Secondary

Lawyers for Bank of America Corp.'s Countrywide unit and the U.S. government returned to a federal courtroom today to spar over whether the bank owes nothing—or as much as $2 billion—for selling thousands of defective mortgage loans to Fannie Mae and Freddie Mac.

Senate Banking Committee leaders are proposing to capitalize a new mortgage cooperative with a government loan to ensure small and even regional lenders can sell their loans for cash.

Commercial and multifamily mortgage debt outstanding reached a record high during the fourth quarter, erasing the declines caused by the recession.

Mortgage bankers welcomed the Johnson-Crapo housing finance reform proposal as a start, but cautioned they had no illusions it will on its own bring private capital back to their industry.

Holders of residential mortgage-backed securities are planning to communicate with trustees and master servicers about Ocwen Financial’s practices, according to the Association of Mortgage Investors.

Sens. Tim Johnson, chairman of the Banking Committee, and Mike Crapo, the top Republican, laid out a preliminary bipartisan agreement on housing finance reform after months of deliberation.

The bank likely was worried about dealing with sellers who did not have the net worth to buy back loans.

USMI, successor to the Mortgage Insurance Cos. of America, says its top priority is to make sure whatever system replaces Fannie and Freddie uses at least as much private coverage.

A former managing director at the New York investment banking firm Jefferies & Co. has been convicted of multiple offenses involving a scheme to defraud customers trading in residential mortgage-backed securities.

As interest rates increase, prepayment speeds are falling precipitously, extending the maturities of mortgage-backed securities, especially the guaranteed variety. This trend is likely to cause future declines in MBS values.