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Volume 2014 - Number 5

February 7, 2014

Bottom Feeders Made A Killing by Speculating In Nonprime MBS, But the Party May be Over

Investors hoping to cash in on some of the huge returns realized by speculators in legacy nonprime MBS likely have missed the boat. Moreover, principal reductions on the remaining underlying loans are now deemed a credit negative. Trading in on vintage non-agency securities has been light of late. According to a recent report from Bank of America Merrill Lynch, the rally in such securities “has reached the ninth inning.” BAML notes...

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

 

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Poll

HUD has announced a 25 basis point cut in FHA premiums, which is slated to take effect in late January. Is your lending shop for or against a cut in FHA premiums?

For. It should help lending volumes.
Against. The private MI sector should take on this risk, not the government.
Too early to say.
I believe the new White House may scuttle the idea so it doesn’t matter.

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