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U.S. Bank Sues Bank of America Over RMBS Issues

first_img Demand Propels Home Prices Upward 2 days ago  Print This Post Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago The Best Markets For Residential Property Investors 2 days ago Subscribe The Best Markets For Residential Property Investors 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Tagged with: Bank of America Reverse Mortgage Backed Securities RMBS U.S. Bank Home / Daily Dose / U.S. Bank Sues Bank of America Over RMBS Issues Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer. Related Articles Previous: Technology Coming to Loan Applications Next: Temporary Extension Granted for National Flood Insurance Programcenter_img U.S. Bank Sues Bank of America Over RMBS Issues Share Save U.S. Bank has sued Bank of America, claiming that “a company it acquired sold defective mortgages to a $2 billion residential mortgage-backed securities [RMBS] trust and failed to disclose problem mortgages to the trust’s investors,” Reuters reported.According to Reuters, U.S Bank has alleged that Bank of America predecessor company First Franklin Financial Corp. “breached its contractual duties by selling the defective mortgages and failing to repurchase them after problems surfaced.” U.S. Bank filed the suit in “its capacity as trustee for the RMBS trust.”The case is just the latest in a long line of wide-ranging litigation stemming from the financial crisis, many of which is still being resolved. In 2015, Prudential Insurance Co. moved to settle its lawsuits with Bank of America NA, Merrill Lynch & Co. Inc., and First Franklin Financial Group. The suits, which were first filed in March 2013, alleged Bank of America and others knowingly sold Prudential $2.1 billion in low-quality mortgage-backed securities—and made false statements about them. Prudential claimed this left the company with more than 10,000 defective home loans, many that eventually went into default or foreclosure.Recent RMBS PerformanceMorningstar Credit Rating’s research reported that RMBS credit performance backed by nonqualified mortgage loans remained strong in Q1 2019. Morningstar’s report indicated that, while high prepayment levels may typically indicate poor loan quality, the trend of recent relatively high prepayments has not impacted credit quality. Morningstar’s report states that prepaid loans and the remaining loans have a similar credit quality, noting that many deals have seen prepayment rates above 20%.“As noted in our RMBS outlook for 2019, we expect non-QM RMBS issuance to continue to increase in 2019, with the credit quality of the collateral weakening somewhat but remaining overall consistent with the prior year,” said Morningstar in a release. “Also, we expect the non-QM RMBS transaction structures to evolve as issuers explore ways to optimize funding costs and maximize proceeds from securitization.”Government-backed loans as a whole have seen a resurgence. Kroll Bond Ratings Agency reported 63% increase in residential mortgage-backed securities issued in 2018 over 2017. The report indicated that if the U.S. GDP was to grow at the steady pace it has this year, until July 2019, the year could see “another robust issuance year in 2019.” However, factors such as higher interest rates, home price moderation, and widening spreads that have been experienced by the market in the last few weeks are likely headwinds that might pull down the performance of RMBS next year, the report revealed. Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Bank of America Reverse Mortgage Backed Securities RMBS U.S. Bank 2019-05-29 Seth Welborn May 29, 2019 5,594 Views Demand Propels Home Prices Upward 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Sign up for DS News Daily About Author: Seth Welborn The Week Ahead: Nearing the Forbearance Exit 2 days ago in Daily Dose, Featured, Market Studies, News, Secondary Marketlast_img

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