Secondary Market

Ginnie Mae, which provides a guaranty on mortgage securities backed by Federal Housing Administration loans, has announced a new policy regarding the pooling of past-due loans. For single-family securities with an issue date of June 1, 2011, and after, servicers can no longer package loans that are delinquent by more than the monthly installment of principal and interest that is due on the issue date. This fall, the federal agency will also begin requiring issuers to supply new data elements, such as loan-to-value ratios and pre-modification qualities.

MountainView Capital Holdings has announced the hiring of Robert Wellerstein as a managing director in its mortgage and fixed income sales and trading units. Wellerstein is an industry veteran with a broad range of experience in sales and trading of mortgage loans, mortgage servicing rights, and fixed income securities. He joins MountainView from Banc of Manhattan Capital, after 17 years with Countrywide Securities Corporation.

Washington Governor Christine Gregoire recently signed legislation to restrict Wall Street home resale fees - also known as private transfer fees. The new law, sponsored by Sen. Nick Harper, places a ban on these fees. Rep. Roger Goodman sponsored the companion bill in the state's House of Representatives. Washington is the 25th state to restrict the use of these fees.

Lawmakers in both the House and Senate are seeking to legislate changes to servicing practices. On the heels of the cease and desist orders issued by federal regulators to a handful of mortgage servicers to address process deficiencies uncovered by robo-signing investigations, four bills have been introduced aimed at reforming the way delinquent borrowers are handled industry-wide and aligning servicer incentives with those of investors and homeowners.

Bank of America said Friday that it turned a profit of $2.0 billion for the first quarter of 2011. That's down 39 percent from the lender's earnings a year earlier, largely due to continuing losses tied to its legacy mortgage business. Bank of America took a $4.9 billion hit related to foreclosure delays and other out-of-pocket expenses that the company does not expect to recover, as well as higher litigation costs and loss mitigation expenses. The bank has also confirmed plans to lay off 1,500 mortgage employees.

The delinquency rate on loans included in U.S. commercial mortgage-backed securities (CMBS) conduit/fusion transactions inched down 2 basis points in March to 9.16 percent, Moody's Investors Service reported Thursday. More significantly, the agency says the total dollar balance of delinquent loans declined in March, slipping to $56.5 billion from $56.8 billion the month before. It's the first monthly decline in the balance since October 2007.

A new law requires that Arkansas homeowners receive critical documents prior to a foreclosure and encourages loss mitigation or loan modification efforts before the foreclosure is initiated. Mortgage servicers must now provide borrowers facing foreclosure with copies of the note, mortgage, and any assignments; the physical location of the note; and payment history. Homeowners must also receive information about assistance programs that are available.

The climb towards an expected 10 percent delinquency rate for loans held in commercial mortgage-backed securities (CMBS) has slowed, according to the latest index results from Fitch Ratings. The agency reports that late-pays retreated two basis points to end March at 8.74 percent, with delinquencies falling for four of the five major property types. At the same time, Trepp says loss severity is the lowest it's been since the company began reporting, with the majority of loans liquidated in March having losses of less than 2 percent.

Recent improvements in the job market are translating into falling subprime delinquency rates. At the same time, prices on subprime credit-default swaps (CDS) have risen for five straight months. Multiple reports on the secondary market signal growing investor appetite for subprime mortgage bonds and finance instruments like CDS, which transfer the risk of default from the bond holder to the seller of the swap. According to Fitch, subprime delinquencies are dropping sharply with cured loans up by as much as 50 percent for some vintages.

The American Securitization Forum (ASF) is opening a Washington, D.C. office. The organization is headquartered in New York but with all the new rules and regulatory changes coming down from Washington, ASF says a physical presence there will help further its advocacy efforts on behalf of the securitization markets. In conjunction with the office opening, ASF has named Jim Johnson managing director of public policy. Johnson previously served as senior counsel to the U.S. Senate Banking Committee for Ranking Member Richard Shelby.