Tag Archives: RMBS

If Hurricane Sandy has any impact on the performance of residential mortgage-backed securities (RMBS), it will probably be one that is short-term, according to Fitch Ratings. The global rating agency says a ""modest and temporary increase in mortgage delinquency could occur"" after assessing the potential impact of the storm that has devastated areas in the Mid-Atlantic and Northeast coast.

Government agencies are seeing an increase in participation within the mortgage servicing space and are seeking to provide better insight into some of the new and growing players in the market, a panel of experts told the audience at a mortgage industry conference in Chicago this week. Dave Williams of Amerisave Mortgage Corp., David Allison with Dovenmuehle Mortgage, and representatives from Fannie Mae and Ginnie Mae all shared their thoughts with conference-goers on servicing mortgages for secondary market investors.

Rep. Barney Frank (D-Massachusetts) is stepping up and speaking out in defense of JPMorgan Chase, calling the U.S. government's lawsuit against the financial institution a case of ""no good deed goes unpunished."" New York Attorney General Eric Schneiderman filed a suit against JPMorgan on October 1 for the alleged misconduct of Bear Stearns & Co. prior to JPMorgan's acquisition of the failing investment bank, and Frank says he has first-hand knowledge that federal officials urged JPMorgan to ""do a good deed"" by taking over an institution which JPMorgan would never have sought to acquire absent that urging.

Residential mortgage servicer Vericrest Financial, Inc., announced Thursday that it has relocated its Texas Center of Excellence from Dallas to Irving, Texas. Vericrest's Texas center houses the company's corporate functions, as well as asset management, business development, technology, and servicing operations. The company says its plans for future expansion could create potentially hundreds of new jobs.

Performance on vintage prime residential mortgage-backed securities (RMBS) continues to degrade, Fitch Ratings revealed in a report. The ratings agency announced a downgrade on 6 percent of its rated prime RMBS classes, many of which fall into the pre-2005 category. Fitch attributed the downgrade to increased delinquency rates in certain pools.

New York attorney general and co-chair of RMBS Working Group Eric T. Schneiderman announced a lawsuit against JPMorgan Chase Bank, JPMorgan Securities, LLC (formerly known as Bear Stearns & Co.), and EMC Mortgage LLC (formerly EMC Mortgage Corporation). Schneiderman's complaint alleges that Bear Stearns led investors to believe that the quality of loans in its mortgage-backed securities had been carefully evaluated and would be monitored. The complaint further alleges that as a result of Bear Stearns' and the other defendants' negligence, investors suffered cumulative losses of approximately $22.5 billion.

Mortgage lenders who survived the residential mortgage meltdown must now brace for repurchase demands from their third-party investors — and for the refusal of their liability insurers to defend and indemnify them against these demands. Mortgage lenders should be prepared to protect themselves against such denials of coverage.

Fannie Mae and Freddie Mac new representations and warranty guidelines for lenders Tuesday to clarify lenders' risk regarding repurchase claims and define steps lenders can take to challenge repurchase claims they feel are without grounds. Under the new guidelines, if a loan is current for 36 consecutive months, lenders ""will be relieved of certain repurchase obligations,"" according to the Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac.

The National Credit Union Administration (NCUA) is suing the global investment firm UBS Securities for allegedly falsely representing the level of risk associated with mortgage-backed securities (MBS) the firm sold to two federal credit unions. According to NCUA officials, the defaults and losses that resulted directly contributed to the collapse of both credit unions. The case against UBS marks the sixth outstanding suit brought by NCUA against securities issuers. The agency has settled similar claims worth more than $170 million with three securities issuers.

Adverse selection is leading to rating downgrades for one of the strongest U.S. residential mortgage vintages, the pre-2005 vintage, according to Fitch Ratings. Residential mortgage-backed securities formed before 2005 have historically performed well, according to Fitch. While this may be true, Grant Bailey, managing director at Fitch, explained, ""Many high-quality mortgage borrowers are refinancing to take advantage of record-low interest rates, leaving the remaining mortgage pools increasingly concentrated with borrowers unable to refinance.""