RMBS

Bank of America Corp. sold defective residential mortgage loans to the GSEs that later defaulted, the U.S. government said in a $1 billion fraud lawsuit against the bank.

Ocwen Financial sent out a memo to employees early this afternoon informing them that the firm won the bid for Residential Capital Corp.

Royal Bank of Scotland will pay $42 million to settle a probe by Nevada’s attorney general into its mortgage-purchase practices before the housing crisis.

Mortgage application activity dropped 12% in the week ending Oct. 19 as mortgage rates inched higher.

Just two firms showed up at the auction: Nationstar and Ocwen Financial, which is working with Walter Investment, according to industry advisors tracking the deal.

SEC chairwoman Mary Schapiro criticized the prevailing pay model for ratings agencies on Tuesday.

With BofA out of the correspondent market for almost a year, and with other aggregators paying paltry sums for the ‘servicing released premium,’ many mid-sized FHA lenders want to become direct issuers.

It appears that other bidders will make a run at Residential Capital Corp. on Tuesday and Wednesday when the firm is auctioned off by a federal bankruptcy trustee.

Speakers harped on two topics in particular: the qualified residential mortgage rule and what they see as the unfair advantage that Fannie Mae and Freddie Mac still enjoy over the private-label RMBS market.