Secondary Market

Real estate auctioneer and loan sales advisor Auction.com announced Monday that the company has named Elizabeth O'Brien managing director and SVP. O'Brien was hand-picked by CEO Jeff Frieden to expand Auction.com's residential mortgage notes platform and lead the firm's residential capital markets business. She previously served as a director in mortgage finance within Citi's fixed income division.

MasterServ Financial, Inc., a new provider of portfolio monitoring, analysis, and management tools and services, has named veterans from the mortgage lending industry to its management team. Led by CEO and Big Four consulting veteran John Iatesta, the MasterServ Financial team is tasked with leveraging the company's technology resources and a customer list that includes the likes of HUD and Ginnie Mae to improve portfolio performance and asset quality for private sector financial services organizations and the GSEs.

The delinquency rate on loans held in U.S. commercial mortgage-backed securities (CMBS) fell 23 basis points in August to 9.01 percent, according to Moody's Investors Service. Even with a slip in the numbers, Moody's notes that August was the eighth consecutive month that delinquencies have been above the 9 percent mark. The resolutions of delinquent loans continued to exceed new delinquencies last month, with $4.1 billion in resolutions versus $2.6 billion in newly delinquent CMBS loans.

The Federal Housing Finance Agency (FHFA) has signed off on several headline-grabbing arrangements between major lenders and the GSEs to reconcile loan repurchase claims. The results of an investigation released this week, however, indicate approval was made in haste. In response, FHFA has put the brakes on any future repurchase settlements pending further examination of the process in place to assess the true cost of such deals for taxpayer-funded Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency (FHFA) is seeking public comment on two new compensation structures for mortgage servicing. The agency says the current model was not designed for today's market conditions. After meetings and discussions with various stakeholders, FHFA has put forth two alternatives. One proposal would establish a reserve account within the current servicing compensation structure. The other proposal would create a new ""Fee for Service"" model.

Residential mortgage-backed securities investor Two Harbors Investment Corp. has announced the appointment of its controller Brad Farrell to the position of CFO and treasurer, effective January 1, 2012. After that time, Two Harbors' current CFO, Jeffrey Stolt, will continue to serve as partner and CFO of Pine River Capital Management L.P., the parent of PRCM Advisers LLC, Two Harbors' external manager.

Mortgage litigations in the second quarter of 2011 have more than doubled since last year, according to an industry report released Monday. During the April-to-June period, mortgage litigations reached 190 cases, up from 75 over the same quarter in 2010 and 151 during the first quarter of this year. Foreclosure-related litigation rose from 29 cases in the second quarter of 2010 to 67 cases a year later. The study also recorded a significant jump in cases involving secondary market transactions.

The nation's foremost securities regulator is considering a civil injunction against Standard & Poor's (S&P) for its rating of a collateralized debt obligation (CDO) linked to high-risk mortgages. S&P's parent company told investors Monday it received notice that the Securities and Exchange Commission (SEC) may proceed with enforcement actions and monetary penalties. At the center of the investigation is a $1.6 billion CDO from 2007, which has been cited as an example of why the financial crisis ran so deep.

According to the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG), FHFA's examination process is not up to par. FHFA-OIG says it has identified shortfalls in the agency's examination coverage, particularly in the areas of real estate owned (REO) and default-related legal services. In fact, the inspector general says FHFA has not conducted an examination of the GSEs' management of their REO inventories, despite the surging number of foreclosures, since 2007.

A year after evidence of robo-signing related to the processing of home foreclosures surfaced, state attorneys general don't seem to be any closer to a consensus on what should and shouldn't be included in the settlement. In fact, dissension among states' lead counsels is growing. Attorneys general from Kentucky and Minnesota have now joined the faction questioning the thoroughness of the investigation. Of particular concern is liability related to securitizations and the use of MERS.