RMBS

There is a significant disconnect in the Jumbo mortgage between the primary market and the secondary market. Since the 2008 financial crisis the once-thriving and vibrant non-agency, Jumbo MBS market has evaporated. Despite some attempts to resuscitate the Jumbo secondary market the gulf between investor needs and what consumers want remains large. Most of us are familiar with the expression “the elephant in the room.” Wikipedia defines this expression “as an English metaphorical idiom for an obvious truth that is being ignored or goes unaddressed.” Wikipedia goes on to say “the idiomatic expression also applies to an obvious problem or risk no one wants to discuss.” The application of this expression perfectly describes the dysfunctional gap between the terms investors want and what originators representing consumers need.

Mortgage bondholders are threatening legal action over the $25 billion national mortgage settlement, which will give the five largest servicers credits for principal writedowns that the bondholders may take.

Not only is PennyMac cranking up its correspondent lending platform, but the publicly traded REIT also plans to be an aggressive bottomfisher in the mortgage servicing rights arena.According to a recent investor presentation filed with the Securities and Exchange Commission, PennyMac said it now has the ability to scale its servicing platform up to $40 billion of “sub-performing” loans within 12 months.

Fannie Mae has priced its third multifamily DUS REMIC of the year, a $767 million deal that is notable in that it is the first ever to have separate tranches backed by both seven-year and 10-year collateral.

The U.S. Treasury Department has completed the orderly wind-down of its agency-guaranteed MBS portfolio. The Treasury’s MBS portfolio had a positive return of $25 billion.

A federal judge Friday dismissed claims by senior WesCorp Federal Credit Union officials that National Credit Union Administration 's (NCUA) may have contributed to the failure of the one-time $34-billion corporate by approving the risky investments that sunk the corporate giant.

An appellate court decision earlier this month would provide a new avenue for borrowers to file suit against mortgage servicers that deny permanent modifications under the Home Affordable Modification Program (HAMP).

Moody's Investors Service has pointed out in a report released late yesterday that the overall level of credit risk in the structured market is inching up. The rating agency predicted that the easing of credit that happened in 2011 will continue into 2012 and beyond.

Mortgage bankers funded roughly $41 billion of Jumbo loans in 4Q11, a 28% increase from the same period a year earlier, according to exclusive survey figures compiled by ASR sister publication National Mortgage News and the Quarterly Data Report.

The week revolved primarily around Tuesday's one-day Federal Open Market Committee meeting. For one that was expected to be relatively uneventful, it turned out to have anything but in terms of the markets' response.