Finance

Rule 17g-5 could be enhanced to offer structured finance buyers with more transparency on the rating agency selection process, according to a comment letter Fitch Ratings is submitting to the Securities and Exchange Commission. (SEC).

The flight to safety pressed mortgage rates lower with 15-year fixed, 5/1 hybrid ARMs and one-year ARMs all setting new record lows for the week ending August 11. 15-year rates slipped four basis points to 3.50 percent, hybrids averaged 3.13 percent versus 3.18 percent last week, and one-year ARMs plunged 13 basis points to 2.89 percent.Meanwhile, the 30-year fixed mortgage rate dropped to its lowest level for 2011, averaging 4.32 percent compared to 4.39 percent last week. It remains 15 basis points above its record low of 4.17 percent.Deutsche analysts said that despite the sharp drop in Treasury rates, the 30-year primary mortgage rate is likely to be sticky between 4.0 percent and 4.25 percent. That is the result of capacity constraints. They noted in their daily MBSTrader that there is nearly $1 trillion of mortgages with note rates between 4.85 percent and 5.15 percent in agency MBS pools. As rates decline through 4.20 percent, "this mostly clean set of borrowers would become refinanceable, having over 65 bps of rate incentive," they said.However, employment in the origination business is down 20,000 from last fall, they said in their weekly research yesterday, and new guidelines from the GSEs that become effective this fall will require them to devote more resources to servicing/foreclosures versus origination. This creates an incentive for bankers to manage volume by keeping rates and MBS prices high. Indeed, Deutsche said the primary-secondary mortgage spread is at around 90 basis points compared to an average spread over the past five years of 60 basis points.With the further decline, Credit Suisse projects the MBA's Conventional Refi Index could pop up towards 4500 for the week ending August 12 from 3881. This suggests a print of 4200 on the Composite Refi Index from 3626 reported yesterday.The flight to safety pressed mortgage rates lower with 15-year fixed, 5/1 hybrid ARMs and one-year ARMs all setting new record lows for the week ending Aug. 11.The 15-year rates slipped four basis points to 3.50 %, hybrids averaged 3.13% versus 3.18% percent last week, and one-year ARMs plunged 13 basis points to 2.89%.Meanwhile, the 30-year fixed mortgage rate dropped to its lowest level for 2011, averaging 4.32% compared to 4.39%t last week. It remains 15 basis points above its record low of 4.17%.Deutsche Bank Securities analysts said that despite the sharp drop in Treasury rates, the 30-year primary mortgage rate is likely to be sticky between 4.0% and 4.25%. That is the result of capacity constraints. Analysts noted in their daily MBSTrader that there is nearly $1 trillion of mortgages with note rates between 4.85% and 5.15% in agency MBS pools. As rates decline through 4.20%, "this mostly clean set of borrowers would become refinanceable, having over 65 bps of rate incentive," they said.However, employment in the origination business is down 20,000 from last fall, Deustche analysts said in their weekly research yesterday, and new guidelines from the GSEs that become effective this fall will require them to devote more resources to servicing/foreclosures versus origination.This creates an incentive for bankers to manage volume by keeping rates and MBS prices high. They added that primary-secondary mortgage spread is at around 90 basis points compared to an average spread over the past five years of 60 basis points.With the further decline, Credit Suisse analysts projected the Mortgage Bankers Association's Conventional Refinance Index could pop up towards 4500 for the week ending Aug. 12 from 3881. This suggests a print of 4200 on the Composite Refinance Index from 3626 reported yesterday.

Federal regulators are seeking input on new options for selling foreclosure properties owned by the government sponsored enterprises and the Federal Housing Administration (FHA).

As ASR reported on Aug. 1, Kroll Bond Rating Agency (KBRA) is requesting comment for its rating approach for individual RMBS transactions.

Researchers at some firms were recommending overweighting agency MBS Wednesday morning, saying relative yield advantages and the likelihood of continued tight underwriting could outweigh negative convexity concerns as more market turbulence continued to drive rates lower.

Capital One Financial Corp. has taken the second step that had seemed inevitable.The McLean, Va., bank has agreed to buy the monoline U.S. credit card and private-label credit card businesses of HSBC for a $2.6 billion premium, according to press releases issued Wednesday by Capital One and HSBC. That is an 8.75% premium for the roughly $30 billion card portfolio, the releases said.

With Bank of America dangerously weighed down by costly acquisitions, its longstanding contention that it could jettison its troubled mortgage unit Countrywide must hold considerable appeal within the company's executive offices.

Spurs Capital is coming to market with two small loan pools: a $25 million package of performing/sub-performing product, and $20 million worth of nonperforming mortgages.The offering circular is expected to reach interested investors some time on Wednesday, said one official.

Bank of America is trying to sell a $10 billion chunk of Freddie Mac mortgage servicing rights, after failing to unload a larger $50 billion package of MSRs, according to industry officials.

The Obama administration is seeking ideas from market participants on how Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) can employ bulk sales of foreclosed homes, turning these units into rentals that will help stabilize local housing markets.

The Carlyle Group said today it recently added $1 billion in new CLO assets under management.

Highland Capital Management has been appointed the manager of a $243 million CLO previously managed by CypressTree Investment Management.

The Refinance Index surged 30.4% to ~3630.5 for the week ending Aug. 5 as the 30-year average contract interest rate declined eight basis points to 4.37%.

In an unusual — and sure-to-be-humbling — move, Bank of America CEO Brian Moynihan will submit to a public grilling by a big investor on Wednesday. Hedge fund manager Bruce Berkowitz will host a 90 minute conference call with Moynihan starting at 1 p.m. EST — and he wants your "toughest questions" for Moynihan, whose troubled company's shares have fallen almost 50% this year.Berkowitz, founder of Fairholme Capital Management, said last week that the "purpose of the call is to better understand how Bank of America is navigating the economic environment." He invited skeptics to participate on the call. ASR sister publication American Banker took him at his word and sent along the list below.

The National Association of Independent Housing Professionals (NAIHP) said it has a meeting scheduled for Tuesday with the Federal Deposit Insurance Corp. (FDIC) to discuss the issue of loan buyback claims being forced upon mortgage brokers.

Many more servicers are using deficiency judgments to recoup losses, DBRS analysts said.

Fannie Mae, in a new quarterly filing, said it is receiving "higher amounts" from lenders on loan repurchase requests while its pipeline of buyback claims on defaulted mortgages continues to grow.

As the stock prices of the big banks cratered on Monday, particularly for Bank of America, pundits and industry observers began worrying that a second financial crisis was in the offing, including the possibility of the failure of a large financial institution.

Fitch Ratings intends to have expanded disclosure of representations, warranties and enforcement mechanisms in its global structured finance rating reports starting Sept. 26.

CMBS issuance could edge up in the short run, as predicted by a recent spike in origination, Standard & Poor's said in a release. CMBS conduits origination soared 638% in Q2 year-on-year, and jumped 210% from Q1, according to data from the Mortgage Bankers Assocation released last week. There is a caveat though: recent reports suggest that lending has tanked.