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Inside Nonconforming Markets

October 10, 2008

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AAA Subprime MBS is a Likely Target for TARP Purchases

The federal government’s Troubled Asset Relief Program is likely to begin purchasing subprime mortgages within two months, according to analysts. President Bush signed the Emergency Economic Stabilization Act last week after a 75-24 vote by the Senate and a 263-171 vote by the House. The Treasury Department this week began hurriedly putting together the apparatus to... Read More

HOPE for Homeowners Tries To Lure 2ND Lien Holders

The federal government launched its refinance program for troubled borrowers last week, though officials suggest it could take two months for originations to pick up. An oversight board, including the Department of Housing and Urban Development and other federal regulators, issued two mortgagee letters, a final regulation and a series of other guidelines, examples, disclosure... Read More

FHLBs to Facilitate HOPE For Homeowners Loans

The Federal Home Loan Banks can establish temporary mortgage refinancing programs for low- and moderate-income troubled borrowers under an interim final rule released this week. The programs will help borrowers refinance into the HOPE for Homeowners program by funding of additional principal write-downs or closing costs. Each of the 12 Federal Home Loan Banks is required to contribute... Read More

SEC’s Fair Value Guidance Receives Mixed Response

Reaction from the mortgage industry was split regarding guidance on fair-value accounting for illiquid subprime assets. Regulators last week clarified accounting rules in an effort to help lenders avoid large unnecessary writedowns of subprime mortgage-backed security holdings. The Securities and Exchange Commission released guidance that allows companies to rely more on their... Read More

States Push BofA’s Subprime Mod Settlement as a Model

Bank of America this week entered into a landmark settlement with 14 states to modify up to 400,000 mortgages, most of which are subprime. The agreement settles lawsuits filed by state AGs against Countrywide this summer around the time of the lender’s merger with Bank of America. The settlement establishes the largest mandatory loan modification program in the country and the... Read More

Bank Affiliates Top Higher-Priced Loan Purchasers

Mortgage lenders sold a total of $196.78 billion of higher-priced mortgages to investors last year, with the largest flow of business going to affiliates of the lender, usually a parent bank, according to an Inside B&C Lending analysis of 2007 Home Mortgage Disclosure Act data. Some $287.78 billion in high-rate loans were originated in 2007, according to the... [Includes two charts] Read More

More Troubled Subprime Borrowers Not Receiving Help

An increasing number of seriously delinquent borrowers are not on track for any loss mitigation, according to a group of state regulators. The number hit nearly 80 percent in May, according to a report released last week by the State Foreclosure Prevention Working Group. “This declining trend of new loans in process suggests that new loan modification approaches have... Read More

Subprime Rebound Could Come Via Covered Bonds

“The American financial system, if it remains true to its history, will adapt and innovate its way back to profitability and high stock prices sooner than is suggested by the dire predictions that fill today’s newspapers,” according to Charles Calomiris, a professor at Columbia Business School and a visiting scholar at the American Enterprise Institute. In a recent paper on... Read More

B&C News Briefs

The launch of the ABX.HE 05-2 index was postponed due to “market conditions.” The tradable synthetic index of... The Department of Housing and Urban Development recently set aside $3.92 billion to help states respond to high foreclosure... The Securities and Exchange Commission last week charged five Los Angeles-area mortgage brokers with securities fraud tied. to... Read More

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