The question of whether the FHA should allow the refinancing of underwater mortgages seized through eminent domain has reemerged as a key issue following a recent decision by the city of Richmond, CA, to use its authority to take over distressed mortgages for restructuring. There is a new twist to the question, however. Could FHA’s refusal to refinance such mortgages be deemed discriminatory against cities and homeowners if eminent domain programs meet the requirements of the FHA Short Refinance program? Is that tantamount to redlining? A top executive of Mortgage Resolution Partners, which developed the eminent domain strategy to help underwater homeowners at risk of foreclosure, said ...
Ginnie Mae has changed certain office names to reflect the activities and responsibilities of the office more accurately. For example, the Office of Mortgage-Backed Securities is now known as the Office of Issuer and Portfolio Management. The Office of Program Operations name also has been discarded in favor of the Office of Securities Operations. The MBS Guide, including the summary of addresses and all forms and appendices, has been updated to reflect the office name changes. In addition, the address for overnight delivery of new MBS issuer applications ...
Fannie Mae, Freddie Mac and mortgage-backed securities trustees representing investors in non-agency MBS sued the city of Richmond, CA, this week to stop it from further implementing a plan to use eminent domain authority to seize and purchase performing underwater mortgages. Wells Fargo and Deutsche Bank, acting as trustees for a group of investors that includes BlackRock, Inc., Pacific Investment Management and the government-sponsored enterprises, filed the lawsuit in federal court in San Francisco at the behest of certificate holders. The plaintiffs are asking the court to declare the “Richmond Seizure Program” unconstitutional and in violation of California laws, and to order city officials to end the program. Securitizers and investors are...
A federal district court in New York last week ruled that a landmark discrimination lawsuit, the first to connect racial discrimination to the securitization of mortgage-backed securities, can move forward against Morgan Stanley. A July 25 ruling by the U.S. District Court for the Southern District of New York in Adkins v. Morgan Stanley denied in part the investment bank’s motion to dismiss the case, which alleges violations of the Fair Housing Act and the Equal Credit Opportunity Act. The putative class-action suit was filed...
Mortgage real estate investment trusts can draw some guidance from a recent private-letter ruling from the Internal Revenue Service on whether excess spread on mortgage servicing rights can be deemed as real-estate assets for REIT purposes. According to a recently released IRS private-letter ruling dated April 12, certain excess servicing rights would constitute a real-estate asset, and income from the spread would be treated as interest on obligations secured by mortgages on real property, for purposes of tax rules governing REITs. MSRs generally represent...
Freddie Mac this week issued the first in a series of planned transactions from the government-sponsored enterprises to share risk with the non-agency market. Industry analysts suggest that while the transaction represents a good value for investors, the audience for the transactions structured like a synthetic collateralized debt obligation is limited. The Structured Agency Credit Risk Debt Notes 2013-DN1 included a total of $500 million in two non-guaranteed tranches sold to investors with 10-year terms, according to non-agency market participants. The STACR reference pool consists...
Freddie Mac sold $500 million in non-guaranteed credit risk this week as part of an effort to eventually reduce the government-sponsored enterprises’ market share and help price their guaranty fees. While non-agency investor appetite for the transaction was strong, industry analysts suggest that the deal has limited usefulness for the long-term goals set by the Federal Housing Finance Agency. The Structured Agency Credit Risk Debt Notes Series 2013-DN1 included four tranches, all unrated. The two mezzanine ...
It’s no secret that the market for nonperforming mortgages has improved nicely this year, but now there are signs of life in the “re-performing” sector as well, especially among investors that hope to package and securitize the notes. According to Jeana Curro, director of agency MBS strategy for Royal Bank of Scotland, the re-performing MBS market is small, “although not insignificant.” But getting a true handle on MBS backed by re-performing loans can be...
Beginning Jan. 1, capital requirements for bank holdings of certain non-agency mortgage-backed securities will begin to increase. The changes were included in the Basel III reforms approved by federal banking regulators last week. The Basel III final rule includes the simplified supervisory formula approach in lieu of the use of credit ratings to determine capital requirements for holdings of non-agency MBS. The SSFA relies on the 90+ delinquency rate, risk weights of the underlying exposures ...
After long delays, Freddie Mac is close to selling a mortgage-backed security that will include non-agency risk-sharing features. The sale will be part of efforts by the two government-sponsored enterprises to test risk-sharing arrangements on at least $30 billion of business this year, as required by the Federal Housing Finance Agency. A Freddie spokesman said it is “premature” to comment on any deals, but those with knowledge of the pending issuance said the GSE hired Credit Suisse to help market the security ...
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
News Tailored to Your Needs
Get Focused Coverage
Inside Mortgage Finance's newsletters break the mortgage market down so you get the news and data you need most, whether it's total industry coverage or just the news related to securitization, regulation, profits or other specific topics.