The top three rate-spread lenders in 2010 were major banks – largely because of the sheer size of their total originations rather than a focus on rate-spread lending, according to an analysis of new Home Mortgage Disclosure Act data by ComplianceTech and Inside Nonconforming Markets. Meanwhile, Texas accounted for the largest share of rate-spread lending during the year. ... [includes two data charts]

Bank of America’s proposed $8.5 billion settlement with non-agency mortgage-backed security investors was officially moved to federal court this week. The change of venue from state court – requested by a group of investors known as Walnut Place – will likely lengthen the amount of time it takes the settlement to close and could lead to the settlement being renegotiated with better terms for investors. ... [includes six briefs]

Investors in non-agency mortgage-backed securities would rather not fight in court to enforce buybacks, according to Talcott Franklin, shareholder of his namesake law firm. However, Franklin said litigation has been necessary because servicers – largely those affiliated with lenders or MBS issuers – have not done enough to prevent losses. “If the banks can get it together on the servicing side and try to reduce these losses, that is going to be the best way for them to proactively reduce these [buyback] risks,” he said this week during a webinar hosted by Inside Mortgage Finance Publications. ...

The Securities and Exchange Commission is considering launching a civil injunctive action against Standard & Poor’s Rating Services, alleging violations of federal securities laws with respect to the company’s ratings for a 2007 collateralized debt obligation. According to a Form 8-K filing this week by McGraw-Hill, the rating service’s parent, the federal agency is looking into S&P’s rating of Delphinus CDO 2007-1, which was to be mostly backed by non-agency residential MBS. “In connection with the contemplated action, the [SEC] staff may recommend that the commission seek civil money penalties, disgorgement of fees and...

Redwood Trust is set to issue a non-agency mortgage-backed security backed by $375.2 million in jumbo mortgages, marking the issuer’s – and the mortgage market’s – second new jumbo deal this year. Fitch Ratings is giving a AAA rating based on its new tougher standards, though it remains unclear whether another service will rate the transaction. A presale report issued last week by Fitch noted the strong characteristics of Redwood’s Sequoia Mortgage Trust 2011-2. ...

Restrictions by the government-sponsored enterprises have not stopped one company from offering Property Assessed Clean Energy program loans. FIGtree Energy Resource Company, a San Diego company, is offering the California PACE program – only for non-agency jumbo mortgages in certain jurisdictions. PACE programs offer loans for energy-efficiency home improvements. Beginning in July 2010, the GSEs stopped purchasing PACE-related mortgages that had automatic first lien priority over previously recorded mortgages. ...

The stigma once associated with nonconforming mortgages appears to be fading as another originator is touting its nonconforming offerings. Last week, NexBank was the latest lender to detail its nonconforming products, including jumbos and conforming balance options. “By expanding our balance-sheet offerings to include loans down to $250,000, the Mortgage Connect program allows us to serve the funding needs of most homeowners in the North Texas market,” said Jed Meaux, vice president and head of NexBank’s mortgage division. ...

Standard & Poor’s and Fitch Ratings have announced separate ratings of two new non-agency MBS over the past two weeks, making a little noise in the long slumbering non-agency MBS market. Fitch this week released a presale report on Redwood Trust’s next prime jumbo transaction, while S&P rated a securitization of seasoned subprime mortgages that drew flak because it got higher grades than the agency gave the U.S. government. The new Redwood transaction, Sequoia Mortgage Trust 2011-2, looks a lot like the company’s last issuance back in February. It’s backed by $375 million of squeaky-clean prime jumbo mortgages, most of which were originated by...

Mortgage securitization rates remained at record levels through the first half of 2011, reflecting a sharp decline in new primary market production and a surge of agency issuance early in the year. A new Inside MBS & ABS analysis reveals that mortgage securitization activity in the first half of 2011 equaled 96.0 percent of loans originated during the same period. That compares to an 84.9 percent securitization rate for all of 2010 and an 85.6 percent rate – the record high – back in 2009. Because it can take weeks or even months before a newly originated mortgage hits the capital markets as collateral backing an MBS, there is a significant slippage between... [Includes one data chart]

The ongoing debate over the need for a government guarantee to sustain the benefits of the to-be-announced MBS market moved this week to the Senate Housing, Banking and Urban Development Committee, where researchers covered both sides of the issue for a group of lawmakers who aren’t likely to act on their counsel any time soon. “Proponents of privatization ignore that the jumbo market does benefit from a government guarantee indirectly in multiple ways,” said Adam Levitin, professor of law at Georgetown University. “The jumbo market has long aped the standards set by the [government-sponsored enterprises] in the conforming market, including...