Tag Archives: RMBS

Six former executives at Fannie Mae and Freddie Mac are now facing securities fraud charges for making misleading statements about the companies' holdings of subprime loans between March 2007 and August 2008. The Securities and Exchange Commission (SEC) alleges they fed the markets false information about the amount of risk on each company's books. Both GSEs entered into non-prosecution agreements with the SEC and have agreed to cooperate in the litigation against their former executives.

State attorneys general and the nation's five largest mortgage servicers have been supposedly close to a settlement for quite some time. The latest estimate is that they are likely to reach an agreement before Christmas. A local Iowa media outlet attributes this information to Iowa Attorney General Tom Miller, head of the states' negotiating committee. Miller says the settlement would release the banks from legal claims on past servicing and foreclosure practices but would not provide any release on securitizations.

A New York federal judge ruled Monday against the proposed $285 million settlement agreed to by Citigroup and the Securities and Exchange Commission (SEC) in October. Judge Jed Rakoff said he has ""regretfully"" concluded that the agreement is neither reasonable nor in the public interest. Rakoff's opposition is rooted in the lack of evidence needed to determine whether the settlement is sufficient and the fact that Citigroup did not admit fault. He has set a trial date of July 16 for the issue to be aired in public.

Carrington Mortgage Services, LLC has announced the hiring of Brad Nease as SVP, capital markets. In this newly created position, Nease will lead the secondary marketing efforts for the company's growing loan origination business, and will be responsible for product development, investor relations, loan trading, and warehouse lending. Nease has more than 28 years' experience in the industry. He joins Carrington from ICON Residential Lenders, where he was COO of capital markets.

A federal judge has ruled to allow the Delaware and New York attorneys general to pursue litigation in Bank of America's $8.5 billion settlement with mortgage investors. Bank of America reached the settlement agreement in June with Bank of New York Mellon, the trustee for the 530 mortgage-backed securities trusts in question. But the judge has ruled that there's more at stake than the financial interests of the few major investors involved in the settlement negotiations.

Sen. Bob Corker of Tennessee introduced legislation in early November aiming to wind down Fannie Mae and Freddie Mac over the next 10 years and replace the Mortgage Electronic Registration System (MERS) with a new government-run registry. According to the ratings agency DBRS, Corker's proposal could give the private market for mortgage securitizations a much needed boost, and the creation of a new MERS database could ease investor concerns over the legal battles facing the original system.

Freddie Mac plans to re-securitize certain mortgage loans that were previously delinquent but have been reinstated to current, performing status. The new-issue bonds will not, however, include loans that have been modified. The GSE says this new avenue for securitization will provide more flexibility for the company to manage its mortgage-related investment portfolio and its distressed assets. Freddie Mac expects to make its first offering of reinstated loans later this month.

The National Credit Union Association (NCUA) has reached settlements with Citigroup and Deutsche Bank Securities regarding residential mortgage-backed securities sales to five wholesale credit unions that have recently failed. Citigroup agreed to pay $20.5 million, and Deutsche Bank agreed to pay $145 million to help lessen the losses incurred when the five credit unions failed. Neither bank admitted to fault when agreeing to the settlement. Total losses incurred from the five credit union failures stand at $3.3 billion, according to the NCUA.

Sen. Bob Corker of Tennessee has introduced a bill aimed at winding down the GSEs and bringing uniform standards to the industry. Coker's proposal would gradually reduce the amount of new mortgage backed securities (MBS) issued by Fannie Mae and Freddie Mac over 10 years. At the end of the 10-year period, the MBS market would be completely private. The bill also mandates sales of the GSEs' technology and other systems to private investors, and calls for a replacement to the MERS registry system.

Foreclosure starts among private-label residential mortgage-backed securities (RMBS) have been rising toward historic averages, which will lead to an influx of distressed properties bringing downward pressure to the housing market, according to Fitch Ratings. Foreclosure starts among loans that have been delinquent for six months or more have almost doubled in the past five months. Fitch says it's a sign that servicers are playing catch-up on actions that have been delayed over the past year.