Issuers of non-agency MBS and agency mortgage sellers have addressed most of the legacy representation and warranty issues that have bedeviled the market for the past few years, according to industry analysts. However, repurchase and buyback issues haven’t been completely resolved as investors and regulators make last grasps at recoveries. Analysts at Compass Point Analytics & Trading estimated that the total losses incurred for rep-and-warrant claims from Fannie Mae, Freddie Mac, the Federal Housing Finance Agency, the FHA and non-agency MBS investors by publicly traded U.S. originators still in existence will total $89.0 billion. The analysts said lenders have charged off or reserved $88.0 billion for such losses. Compass Point said...

Ocwen Financial announced late last week that its planned purchase of mortgage servicing rights on a $39.2 billion portfolio of mortgages from Wells Fargo is on “indefinite hold” due to a request and scrutiny by the New York Department of Financial Services. Industry participants suggest that delays in servicing transfers due to third parties are common and the deal with Ocwen, which largely consists of mortgages in non-agency MBS, will be completed. “Ocwen will continue to work closely with the NYDFS to resolve its concerns about Ocwen’s servicing portfolio growth,” the servicer said. The NYDFS raised concerns that Ocwen doesn’t have enough capacity to handle the significant portfolio growth experienced by the servicer in recent years. Certain nonbank servicers are getting...

The jumbo mortgage-backed security market was dormant for over two months, but within the past 14 days, Credit Suisse issued a $287.42 million deal and JPMorgan Chase started shopping a $356.39 million issuance. That’s not to say the jumbo MBS market is back to full strength. The two deals have some unique characteristics, and banks still maintain their dominance over nonbank aggregators of jumbos. Officials at American Capital Mortgage Investment said jumbo MBS issuance has plenty of potential ...

Certain nonbank servicers are getting “too big, too fast,” Ben Lawsky, superintendent of the New York Department of Financial Services, said in a speech this week. The remarks came after the NYDFS halted the transfer of mortgage servicing rights with an unpaid principal balance from Wells Fargo to Ocwen Financial. Lawsky said state regulators and servicers need to make sure that transfers of servicing to nonbanks don’t put borrowers at risk. He raised particular concerns about staffing levels at nonbanks, with ...

Ocwen Financial announced last week that its purchase of mortgage servicing rights from Wells Fargo is on “indefinite hold” due to a request from the New York Department of Financial Services. While some have suggested that the deal for servicing on mortgages with an unpaid principal balance of $39.2 billion won’t be completed, officials at nonbanks note that delays on servicing transfers due to third parties are common. In recent years, the time required to fulfill contractual conditions from initial closing ...

Investors hoping to cash in on some of the huge returns realized by speculators in legacy nonprime MBS likely have missed the boat. Moreover, principal reductions on the remaining underlying loans are now deemed a credit negative. Trading in on vintage non-agency securities has been light of late. According to a recent report from Bank of America Merrill Lynch, the rally in such securities “has reached the ninth inning.” BAML notes...

Although the city of Richmond, CA, is still toying with the idea of using eminent domain to seize underwater mortgages out of non-agency MBS trusts, it has yet to receive final approvals to do so. Moreover, even though speculation is mounting that its “partner” in the controversial tactic, Mortgage Resolution Partners, might be going away, the city’s mayor said she hasn’t given up. In an interview with Inside MBS & ABS this week, Mayor Gayle McLaughlin noted that “Eighteen elected officials I have talked to have shown an interest” in the concept. Those officials include representatives from San Pablo, CA, San Francisco, and smaller cities around Los Angeles. She also has spoken with officials in Irvington and Newark, NJ. Wall Street has lobbied...

Wall Street generated $165.66 billion of new non-mortgage ABS during 2013, a sturdy 12.7 percent increase over the previous year and the best annual production volume since 2008, according to a new analysis and ranking by Inside MBS & ABS. ABS issuance fell off in the fourth quarter of 2013, dropping 10.4 percent from the third quarter, as all the major asset classes saw slowing volume. The $37.82 billion of new ABS generated in the final three months of 2013 was slightly below the second quarter, but it was above the level set in the third and fourth quarters of 2012. Vehicle-finance ABS turned in...[Includes two data charts]

Investors in non-agency MBS continue to push for increased transparency on both vintage securities and new issuance. Issuers suggest that they want to provide additional information to investors but costs and regulatory issues have prevented adequate communication. A significant number of investors attending the ABS Vegas conference last week said bondholder communication on non-agency MBS is rarely adequate. The conference was sponsored by the Structured Finance Industry Group and Information Management Network. Bill Moliski, a managing director at SG Capital, an investment management firm, has...

A number of structured-finance products outside of new non-agency MBS rebounded from the financial crisis, offering stronger returns than new non-agency MBS, and often with less risk. Among the myriad of products investors at the ABS Vegas conference last week said they prefer to new non-agency MBS were collateralized-debt obligations backed by trust-preferred securities, collateralized-loan obligations, commercial MBS, rail car ABS and container ABS. “There’s...