Non-agency MBS hit the market ahead of Thanksgiving; rating upgrades possible with new commercial MBS methodology at Moody’s; timeshare securitization performance stable; Fitch extends comment period for proposed criteria to rate shipping container ABS; California launches tobacco-settlement securitization.
Nearly $4.0 billion of non-agency MBS with mortgages for investment properties was on offer in the past two weeks. Many of the deals are backed by GSE-eligible mortgages.
No one’s shouting “fire” in a crowded non-QM movie house yet, but there are scattered concerns whole-loan pricing may have gotten ahead of itself. Something to keep an eye on?
Congress is getting closer to passing legislation that would help legacy MBS and ABS transition away from LIBOR; there’s a securitization angle in Zillow’s move to discontinue its fix-and-flip business.
Spreads on jumbo MBS widened in recent months as the supply of prime non-agency MBS surged. Redwood Trust opted for more whole-loan sales during the third quarter while JPMorgan Chase remained an active MBS issuer.
While caps on GSE acquisitions of loans for investment properties were suspended mid-September, non-agency issuers continue to package the loans in their MBS. Three firms entered the sector during October.
The non-agency securitization business is hot but maybe it’s too hot? Some market participants contend issuing banks are eyeing the rating services for talent.
The difference between interest rates on non-QMs in MBS and the interest rate paid to investors in the securities is helping to protect investors from losses. Excess spread in the sector increased as seasoned loans were repackaged.