RMBS

After the Treasury Department rolled out its Home Affordable Modification Principal (HAMP) reduction program in October 2010, it didn’t take long to figure out the incentive payments to investors were not high enough to encourage a high level of participation.

Mortgages outperformed over the week based on expectations that the Federal Reserve will initiate QE3 at its September meeting and a drought in supply.

Citigroup plans to cut roughly 350 additional jobs this year from its securities division, which includes investment banking and trading, according to published reports.

The U.K. RMBS pipeline added a £680 million ($1.06 billion) transaction that is backed by a pool of prime U.K. residential mortgage loans originated by the former Britannia Building Society and the Co-operative Bank plc.

Market participants believe the availability of new mortgage production is an obstacle to QE3 despite Federal Reserve Chairman Ben Bernanke's supportive comments in his semi-annual congressional testimony on Tuesday, BNP Paribas MBS analysts said in a report released yesterday.

A proposal by San Bernardino County to use eminent domain to seize, and then restructure, underwater private-label mortgages would result in more than just losses to private investors. Fannie Mae, Freddie Mac and the Federal Home Loan Banks are also in major investors in private-label securities and they too would suffer if the county took over what is estimated to be 150,000 underwater mortgages.

The Securities Industry and Financial Markets Association (SIFMA) has reached a consensus on the issue of cities using their power of eminent domain to refinance underwater mortgages (using reducing principal reductions) that reside in private-label MBS, saying it will foul up the securitization process.

Thanks to continued, ultra-low interest rates, Freddie Mac is feeling quite bullish about loan production for the remainder of 2012, hiking its origination forecast by $200 billion to $1.65 trillion for the year.

The Prestwick Mortgage Group is marketing a $58 million package of mortgage servicing rights backed by mostly multifamily commercial mortgages held by private investors.

Freddie Mac reported new record lows along 30- and 15-year fixed mortgage rates as well as 5/1 hybrid ARMs for the week ending July 19. Both 30- and 15-year rates declined three basis points to 3.53% (no -point rate at 3.71%) and 2.83%, respectively. Meanwhile, 5/1 hybrids fell five basis points to a 2.69% average which matches this week's one-year ARM rate.