Secondary Market

John J. Mack will step down as chairman of Morgan Stanley and leave the board as expected at the end of the year. Mack also will retire from a full-time role at Morgan Stanley and become a senior advisor to the firm at that time. James P. Gorman, president and CEO, was elected by the board to also take on the role of chairman, effective January 1, 2012.

Freedman Anselmo Lindberg, LLC has been added to Freddie Mac's Designated Counsel and Trustee network for the state of Illinois. The firm is already part of Fannie Mae's retained attorney network for Illinois and is now able to provide total GSE services to further meet its clients' needs. Freedman Anselmo Lindberg has been offering representation in Illinois as a full-service creditor's rights firm since 1980.

Several servicers remain below median performance level as of the first half of the year, as ranked by Fannie Mae's Servicer Total Achievement and Rewards (STAR) Program. Fannie Mae announced the STAR Program in February to measure servicers' success in providing sustainable solutions to distressed homeowners. The mid-year results released Wednesday by the GSE indicate that only four out of the 11 banks in Peer Group 1 are on track to receive at least a three-STAR rating at the end of the year.

The Collingwood Group recently announced that Tom Cronin has joined the firm as a managing director. In his new role, Cronin will lead the Collingwood Group's secondary market initiatives. He will support the firm's ongoing efforts helping clients navigate the business opportunities that exist in Washington and the housing finance industry.

While the Obama administration is still working through the specifics with the Federal Housing Finance Agency (FHFA) on how to open up refinancing to more borrowers, Keefe, Bruyette and Woods - an investment bank specializing in financial services - notes the most likely course of action is a moderate expansion of the Home Affordable Refinance Program (HARP) rather than a broad refinance program. Even a HARP expansion is likely to be modest at best, the research said.

The Senate Banking Committee held a hearing Tuesday on housing finance reform, the first of three housing-related hearings on the agenda this week. The issue of government guarantees for home mortgages came under some fire. One witness with the American Enterprise Institute in Washington, D.C. noted that without any change in policies and without any further increase in the GSEs' debt, the national debt will reach $30 trillion in 10 years.

President Obama's speech introducing his new Jobs Act included a pledge to refinance millions of home mortgages. Documents released since then by the White House and a key housing regulator reveal that the government-led refi push will indeed center around an overhaul of the Home Affordable Refinance Program (HARP). The administration says it intends to remove the barriers that exist in the current program to allow more borrowers to qualify as long as they have a history of making their payments on time.

Congressman Gary Ackerman of New York has sent a letter to House Appropriators urging them to extend the temporarily increased conforming loan limit that will otherwise expire October 1. Ackerman was joined by 36 members of Congress in his request. He suggested the conforming loan limit extension be built into the continuing resolution that will keep the federal government functioning when the new fiscal year begins next month. Private investors, though, are advocating for the loan limit increase to expire.

The American Securitization Forum (ASF) recently released the ASF Model RMBS Repurchase Principles, which were designed to align the incentives of originators with those of investors. The trade group's guidelines deal specifically with maintaining skin-in-the-game through the enforcement of representations and warranties. ASF says the risk retention rules proposed by regulators, on the other hand, are not sufficiently tailored to various asset classes and will likely have negative consequences.

Data released this week by the market research firm Trepp LLC shows that the percentage of loans held in commercial mortgage-backed securities (CMBS) paying off on their balloon date came in at just under 40 percent last month. In August, 39.5 percent of the loan balances reaching their maturity date were settled in full. The figure barely budged from 39.6 percent the previous month. Trepp says prior to 2008, payoff percentages were typically well north of 70 percent.