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Tag Archives: RMBS

American Securitization Forum Proposes New RMBS Guidelines

The American Securitization Forum (ASF) recently released the ASF Model RMBS Repurchase Principles, which were designed to align the incentives of originators with those of investors. The trade group's guidelines deal specifically with maintaining skin-in-the-game through the enforcement of representations and warranties. ASF says the risk retention rules proposed by regulators, on the other hand, are not sufficiently tailored to various asset classes and will likely have negative consequences.

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Industry Calls for Less GSE Action, More Investor Protection

At a congressional hearing Wednesday, witnesses voiced concerns about the government's participation in the mortgage market as well as the lack of transparency between servicers and investors. One analyst described the U.S. housing finance system, where the GSEs account for over 90 percent of new mortgages, as ""problematic."" Others said government is crowding out the private market with programs that make below-market-rate loans available to nearly all borrowers, and they advocated for the expiration of increased conforming loan limits.

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Financial Firms ‘Disappointed’ FHFA Chose Lawsuits Over Negotiations

The Federal Housing Finance Agency's decision to pursue legal action against firms that sold residential mortgage-backed securities to Fannie Mae and Freddie Mac could potentially strain relationships between the GSEs and the companies named as defendants, many of whom still sell mortgages to Fannie and Freddie and service home loans held by the two mortgage financiers. Some of the financial firms have been forthcoming with pledges to aggressively defend themselves against the allegations and are disappointed by the fact that FHFA has taken to the courts.

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FHFA vs. Mortgage Powerhouses: What Does It Mean for the Market?

The Federal Housing Finance Agency (FHFA) is suing 17 financial institutions in an attempt to recover losses incurred by Fannie Mae and Freddie Mac from mortgage bonds purchased between 2005 and 2007. Based on initial reports, FHFA is looking to recoup as much as $45 billion. At least one financial analyst believes the matter will end in a settlement significantly south of that amount. Others say a more long-lasting impact may come in the form of higher mortgage costs for consumers.

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Sen. Franken and Others Address Rating Agency Reform

Sen. Al Franken of Minnesota continues to express concerns that the new rules regarding ratings agencies are not addressing fundamental issues with ratings procedures. Franken, along with other congressmen and policymakers, believes ratings agencies inflated assessments of mortgage-backed securities and that these inflated ratings ultimately led to the financial crisis. During a conference call hosted by Americans for Financial Reform, Franken and others spoke out on the inherent conflict of interest they see within ratings procedures.

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FHFA Files with Court Considering BofA Proposal to Mortgage Investors

The Federal Housing Finance Agency (FHFA) is the second regulatory body to file a petition with the New York federal court that is reviewing Bank of America's $8.5 billion settlement proposal to Countrywide mortgage investors. FHFA has filed a Notice of Appearance and Conditional Objection in order to obtain additional information related to the proposal, but the agency says it sees ""no basis"" to raise a substantive objection to the settlement at this time.

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Study: Less Than 3% of Mortgage Mods Involve Principal Reductions

The ratings agency DBRS made principal reductions the focus of a research note released Monday. The firm's analysts stressed that as a modification technique, debt forgiveness has long been regarded as controversial in the mortgage industry due to its moral hazard risk and the potential impact it could have on the performance of securitized mortgages. As such, it's been utilized on a very limited basis. Based on first-quarter data, DBRS found that principal reduction modifications accounted for 2.80 percent of the total mods performed.

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Justice Department Joins Investigation of S&P

Investigators are looking to determine whether Standard and Poor's (S&P) over-rated dozens of mortgage-backed securities prior to the financial crisis. The Securities and Exchange Commission has been investigating the matter for several months, and the Justice Department recently joined the investigation, according to media reports. The federal probe began before S&P downgraded the U.S. credit rating from triple-A status to double-A status. The SEC has reportedly also been investigating Moody's in regards to two mortgage-bond deals.

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CoreLogic Technology Forecasts Mortgage Performance

CoreLogic announced the availability of RiskModel Version 4.4 this week. The new technology offering is an analytics application that forecasts future mortgage prepayments, defaults, losses, and cash flows at both the loan and portfolio level. This latest version integrates the CoreLogic Home Price Index (HPI) with new transition and loss-given-default models for Alt-A first and second-lien mortgages, allowing more than 75 percent of the loans in the development dataset to be estimated at the ZIP code level.

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Delaware AG Opposes BofA Settlement

Delaware Attorney General Beau Biden has announced his opposition to the proposed $8.5 million Bank of America settlement. He sent a petition to the New York Supreme Court expressing his disapproval and requesting permission to intervene in the court's review of the settlement. ""I am intervening to enforce our laws and to protect Delaware investors who may have been harmed by these toxic securities,"" Biden said. ""Intervening in this settlement puts us in position to ensure that the banks are playing by the rules.""

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