire sectors of the industry could be lopped off, said Tom Deutsch, executive director of the American Securitization Forum, during the ASF conference last week in Las Vegas. Only about one eighth of the regulatory requirements...
The Obama administration late last week announced that it is extending its Home Affordable Modification Program for another year and sweetening the inducements to get investors to agree to principal reduction loan mods. MBS analysts generally grade the changes as a positive for the non-agency MBS market, but the impact on Fannie Mae and Freddie Mac securities may depend on whether the government-sponsored enterprises agree to principal reductions. The revised HAMP program will now be available for investor-owned mortgages, and it will feature a revised debt-to-income calculation taking into...
MBS and ABS markets in the U.S. are increasingly being shaped by global forces, from the impact of the European debt crisis to the worldwide adoption of new international regulatory standards and the surge in Euro securitizations thats taking up some of the slack from the depressed U.S. non-agency MBS sector. There was an unmistakable international flavor to the ASF 2012 conference sponsored by the American Securitization Forum in Las Vegas this week. A significant number of the more than 5,000 attendees an ASF record came from outside the U.S., and numerous panels were devoted to global issues...
The U.S. residential housing market used to provide the lions share of business for non-agency asset securitization, but experts at this weeks American Securitization Forum say it will take years for the sorely damaged housing market to recover and the nationalized mortgage finance system to be overhauled. Supply and demand fundamentals in the housing market are severely broken, said Laurie Goodman, senior managing director at Amherst Securities Group. There are some 2.9 million borrowers in foreclosure or more than 12 months delinquent, plus another 400,000 units of real estate-owned properties. With...
New issuance of non-mortgage ABS increased by 15.8 percent from 2010 to 2011, according to a new Inside MBS & ABS ranking and analysis. But it was a rebound from a record low level, and the market is less than half the amount typically produced before the financial market collapse in 2008. A total of $126.8 billion of non-mortgage ABS were issued in the U.S. last year, and over half of that amount was in the auto ABS sector. Securities backed by loans and leases to vehicle users rose 22.4 percent from 2010 levels, although the sector was down slightly in the fourth quarter. Overall...(Includes two data charts)
With a price tag of $100 billion required to forgive the principal of underwater Fannie Mae and Freddie Mac mortgages, the best bet for the government-sponsored enterprises and for taxpayers is for the GSEs to pursue a policy of principal forbearance, the Federal Housing Finance Agency said. This week, the FHFA released its analysis conducted in 2010 following numerous requests and an eventual threat of subpoena by House Democrats. The agencys number crunchers found that principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure. As of June 30, 2011, Fannie and Freddie...
Redwood Trust is set to issue a $415.73 million non-agency jumbo mortgage-backed security by the end of this month, continuing its run as the only issuer of new non-agency MBS. Unlike its three previous securities issued in 2010 and 2011, the real estate investment trust has faced little criticism from rating services regarding the characteristics of the new MBS. Fitch Ratings and, in a first, Kroll Bond Rating Agency are set to place AAA ratings on Sequoia Mortgage Trust 2012-1, which includes a pool of 30-year fixed-rate mortgages, ARMs and 15-year fixed-rate mortgages, 446 loans in all. Standard & Poors and Moodys Investors Service were critical of Redwoods previous deals and will not place ratings on the new issuance ...
Redwood Trust is getting ready to issue its first jumbo MBS of 2012 backed by a more diverse pool of prime mortgages than the companys previous transaction. Fitch Ratings said it plans to give AAAsf ratings to the senior bonds in Sequoia Mortgage Trust 2012-1, which will enjoy 8.25 percent credit enhancement from subordinate classes. Thats a stiffer credit enhancement level than on Redwoods two jumbo deals from last year, which had 7.40 percent and 7.50 percent support levels at issuance. Two factors appeared to play the biggest part in the higher credit support levels: more diverse collateral and more...
The aging of the subprime and prime mortgages that back the shrinking universe of non-agency MBS is gradually changing the performance trends of these loans, according to analysts speaking at a Fitch Ratings conference in New York this week. Selection bias changes in the composition of the remaining subprime and prime mortgage pools as borrowers default or refinance will mean different things for different asset classes, but differences between the two will likely become less pronounced over the next year, analysts said. Grant Bailey, a managing director at Fitch, explained that in many ways...