Secondary Market

Clayton Holdings announced the formation of a new securitization group dedicated to helping the private market prepare for the return of non-agency residential mortgage-backed securities (RMBS). Clayton Holdings provides customized risk analysis, loss mitigation, operational solutions, and staffing services to the mortgage and fixed income industries. The firm's new securitization group will offer consultative services, as well as loan reviews and due diligence services in readying the secondary market for greater private sector involvement.

Investors opposed to the $8.5 billion settlement reached between Bank of America and securities trustee Bank of New York Mellon will get their day in federal court. The settlement was originally filed in New York state court. A band of dissenting investors going by the name of Walnut Place moved the action to federal court, and BNY Mellon has been pushing for the case to revert back to the state. U.S. District Judge William Pauley denied BNY Mellon's motion this week.

The delinquency rate among commercial mortgage-backed securities (CMBS) in the U.S. have been above 9 percent for nine consecutive months, according to Moody's Investors Service's Delinquency Tracker. Moody's says the rate is now 9.36 percent, up from 9.01 percent reported last month. In addition to rising at a national level, CMBS delinquencies rose in all regions except the Midwest. All property types saw an increase in past-due loans, though multifamily continues to fare the worst.

Bank of America reported Tuesday that it saw a profit of $6.2 billion during the third quarter of this year, compared to a loss of $7.3 billion a year ago. Perhaps the biggest headline-grabber gleaned from BofA's third-quarter numbers is that the company lost its position as the largest U.S. bank by assets. On the mortgage side of the business, BofA says it has successfully implemented the rollout of a single point of contact for default servicing. Provisions for credit losses declined 37 percent from the year-ago quarter.

CoreLogic and Amherst Holdings, LLC, have partnered to release the Agency Prepayment Analyzer, an online investment analysis tool. The analyzer intertwines CoreLogic's data with Amherst's analytics and forecasting to deliver prepayment risk trends for agency mortgage-backed securities. Designed for fixed-income investors, Agency Prepayment Analyzer tracks the rates at which residential mortgage loans prepay, either voluntarily or involuntarily due to refinancing, defaults, or sales - instances in which the GSEs require buybacks.

The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to transition away from their current foreclosure attorney network programs, and move to a system where mortgage servicers will select law firms based on minimum qualifications and uniform criteria. Currently, each GSE designates eligible law firms for individual states, and servicers choose a firm from these lists to handle their foreclosure work. FHFA says the new approach is an extension of the Servicing Alignment Initiative and will lead to greater transparency.

Help for underwater homeowners has moved from principal writedowns to refinancing in the settlement negotiations between state attorneys general and the nation's five largest mortgage servicers. According to a widely circulated report, the proposal made its way into the talks last week. Borrowers who are current on their mortgage payments but owe more than their home is worth would be able to refinance at today's lower rates. The main caveat is that the loan must be owned, not just serviced, by one of the five banks.

Citigroup reported Monday that it brought in net income of $3.8 billion during the third quarter of this year. That's up 74 percent from a year earlier. Third quarter revenues increased, thanks to a $1.9 billion accounting adjustment that allowed Citi to record a gain based on the risk associated with its credit holdings. The company said in its earnings presentation to investors that it remains highly focused on risk management, particularly as it relates to U.S. mortgage exposure.

Republican members of the House Financial Services Committee point to the GSEs and the Obama administration's housing programs as areas for Congress' deficit reduction super-committee to examine as it works toward cutting $1.5 trillion of the nation's debt. A letter drafted by Chairman Spencer Bachus and signed by 20 Republican committee members first calls for an increase in the GSEs' guarantee fees and then the elimination of such programs as HAMP and HUD's Neighborhood Stabilization Program.

Wells Fargo reported net income of $4.1 billion over the July-to-September period. The company called it a ""record"" quarter, but even with profits up 21 percent from the prior year, the numbers were overshadowed by the fact that Q3 results missed market expectations. It's the first time in more than two years that Wells Fargo didn't meet analysts' forecasts. A decline in loan charge-offs and nonperforming assets, as well as an $800 million reduction in loan loss reserves helped to counter declining revenue.