The Association of Mortgage Investors (AMI) sent letters to a handful of large banks last week expressing concerns on behalf of its members who hold residential mortgage-backed securities (RMBS) certificates.[IMAGE]
The letter notifies trustees of breaches in their legal servicing obligations to certificate holders.
The first issue AMI addressed was ""[e]nforcement of repurchases based on the significant breaches of representations and warranties that have been discovered in the origination and underwriting of loans within these Trusts.""[COLUMN_BREAK]
The second was ""[r]emedying servicer defaults, including establishing processes for replacing servicers if they continually fail to comply with their obligations to service the Trusts in the best interests of the Certificateholders and ensuring that servicers take financial responsibility for damages caused to RMBS Trusts.""
AMI hopes to have guidelines in place to resolve these matters by the third quarter of this year.
""To revive the U.S. housing market and restore the securitization market to working order, it is imperative that outstanding issues relating to 2005- to 2008-vintage mortgage securities be resolved in a manner that does not alienate private investors by disregarding their contractual rights or encouraging opacity,"" AMI states in the letter.
Pointing out evidence that servicers make more loan modifications to loans in their own portfolios than those held by investors, AMI stated its belief that servicers are operating with a conflict of interest and putting more efforts into their own loans than in investors' loans.
In total, AMI's members have about $300 billion in mortgage-backed securities assets under management and a large portion of the country's mortgages in private-label RMBS.