Although federal regulators this week gave the industry more time to comment on their controversial proposal on risk retention in non-agency MBS and ABS transactions, some industry experts have already suggested that the concept fails to address its fundamental purpose of strengthening deal quality by aligning the interests of securitizers and investors. Risk retention is an intellectually appealing idea, but it’s not clear that it provides...
Bank executives expect it will be a tall order for their firms to address the various tax implications of the Dodd-Frank Act, as well as the Basel III liquidity standards, particularly with regard to securitizations, according to a recent survey by audit, tax and advisory firm KPMG. KPMG reported that 48 percent of respondents said their firms were still trying to figure out the tax implications of Dodd-Frank and Basel III, while 49 percent said...
In an unusual convergence, consumer advocacy groups have joined with mortgage lending and real estate interests to warn federal regulators about a host of negative consequences with their interagency proposed rulemaking to implement the risk retention and “qualified residential mortgage” provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act...
New issuance in the agency MBS market declined again in May, falling to the lowest monthly production level since the depths of the global liquidity crisis over two years ago. According to a new Inside MBS & ABS analysis and ranking, Fannie Mae, Freddie Mac and Gin-nie Mae issued a combined total of $71.05 billion of new single-family MBS last month, a decline of 7.7 percent from April’s production. May marked the fifth consecutive decline in monthly agency MBS volume since last year’s refinance boom peaked in December. It was also the lowest monthly production level since... [Includes one data chart]
Federal regulators are hearing it from all corners as industry groups are joining step with consumer advocates and lawmakers on Capitol Hill urging the agencies to write a less restrictive definition of qualified residential mortgages. A letter from a bipartisan group of U.S. senators said the proposed risk-retention rule drafted by federal regulators earlier this year goes beyond the intent of Congress in prescribing a narrow defini-tion of QRM loans which could be securitized without forcing the issuer to retain a 5 percent interest in the transaction. “These restrictions unduly narrow...
Federal regulators should adopt a fair value method for measuring an MBS sponsor’s retained interest in non-agency transactions and make subtle changes in the proposed premium capture provisions in order to provide a framework that’s feasible for issuers, according to Redwood Trust officials. In a briefing with the Federal Housing Finance Agency, the company explained several key changes to the proposed inter-agency rule on risk retention as it would affect non-agency MBS. Redwood, the only company that has issued non-agency MBS backed by newly originated mortgages over the past few years, was joined by officials from Wells Fargo, which had been one of the most...
Two Harbors Investment Corp. announced last week that it has taken its first steps toward setting up a securitization issuance program, with a goal to issue a $250 million jumbo non-agency MBS sometime in 2011. The New York-based real estate investment trust will partner with Barclays Capital to close on a $100 million mortgage loan warehouse facility, which is subject to future increases. Two Harbors will buy prime, fixed-rate jumbo residential mortgages and aggregate them in the facility. It is currently targeting a $250 million deal size for the initial securitization. Barclays will act as underwriter, according to Two Harbors. The program is aimed at...
The legacy of toxic subprime and Alt A MBS from Countrywide Financial continued to spread last week, with a California appeals court deciding to allow a class action involving a number of pension funds and other institutional investors against the lender to proceed. The plaintiffs allege that Countrywide and a number of its subsidiaries, officers and U.S. investment banks violated the Securities Act of 1933 by making materially false and misleading statements in over 450 prospectus supplements relating to the issuance of more than $300 billion in subprime and Alt A securities. Specifically, plaintiffs allege the defendants misrepresented the quality of...
A trio of housing trade associations went to bat for the role of government-sponsored enterprises this week, but not necessarily for Fannie Mae and Freddie Mac, arguing that GSEs, as well as the government itself has a role in the reform of the housing finance system. During testimony this week before the Senate Banking, Housing and Urban Affairs Committee, representatives from the National Association of Realtors, the National Association of Home Builders and the National Multi Housing Council/National Apartment Association warned lawmakers that the current efforts to wind down Fannie and Freddie must not disrupt the already fragile housing and...
Facing significant penalties from investigations by the Securities and Exchange Commission, Wall Street banks are bracing for investigations of their securitization activities by the influential New York attorney general’s office and other state regulators. NY Attorney General Eric Schneiderman has reportedly launched an investigation into the securitization processes of Bank of America, Morgan Stanley, Goldman Sachs, JPMorgan Chase, UBS and Deutsche Bank. All the parties declined to comment, but reports say that the AG is looking into how the banks securitized mortgage loans, as well as their other practices handling mortgage loans. Specific concerns have...
Rates were up across all default categories in the fourth quarter of 2024.
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