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Volume 2014 - Number 35

September 19, 2014

Fitch’s Change to Home Price Modeling Could Reduce Credit Enhancement Requirements on Non-Agency MBS

Fitch Ratings this week proposed changes in how it models home prices for loans to be included in new non-agency MBS. The change means more regions being classified as having sustainable home prices, which could lead to lower credit enhancement requirements on new securities. “The updated Sustainable Home Price model shows a stronger relationship to historical home prices and effectively distinguishes between periods of sustainable and unsustainable home prices,” the rating service said. “Under the new methodology, Fitch’s estimation of overvaluation is typically lower than in the previous model build.” Fitch has incorporated...

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This weekly covers the secondary mortgage market, including mortgage-backed securities and asset-backed securities.



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After the November elections, how long will it take for a new Congress and White House to pass GSE reform legislation?

I’m confident a bill will be passed the first year.


2 to 3 years. GSE reform is complicated.


Sadly it won’t happen in a Clinton or Trump first term.


Not in my lifetime.


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