RMBS

The yield on the benchmark 10-year Treasury fell to 2.35% Monday morning, nearing its all-time low as stocks sold off in the wake of Standard & Poor's historic debt downgrade on the U.S.

American International Group (AIG) plans to sue Bank of America along with a host of other prominent financial institutions as the insurer seeks to recover losses on MBS, according to a report in The New York Times.The newspaper, quoting sources with knowledge of the pending action, says AIG hopes to recover more than $10 billion in losses on some $28 billion in investments, claiming the bank along with its Merrill Lynch and Countrywide Financial units misrepresented the quality of mortgages.

JPMorgan Securities weighed in on the effects on the MBS market of Standard & Poor's lowering its long-term sovereign credit rating on the U.S. to 'AA+' from 'AAA'. They expect forced MBS selling to be very small.

Following its historic downgrade of the U.S., Standard and Poor’s has predictably cut the rating of Fannie Mae and Freddie Mac to ‘AA+’ from ‘AAA.’ At the same time, the agency affirmed the short-term ‘A-1+’ rating on these government-related entities, while removing them from CreditWatch Negative, where they have been since July 15.

As largely expected by the securitization market, Standard & Poor's said today that it has lowered its long-term sovereign credit rating on the U.S. to 'AA+' from 'AAA'.

A global settlement has been reached between Wells Fargo & Co. and institutional investors that purchased Wachovia securities. It is worth a of total $627 million.

Fannie Mae posted a net loss of $5.2 billion in the second quarter and Friday morning requested that the Treasury Department provide it with $5.1 billion of additional funds to keep its capital position in the black.

Starting on Sept. 26, in all reports accompanying new ABS ratings, Moody's Investors Service will include comparisons to standard benchmarks for each transaction's representations and warranties and enforcement mechanisms.

Speeds on MBS were projected to increase around 5% on average in July. However, speeds were 2% slower on FNMAs, flat on FHLMC Golds, and 1% higher on GNMAs.

Redwood Trust, the only firm to publicly issue Jumbo MBS in the past two years, posted a net profit of just $9 million in the second quarter, half of what it earned in 1Q11, telling investors there is a lack of quality mortgages to buy at the right price.