Secondary markets

There have not been very many weeks yet this year where the markets have not been roiled about something, and the last week was not one of them either.

Wells Fargo, the successor to Wachovia Capital Markets, told a federal court in Wichita, Kan. Friday it should dismiss NCUA's suit over mortgage-backed securities Wachovia sold to offering prospectuses.

Thirty Democratic senators are urging the Federal Housing Finance Agency to evaluate the use of principal reduction as a "targeted solution" for assisting underwater borrowers with Fannie Mae and Freddie Mac loans.

The total return to investors from U.S.-based REITs in the first quarter was 10.41%, underperforming the S&P 500, which had a 12.59% return for the period, according to the National Association of Real Estate Investment Trusts. Still, REITs were successful in raising money during the period, possibly setting the stage to jump into the commercial refinance market.

By at least two measures CMBS delinquencies took a notable upward turn in the last month, and by one measure new defaults also are still on the rise. But some observers believe the deterioration in performance is slowing in some areas and better days may lie ahead.

Small mortgage banking companies benefited from a 32% jump in loan production from the third quarter to the fourth quarter, but profitability per loan was crimped by a slight drop in pricing in the secondary mortgage market, according to a new report by the Mortgage Bankers Association.

The Federal Housing Finance Agency's three-year effort to develop standardized loan data reporting requirements for newly originated Fannie Mae and Freddie Mac mortgages will finally go live this month.

One of the major contributors to the housing bubble and subsequent collapse of the market was overinflated prices. Now, believes one CEO, the opposite scenario exists.

The Federal Housing Administration is taking an extra step to make sure certain homeowners aren't locked out of a special refinancing program that President Obama unveiled on March 6.

The volume of refinance applications increased for the first time in six weeks, while purchase applications were at their highest point in nearly four months, leading to a 4.8% seasonally adjusted increase in overall application volume, according to the Mortgage Bankers Association.

Democrats on the Senate Banking Committee are urging the Federal Housing Finance Agency to take more aggressive steps to allow refinancing by homeowners with Fannie Mae and Freddie Mac mortgages.

Investors are increasingly demanding servicers/special servicers file hazard insurance claims on REO properties regardless of whether they will be approved.

Here's a pop quiz for all jumbo MBS fans: what's the biggest stumbling block to the private label securities market taking off? Answer: the subordination levels on jumbo deals are about twice what they used to be, which means the credit pendulum has swung overly far to the conservative side.

Bank of America this month will try to unload roughly $42 billion of mortgage servicing rights through two different offerings, one involving private label product, according to investors and investment bankers familiar with the bank's auction plans.

Hudson Valley Holding Corp. has completed the sale of $474 million in loans after it was required to reduce its concentrations in commercial real estate and classified loans.

DBRS has rated a rare prime residential private-label RMBS backed by recently originated portfolio of loans and Fitch Ratings has issued an unsolicited rating on the deal.

Only a single borrower is currently delinquent among the roughly 1,800 newly originated prime loans securitized in the handful of Sequoia/Redwood private-label residential mortgage-backed security deals seen since the start of 2010, according to a Fitch report Monday.

Fannie Mae purchased $62 billion of mortgages from its seller/servicers in February, its weakest monthly acquisition volume in four months.

Mortgage loan options available have significantly shrunk during the past few years of the crisis to the point that makes some worry creativity is almost impossible, or simply dead. A closer look at borrower preferences and market data indicate product variations may not necessarily be a dare banks need to stay away from.

If you're looking for the next megabank to exit the mortgage sector the most likely candidate would be Ally Financial, the government owned bank holding company that controls No. 5 ranked servicer GMAC Mortgage/Residential Capital Corp.