New issuance of single-family agency MBS pass-through securities increased by 12.2 percent from July to August, pushing the market over the $1 trillion mark for the year with plenty of gas still in the tank. A new Inside MBS & ABS ranking and analysis reveals that all three agencies saw solid gains in MBS issuance last month, largely based on increased refinance activity. Agency MBS production climbed to $149.2 billion in August, the highest monthly production level since March. Ginnie Mae posted the biggest gain, a 15.1 percent increase from July levels, but Freddie Mac (13.5 percent) and Fannie Mae (10.3 percent) also saw healthy increases in production volume. Total agency issuance for the first eight months of 2012 was...[Includes one data chart]
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The Securities and Exchange Commission revealed details last week on its battle for due diligence reports on non-agency MBS issued by Ally Financial’s Residential Capital. A number of other ongoing non-agency MBS lawsuits and SEC investigations have been based on information included in due diligence reports. The SEC is seeking due diligence reports prepared by Office Tiger Global Real Estate Services, a wholly-owned subsidiary of Donnelly, on behalf of investment banks that underwrote 17 non-agency MBS issued by ResCap. The SEC said it is investigating possible fraud in the offering and sale of residential MBS by ResCap. “The information in Donnelley’s possession is...
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Last month’s surprise move by the Treasury Department to revise the preferred stock purchase agreements with Fannie Mae and Freddie Mac definitively settles the question of “when” not “if” the two government-sponsored enterprises are to be wound down but it also removes any remaining sense of urgency to push a legislative solution to GSE reform, according to industry analysts. On Aug. 17, Treasury announced it will require Fannie and Freddie to turn over any profits they earn to the government. Rather than continue to borrow from the Treasury to make a 10 percent dividend payment to the Treasury, the revised PSPA implements a “full income sweep” of GSE profits. Additionally, Treasury’s announcement calls...
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The battle over legacy MBS continues to rage in courts across the country as Bank of New York Mellon filed repurchase-related lawsuits against two financial institutions, Massachusetts Mutual was allowed to proceed with its claims against Countrywide, and a federal banking regulator sued major banks for alleged MBS misrepresentations. On Aug. 21, BNY Mellon, in its capacity as trustee for a pool of loans known as GE-WMC Mortgage Securities Trust 2006-1, sued WMC Mortgage and GE Mortgage Holdings for their alleged failure to repurchase approximately $680 million in defective residential mortgages. According to the lawsuit filed in New York state court, a holder of more than 25 percent of the voting rights under the pooling and servicing agreement notified...
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The Homeownership Protection Program Joint Powers Authority Board, a partnership between California’s San Bernardino County and two of its local communities, unanimously directed staff to develop a request for proposals that would invite interested parties with any kind of formal plan to assist underwater families in the JPA area to submit those plans for board consideration. The JPA is examining local government solutions to the negative-equity issues many homeowners in the two participating communities of Fontana and Ontario are having, with the goal of keeping families in their homes, reducing defaults and foreclosures, and enhancing the economic health of the communities. “Presently, the board has not received...
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The Federal Housing Finance Agency is pushing its own version of mortgage reform: an ambitious agenda of standardizing Fannie Mae and Freddie Mac securitization operations to the point that their MBS are interchangeable. The plan, hatched in the absence of any substantial move by Congress or the Obama administration to address the nearly four-year-old conservatorships of the government-sponsored enterprises, has won broad endorsement from the lending and securitization industries. But some analysts say the FHFA strategy will make things worse, not better. Karen Shaw Petrou, managing partner of Federal Financial Analytics, a proprietary think-tank in Washington, DC, characterized the idea as “seductive” and “dangerous as all get-out.” First, there’s the issue of whether the two GSEs could be...
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Following the collapse of the non-agency market, critics of banks have suggested that MBS issuers could be liable for significant tax payments due to violations of real estate mortgage investment conduit rules. However, the IRS has yet to act on the issue and officials at the IRS downplayed suggestions of a wide-scale investigation. REMICs receive tax advantages as passive, static investments. The IRS requires that mortgages be transferred to the trust within a certain timeframe, usually within 90 days after the trust is created. Some have suggested that the improper assignment of mortgages to REMICs is...
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