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Inside MBS & ABS

February 12, 2010

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Fed Chief Bernanke Confirms Exit Strategy: Bulk MBS Sell-Off Is Considered Unlikely

The Federal Reserve remains on course to stop buying agency MBS by the end of next month, and the agency has no plans to dump its massive holdings in the market, according to Congressional testimony prepared for Fed Chairman Ben Bernanke. Freakishly heavy snowfall in Washington, DC, resulted in a postponement of a hearing on the Fed’s exit strategy... [Includes one chart] Read More

Fannie and Freddie Announce Plans for Mass Buy-Outs of Delinquencies from MBS Pools

Agency MBS investors could see the writing on the wall when new accounting standards emerged last year that could make it more economical for Fannie Mae and Freddie Mac to repurchase seriously distressed loans from MBS pools. It was mostly a matter of when and how fast. The government-sponsored enterprises answered those questions this week: soon and very quickly... Read More

U.S. Judge Finds Flaw, Dismisses Lawsuits Against S&P, Moody’s

A federal court judge for the Southern District of New York has thrown out investor lawsuits against Standard & Poor’s and Moody’s Investor Service alleging dubious ratings practices involving structured products sold by defunct Lehman Brothers Holdings, Inc.U.S. District Judge Lewis Kaplan let the two ratings agencies off the hook after finding that provisions of the... Read More

New Data Standards for Non-Agency MBS Seen as Big Plus, But Implementation Remains an Issue

Investors, ratings analysts and issuers agree that the extensive new data standards for non-agency MBS represent a big step forward for the industry, but it remains to be seen whether they require too much of a stretch for issuers. One of the key benefits of the data requirements for issuing and periodic reporting of new non-agency MBS is that they provide standardized definitions... Read More

GSEs, Ginnie Mae Implement HAMP Documentation Changes Expected to Improve Conversion Rates

Fannie Mae, Freddie Mac and Ginnie Mae each issued separate directives to adopt recent changes in the Home Affordable Modification Program to loans backing their MBS, including a key change that borrower income has to be verified before a trial mod can be started. The idea is that collecting documents and completing verifications earlier in the loan mod process will improve the... Read More

State Street Settles With SEC, Massachusetts Over Charges Involving Subprime Disclosures

Boston-based State Street Bank and Trust Co. has entered into settlements with the Securities and Exchange Commission, the Massachusetts Attorney General and the Massachusetts Securities Division of the Office of the Secretary of State to settle charges that the institution misled investors about their exposure to subprime mortgage investments while selectively disclosing more... Read More

Investor Group Offers Principal Reduction Proposal As Alternative to Mortgage Cramdown Legislation

As foreclosures continue to mount and loan modifications produce mixed results, the Mortgage Investors Coalition has offered a second-lien principal reduction, loss-sharing proposal to help remove what is increasingly seen as the primary obstacle to successful loan mods for underwater borrowers: the second mortgage. Under the MIC plan, losses due to principal reduction on such loans would be... Read More

GAO Says TALF Program Presents Unnecessary Risks; Treasury Balks at Recommendations

The Government Accountability Office said the Federal Reserve could do more to minimize risk to the government from the Term ABS Loan Facility, but the program’s administrators said the GAO understated TALF’s success and overstated the risk involved. TALF, administrated by the Federal Reserve Bank of New York, can lend up to $200 billion to certain eligible borrowers in return... Read More

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