The Treasury Department this week finished winding down its holdings of Fannie Mae and Freddie Mac MBS, claiming a positive return of $25 billion for the U.S. taxpayers from a market stabilization initiative launched in the teeth of the 2008 financial market meltdown. Treasury’s holdings of MBS issued by the two government-sponsored enterprises peaked at $197.6 billion in December 2009. “These MBS purchases helped preserve access to mortgage credit during a period of unprecedented market stress,” the agency said. The Federal Reserve agency MBS investment program was far bigger, peaking at $1.12...

The non-agency MBS market showed some spark as always-performing loans continued to improve in February and more nonperforming loans moved to the re-performing bucket, according to Amherst Securities Group’s latest analysis of the mortgage market. In its February report, Amherst said first-time defaults from the always-performing bucket dropped to 0.75 percent during the month from 0.82 percent in January. In dollar terms, new defaults constituted $4.0 billion, down from $4.4 billion the previous month, the firm reported. On a year-over-year basis, always-performing loans were down to $525.6 billion from...

Fannie Mae and Freddie Mac buyback demands on Countrywide mortgages were more than double the amount sought on any other lender, but the key reason is that Countrywide securitized a lot more loans than anyone else from 2006 through 2008. A new Inside Mortgage Finance analysis of representation and warranties disclosures made by the two government-sponsored enterprises shows that some $16.22 billion of Countrywide mortgages were subject to buyback demands, both before and after the company was acquired by Bank of America in 2008. In a distant second place was Wells Fargo...(Includes one data chart)

Observers in MBS and legal circles are closely watching how a federal judge will rule on a pending motion by UBS Americas to dismiss the mortgage securities lawsuit brought last summer by the Federal Housing Finance Agency on statute of limitations grounds and the ruling’s potential impact on other pending FHFA MBS litigation. The FHFA sued UBS in July and then filed a blizzard of 17 lawsuits against some of the industry’s biggest institutions, including Bank of America, Credit Suisse, JPMorgan Chase, Morgan Stanley and others, seeking tens of billions of dollars in damages incurred by Fannie Mae and Freddie...

A week after federal and state enforcement agencies launched a residential MBS investigative effort, reports have surfaced that Ally Financial, Bank of America, Citigroup, Deutsche Bank and Goldman Sachs are about to be sued by the Securities and Exchange Commission for allegedly misrepresenting the quality of mortgages they packaged and sold to investors. Officials at the SEC, which never confirms specific Wells Notices of impending legal action, declined to comment on the investigation, as did spokesmen for Ally, Citi and Goldman. Representatives from Bank of America and Deutsche Bank did not...

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 that’s 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 lion’s share of business for non-agency asset securitization, but experts at this week’s 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...

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 agency’s 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...