The Treasury Department approved $10.0 million in federal funds this month for a limited pilot of a program to allow non-agency borrowers with negative equity to refinance. The program in Oregon’s Multnomah County includes characteristics of a proposal from Sen. Jeff Merkley, D-OR, who said the pilot could create a national model. The Oregon Housing and Community Services Department will use money from the Hardest Hit Fund to help non-agency mortgages with loan balances up to $250,000 and ... [Includes one brief]

The ranks of non-agency mortgage-backed security issuers are set to expand beyond Redwood Trust and Credit Suisse, but industry analysts note that issuance remains constrained due to bank portfolio execution and the government-sponsored enterprises. At the American Securitization Forum’s ASF 2013 conference last week in Las Vegas, Laurie Goodman, a senior managing director at Amherst Securities Group, predicted $25 billion to $30 billion in new non-agency MBS will be issued this year, the most ...

Two real estate investment trusts are working toward joining Redwood Trust in issuing new non-agency jumbo mortgage-backed securities. Two Harbors Investment and PennyMac Mortgage Investment Trust are acquiring jumbos with plans to securitize the loans and potentially hold the subordinate tranche, a model similar to Redwood’s efforts. Two Harbors first announced its intentions to issue new non-agency MBS in 2011, with a goal for issuance at the end of that year. Thomas Siering, president and CEO ...

Issuers, investors and even regulators agree that underwriting standards for non-agency mortgage-backed securities will have to loosen for the sector to grow. “We have to start moving down the credit spectrum,” said Sharif Mahdavian, a director and analytical manager of residential MBS at Standard & Poor’s. Speaking at the American Securitization Forum’s ASF 2013 conference last week in Las Vegas, he said non-agency originations could easily move from “shocking prime” to ...

The owners of Citadel Servicing are moving closer to raising capital in the range of $100 million to $200 million, but as Inside Nonconforming Markets went to press this week, they weren’t taking telephone calls about the transaction. The privately held Citadel is based in Orange County, CA. Its CEO is Dan Perl, a former thrift executive who has worked in nonprime but exited the business before the market crashed. Although Perl has declined interviews, at least two sources close to the company ...

Reform of the government-sponsored enterprises still appears to be years away and might not be a priority until non-agency mortgage originations increase significantly, according to industry analysts. Non-agency market participants counter that Fannie Mae and Freddie Mac are hindering non-agency originations. “The better the GSEs do, the less impetus there is for Congress to do anything,” Amy Overton, a vice president of federal government affairs at Citi, said last week at the American Securitization Forum’s ...

The government-sponsored enterprises will soon issue pilot non-agency risk-transfer transactions, according to officials at the Federal Housing Finance Agency, Fannie Mae and Freddie Mac. The GSEs missed a third quarter 2012 deadline set by the FHFA to issue risk-sharing transactions due to complications with the Commodity Futures Trading Commission. Patrick Lawler, chief economist at the FHFA, said a risk-sharing transaction will hopefully be issued in the “not too distant future.” Speaking at the ...

The investment period for the remaining funds participating in the Public-Private Investment Program ended during the fourth quarter of 2012, with four funds exiting the program during that time. The Treasury Department said it earned a profit from the PPIP, which focused on investment in non-agency mortgage-backed securities, and most of the individual funds also turned significant profits. “Our ability to aid in the stability of the MBS market and deliver solid investment ... [Includes one data chart]

Obama administration officials continue to claim that the administration is working toward a program to refinance or modify non-agency loans for borrowers with negative equity. Support in Congress for such a program is largely limited to Democrats, with the Obama administration suggesting that a non-legislative solution could be implemented. “We must expand streamline refinancing to families whose loans are not guaranteed by the government,” Michael Stegman, counselor to the Treasury ...

The Consumer Financial Protection Bureau’s ability to regulate nonbanks, particularly servicers, appears to be questionable due to a recent court ruling on President Obama’s use of “recess appointments.” The questions regarding the CFPB’s authority have been prompted by the U.S. Court of Appeals for the District of Columbia, which recently declared President Obama’s recess appointments to the National Labor Relations Board to be unconstitutional because the Senate was not technically ...