The chairman of the House subcommittee that oversees the GSEs unveiled a bill late this week that seeks to drastically overhaul the secondary mortgage market – without the need for Fannie Mae or Freddie Mac.The Private Mortgage Market Act would create a heavily regulated mortgage-backed securities market consisting strictly of private entities functioning without a federal guarantee, according to Rep. Scott Garrett, R-NJ.Garrett, who chairs the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, said the goal of his legislation is to facilitate continued standardization and uniformity, ensure rule of law and provide MBS investors with the necessary transparency and standardization to ensure “that a deep and liquid market develops” without Fannie and Freddie.

Despite a rare new issue backed by current production jumbo loans, the non-agency MBS market hit a record low in the third quarter of 2011. Just $1.86 billion of new non-agency MBS came to market in the third quarter, a significantly lower number than the previous low reached at the height of the financial crisis in the third quarter of 2008, when $2.15 billion of securities were issued. There was a huge fall-off in resecuritization activity. Just $301 million of these deals were issued in the third quarter, less than a tenth the volume in the previous three-month period. In addition to the...(Includes three data charts)

The performance of large mortgage servicers of non-agency residential MBS, including their ability to prevent or cure loan delinquencies, varied widely during the 12 months ending in June 2011, due in no small part to foreclosure moratoria imposed on some, but not all, servicers, according to Moody’s Investors Service. The company’s inaugural Servicer Dashboard report found that during the June 2010 to June 2011 period, JPMorgan Chase and Bank of America exhibited overall poor servicing performance in contrast to CitiMortgage, GMAC and Ocwen. A major impediment to Chase and BofA’s servicing performance, Moody’s noted, was the fact that...

“We have to reduce uncertainty to bring private capital back,” Shaun Donovan, secretary of the Department of Housing and Urban Development, said at the Mortgage Bankers Association’s annual convention last week in Chicago. Industry participants remain divided on if or when non-agency securitization will resume in a significant manner. Daniel Arrigoni, president and CEO of U.S. Bank Home Mortgage, said U.S. Bank and other lenders must think about developing non-agency securitization capabilities as the federal government works toward reducing its involvement in housing finance. ...

Acquisitions of large non-agency portfolios by Bank of America and JPMorgan Chase resulted in poor servicing performance, according to a new analysis by Moody’s Investors Service. Successful borrower-contact initiatives, meanwhile, resulted in significantly improved servicing performance for others. “Integrating the servicing platforms, employees, processes, and technologies into their servicing operations overwhelmed the banks, reducing their ability to proactively address the increased number of problem loans in their combined portfolios,” Moody’s said. ...

The Federal Housing Finance Agency needs to explain why it hired expensive outside counsel instead of dispatching government lawyers in its massive litigation against the nation’s big financial institutions, as well as just how much the agency expects to recoup from the effort, according to a senior Republican congressman.

The chairman of the House Committee on Oversight and Government Reform wants the Federal Housing Finance Agency to explain why it hired two outside law firms in a massive legal action to recover losses suffered by Fannie Mae and Freddie Mac on their investments in non-agency MBS. Rep. Darrell Issa, R-CA, wrote FHFA Acting Director Edward DeMarco on Sept. 29 asking why the agency hired outside counsel from Quinn Emanuel & Sullivan and from Kasowitz Benson Torres & Freidman to initiate lawsuits against financial institutions and how much the agency is paying them. Issa posed detailed questions and requested documents regarding...

Moody’s Investors Service continued to rank as the top credit rating agency in the non-mortgage ABS market, putting its stamp on 66.9 percent of dollar volume of deals issued in the first half of the year, according to a new Inside MBS & ABS analysis. Moody’s was particularly strong in the vehicle finance and business loan sectors, with market shares approaching 75.0 percent in both categories. The company showed relatively little interest in the student ABS market, but ranked second in rating credit card deals. Standard & Poor’s ranked second overall with a 58.3 percent share of ABS ratings. That included a near...(Includes two data charts)

Ginnie Mae is following its own path in exploring potential changes to servicer compensation, a project that parallels the Federal Housing Finance Agency’s Joint Initiative on Fannie Mae/Freddie Mac servicing compensation. As part of the FHA’s effort to improve default servicing, Ginnie Mae and other government housing agencies will be working separately to develop better claims mechanisms and pooling services as well as clearer risk and warranty delineations to improve the value of securitizations, the FHFA said. In a discussion paper, the FHFA, which oversees Fannie Mae, Freddie Mac and the Federal Home Loan Banks, said ...

Redwood Trust issued its second non-agency MBS of the year this week with just one rating, a sign of dramatic change in the role of credit ratings in the market. During the heyday of the non-agency MBS market, very few public deals went to market without at least two ratings and some transactions were rated by all three of the top credit rating services. Standard & Poor’s was the market leader for years, but Fitch has had a virtual monopoly on the jumbo MBS sector, which totals just two deals so far this year. S&P has effectively taken to the sidelines in rating non-agency MBS backed by new mortgages, according to...