RMBS

The White House's removal of Joseph Smith as a nominee to be the director of the Federal Housing Finance Agency (FHFA) does not bode well for an administration facing so many regulatory jobs to fill, observers said Friday.

Granite paper continues to climb higher as pricing last week reached its post-crisis high, above 94 for the first time since the non-asset trigger event in November 2008, according Royal Bank of Scotland (RBS) analysts.

The concept of a “fee for services” model, including a flat cash payment, has been kicked around for the past 10 years, but is finally gaining traction as the mortgage industry and regulators look for a better way to compensate residential servicers.

Moody’s Investors Service does not see a precedent being set by a provincial court in Spain that ruled that a bank’s repossession of a property effectively wiped out the borrower’s debt. The decision, handing down by a court of appeal in the northern Spanish region of Navarre, has ignited fears among RMBS players that loan defaults will jump and recovery rates drop as borrowers would have more incentive to default if their property prices are in the tank. In a report on the matter, Moody’s dismissed its potential to set precedent for other cases in the country, pointing out that “under article 105 of the Spanish Mortgage Act, a borrower is personally liable for all outstanding debt to the bank.” The full report is linked. For an article (in Spanish) on the court decision published in the daily El Pais on Jan. 26, click here.

Economists at Moody's Analytics expect a pickup in home sales and construction in 2011, but admit they are "nervous" about their price forecast because of the high level of seriously delinquent loans, distressed sales, and strategic defaults.

Now that the President's first pick to be the new GSE regulator has bowed out due to Republican opposition, the White House will likely appoint an administration official who has already been confirmed by the Senate to run the agency.

There has been much discussion around the future of the GSEs. There are three models being floated around: a hybrid market with some GSE involvement; the GSEs becoming full federal agencies; or the privatization of the markets without any GSE involvement. However, there has been little focus on how a new infrastructure for housing finance will be built.

In just under a month of being in office, Michigan’s new Attorney General, Bill Schuette, a former Congressman and state Senator, has taken a firm stance on replenishing the losses incurred to the State of Michigan Retirement Systems (SMRS).

Rep. Darrell Issa, R-Calif., and other Republican lawmakers Friday announced new legislation to end the Home Affordable Modification Program (HAMP).

Sen. Rand Paul, the newly installed 'Tea Party' senator from Kentucky, wants to eliminate the Department of Housing and Urban Development (HUD), saying the agency played a key role in the housing crisis by implementing policies that "expanded risky mortgages," including subprime loans.