RMBS

With home sales anemic and an anticipated avalanche of foreclosures looming, policymakers are beginning to view renting troubled properties as a way to soak up inventory and put a floor on the housing market. And investors are starting to take note.

California Attorney General Kamala Harris reportedly subpoenaed Citigroup and its Citibank unit to order both to answer questions about the selling and marketing of MBS in the state, according to a Los Angeles Times report that cited a person familiar with the investigation.

New York Attorney General Eric Schneiderman has petitioned to intervene in the proposed $8.5 billion Bank of America Corp. private-label mortgage settlement.

The Department of Housing and Urban Development (HUD) has reached a settlement with Bank of America, which releases the company from liability for failing to provide alternatives to foreclosure on 57,000 delinquent government-insured mortgages.The agreement, a draft of which was obtained by American Banker, was previously undisclosed. It has been forged on a separate but parallel track from ongoing settlement talks between BofA, state attorneys general and other regulators over alleged mortgage origination and servicing failures.

One interesting instrument that has been used to take the pulse of the nonagency securitized residential mortgage market has been the U.S. subprime credit default swap index, and recently Fitch Solutions' dropped modestly and reversed its direction, ending what previously had been an unprecedented rally. This trend has looked likely to continue, although it could be short term.

One tenet of real estate investing is that you never should sell a home in a down market. And one tenet of mortgage banking has always been that you don't sell servicing rights in a down market either.

Despite a quarter-over-quarter gain of 4.1%, national home prices are still down over the entire year, according to the Clear Capital Home Data Index Market Report.

Buoyed by gains in mortgage-servicing revenue, Ocwen Financial Corp. in Atlanta reported net income of $26.4 million in the second quarter, up 65% from the $16 million it earned in the same quarter last year.

Pending U.S. risk retention regulations require "careful navigation" by securitization market participants, according to a Fitch Ratings report.

With the likelihood of legislation to create a new housing finance system increasingly remote, the government should still take interim steps to transition away from a system built around Fannie Mae and Freddie Mac, industry representatives said Wednesday.