RMBS

As developments like the Federal Reserve Bank of New York’s plan to gradually and competitively sell nonagency RMBS from the “bailout” period into an improved market suggest, it looks like we’re starting to put the recent downturn behind us in some respects.

Certain of the nation's megaservicers have agreed to sign a modified consent order with Federal regulators as part of a first step to inking a final settlement between the industry and 50 state attorneys general, sources familiar with the matter said on Friday.

Frustrated by the lack of progress with a global settlement between the 50 state attorneys general and the top mortgage servicers, federal banking regulators are expected to move forward with their own enforcement actions against 14 servicers as early as next week.

Investors have proven slow to return to the European securitization market. The limited appetite has been matched by a lackluster amount of securitization supply that market analysts said has created an imbalance in secondary and primary securitization pricing.

Formulating the rules to implement the Dodd-Frank Act has proven to be challenging. Regulators both missed and moved deadlines to accomplish this monumental task.

As 2011 MBS outlooks were being formulated, mortgage rate levels were much lower. This lead to expectations of increased paydowns from the Federal Reserve, theU.S Treasury and the GSEs as a result of the elevated prepayment speeds.

New Jersey, Illinois and Maryland don't get much attention for their middle-of-the-pack foreclosure rates. But CoreLogic said these three states have the highest levels of distressed homes that are not yet listed for sale but make up the shadow inventory.

The outcome of the negotiations between servicers, the group of state Attorneys General and the fledgling Consumer Financial Protection Bureau (CFPB) is extremely important to the future of housing and mortgage lending. The initial documents and press reports, unfortunately, are not encouraging. The proposed Settlement Terms released by the AGs in early March, combined with press reports of enormous fines being sought as part of any settlement, lead to the conclusion that the state and federal governments are together using the scandals arising from the servicing mess as a pretext to redistribute money from banks and investors to homeowners. Aside from issues of fairness, due process and execution, these discussions have enormous ramifications for the future of the mortgage industry and the housing market, particularly in light of the uncertain future of the GSEs.

The FDIC held a meeting March 29 to discuss its risk retention rules and the much debated QRM qualification.

Two and a half years after the global financial markets imploded, the dust has begun to settle, providing a clearer view on which sectors of the securitization market will thrive-and which won't.