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Inside MBS & ABS

July 8, 2011

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MBS Issuance Tumbled in 2nd Quarter as Non- Mortgage Securitization Keeps Gaining Steam

Residential mortgage securitization activity fell sharply during the second quarter of 2011, reaching its lowest level since the low point in the financial market meltdown of 2008. A new analysis by Inside MBS & ABS reveals that only $245.9 billion of single-family MBS were issued during the second quarter of this year, a sharp 31.0 percent downturn from the first three months of 2011. Second quarter MBS issuance wasn’t much stronger than the $222.3 billion of MBS issued back in the fourth quarter of 2008, and to find a lower quarterly issuance volume you have to go ... [includes one data chart] Read More

Views Mixed on Bank of America’s Countrywide MBS Settlement; Some Investors Raise Doubts

Although 22 large investors and Bank of America think they reached a reasonable deal to resolve massive buyback claims on some $221 billion of outstanding Countrywide non-agency MBS, some outside analysts and other investors aren’t so sure. The pending agreement, which has to be approved by the court, requires Bank of America to pay $8.5 billion that would be distributed according to the deals that suffered the biggest losses. In return, the bank would get significant ... Read More

Servicing Standards Top CFPB To-Do List, But Attorneys General Should Focus on Enforcement, Alabama AG Says

The Consumer Financial Protection Bureau is ready to take mortgage servicing by the lapels when it formally opens on July 21, according to an official testifying at a House Financial Services Committee hearing this week – calling the initiative a “priority” for the new agency that faces a heavy load of new duties and authorities. One of the flaws in the regulatory structure is the lack of federal servicing standards, said Raj Date, associate director of depositor and consumer protection at the new agency. Servicing has been a key issue in some MBS investor lawsuits, and many have ... Read More

Fitch: Reps and Warranties, Due Diligence and Originator Reviews Will be More Meticulous

Fitch Ratings has updated its criteria for non-agency MBS, making changes to its standards for representations and warranties, due diligence and originator reviews to better determine credit risk for new issues. Three separate reports released last week revise existing criteria the rating agency created in 2008. “Originator reviews, loan-level due diligence results, and the quality of representations and war-ranties to a transaction are key elements of ... Read More

Ally’s SEC Filing Reveals $100 Million 2Q11 Charge for Losses Incurred by MBS Trusts

Ally Financial, Inc., a major mortgage and automotive lender, said it expects to take a second-quarter charge of approximately $100 million for mortgage losses incurred by certain securitization trusts even as it disclosed new investigations by the Securities and Exchange Commission and the Department of Justice. Ally made the disclosures in an amended prospectus filed with the SEC recently proposing the sale of $100 million shares of the company’s common stock. According to the disclosure, $152 million was paid to the trusts during the second quarter to cover ... Read More

WaMu Settles Class Action Based on Investor Claims About Poor Mortgage Underwriting at Defunct Thrift

Washington Mutual and its former officers, directors, underwriters and auditor late last week agreed to a $208.5 million settlement on one of the largest class-action lawsuits stemming from the financial crisis, according to court documents. In exchange, the plaintiffs would dismiss all claims against the defendants. The lead plaintiff and lead counsel said that this proposed settlement represents “an excellent result and are in the best interests of the class,” according to court documents. The case was consolidated from about 20 plaintiffs who claimed the bank quietly reduced lending standards to inflate home-price appraisals and was not open with customers when loans began to fail Read More

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