Wells Fargo claimed partial victory after a Manhattan federal district court judge dismissed certain claims against it in a government lawsuit alleging the bank lied about the quality of defaulted mortgages insured by the FHA. District Court Judge Jesse Furman ruled that legal injury claims based on events that happened prior to June 2009 were time-barred and that the government had waited too long to file a lawsuit. He also threw out claims of negligence and unjust enrichment. On the other hand, Furman let stand claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which the ...

HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

Investors are eager to get their hands on upcoming risk-sharing deals from Fannie Mae and Freddie Mac even though Freddie’s recent deal was unrated. According to interviews with investors in Freddie’s $500 million Structured Agency Credit Risk bond, 50 different companies bought into the deal with “at least 20 different investors in each tranche,” according to confidential research on the transaction supplied to Inside MBS & ABS. “Word has gotten around...

The Federal Home Loan Bank of Chicago has announced a partnership with Ginnie Mae to issue securities guaranteed by the secondary market agency and backed by home loans originated by member financial institutions. The new conduit product, “MPF Government Mortgage-Backed Securities,” provides another secondary mortgage market outlet for lenders originating mortgages insured by the FHA or guaranteed by the VA or the Rural Housing Service. Low-volume lenders that currently lack direct access to the secondary market are expected to benefit from the new FHLBank program. MPF GMBS would allow lenders to ... [1 chart]

Real estate investment trusts that focus on investing in residential MBS continued to see declines in their portfolios during the second quarter, but their earnings outlook may have improved somewhat this week, analysts say. Residential mortgage REITs held a combined $327.3 billion of single-family MBS as of the end of the second quarter, according to a new market analysis by Inside MBS & ABS. That was down 5.4 percent from the previous quarter, and it was the third straight quarterly decline since REIT MBS holdings reached a high of $374.2 billion in September 2012. REIT MBS holdings are...[Includes one data chart]

Now that PennyMac Mortgage Investment Trust has put together its first jumbo MBS, can a security collateralized by non-performing loans be far behind? “We’ve looked at it,” said a company spokesman. “We’d like to do one down the road, but we’re not there yet. For us, it will happen when the execution of NPLs is more economical.” One thing is...

Commercial banks and savings institutions held a total of $1.528 trillion in residential MBS in portfolio as of the end of the second quarter, down 2.1 percent from the end of March, according to a new analysis and ranking by Inside MBS & ABS. Combined bank/thrift investment in MBS has been under steady pressure since the Federal Reserve resumed buying massive amounts of new agency MBS. The second-quarter decline brought the industry’s total MBS portfolio to its lowest point in two years. The one area where banks and thrifts have beefed up...[Includes two data charts]

Banks, investors and their allies opposed to the City of Richmond, CA, using eminent domain to seize underwater mortgages, refinance and repackage them for sale to other investors were scheduled to have their first hearing in court at week’s end. Current investors, through trustees Wells Fargo and Deutsche Bank AG, have sued in U.S. District Court to block the plan. Parties in Wells Fargo Bank, National Association, as Trustee, et al., plaintiffs, vs. City of Richmond, California, a municipality; and Mortgage Resolution Partners LLC, defendants, Case No. CV-13-3663-CRB, were to appear Sept. 12 and Sept. 13, before Judge Charles Breyer of the U.S. District Court for the Northern District of California in San Francisco. The Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce jointly submitted...

FeatherStone Investment Group has entered the fledgling real-estate-owned-to-rental securitization sector with a new program that allows broader investor participation in the transaction. Other securitized REO-to-rental deals only pay investors coupon and principal cash flows derived from rents on the properties, the company noted. FeatherStone’s program, on the other hand, would allow investors to participate in both the immediate rental cash flow as well as the potential capital gains from the sale of the properties in the deal. FeatherStone’s deal will be financed...

The Federal Housing Finance Agency is expected to announce lower loan limits for Fannie Mae and Freddie Mac sometime this fall, a move that warms the hearts of non-agency jumbo originators everywhere, but is causing consternation among certain factions of the market, in particular, Realtors and the California Mortgage Bankers Association. “Any reduction in the loan limit will have a huge impact on the California market,” said Susan Milazzo, executive director of the CMBA. “We’re a high-cost state.” The trade group executive told...