MBS & ABS Performance

Browse articles from all of our Newsletters related to MBS & ABS Performance.

September 26, 2014 - Inside Nonconforming Markets

Moody’s Touts Transparency with Rating Model

Moody’s Investors Service is working on revamping its process for rating new non-agency mortgage-backed securities, including allowing issuers to use the same loan-level model used in Moody’s rating process. “We are providing an unprecedented level of transparency through publication of our model,” Navneet Agarwal, a managing director of residential MBS at Moody’s, said last week during a webinar hosted by the rating service. In August, Moody’s published a request for comment on its proposed ...


September 26, 2014 - Inside MBS & ABS

Morningstar Credit Ratings Publishes Methodology For Rating and Monitoring U.S. ABS Transactions

Life for ABS investors got a little easier this week as Morningstar Credit Ratings put out its methodology for U.S. ABS ratings, outlining the principles the firm uses when evaluating, rating and monitoring financial, operating and corporate asset transactions. Morningstar’s analytical framework utilizes seven areas of analysis common to ABS transactions: legal structure, asset quality, transaction structure, credit support, cash flow analysis, originator and servicer quality, and counterparty risk. The analysis begins...


September 26, 2014 - Inside MBS & ABS

Treasury Sees a ‘Benchmark’ Non-Agency MBS as Potential Spur for Market

The Treasury Department is considering working with an issuer to sell a non-agency MBS that would serve as a benchmark transaction, according to agency officials. The goal of the issuance is to attract investors to the sector and create a standard term sheet for issuers. “The Treasury is thinking about facilitating one or more benchmark transactions,” Michael Stegman, counselor to the Treasury Department for housing finance policy, said this week at the ABS East conference produced by Information Management Network in Miami Beach. He said...


September 19, 2014 - Inside The GSEs

FHLBank Agency MBS Investments Drop During Second Quarter 2014

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the second quarter of 2014, with a very slight decline from the previous quarter, according to a new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. Meanwhile, Ginnie Mae securities posted an increase within the FHLBank system during the three-month period ending June 30, 2014.


September 19, 2014 - Inside The GSEs

GSE MBS Business Activity Posts Overall Increase in August

Together, Fannie Mae and Freddie Mac in August posted a combined increase in the volume of single-family mortgages securitized, according to a new Inside The GSEs analysis. Fannie and Freddie issued $61.1 billion in single-family mortgage-backed securities in August, a 5.5 percent increase from July. However, August's MBS issuance was down 56.7 percent on a year-to-date basis.


September 19, 2014 - Inside MBS & ABS

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...


September 12, 2014 - Inside MBS & ABS

Court Unseals Whistleblower Suit Against Moody’s; NY Court Dismisses FDIC Lawsuit Versus Banks

A former analyst at Moody’s Ratings has accused the credit rating agency of complicity in the financial meltdown in 2008, while a federal judge in Texas dismissed a government lawsuit against major banks involving non-agency MBS because it was filed too late. In his 2012 whistleblower lawsuit against Moody’s, Ilya Kolchinsky, a former analyst with the firm, alleged that the rating service issued inflated ratings, often “Aaa,” to most risky residential MBS and collateralized debt obligations it reviewed from 2004 to 2007. The lawsuit was brought...


September 5, 2014 - Inside MBS & ABS

S&P Considers New Rating Criteria for Servicer- Advance MBS to Spur Activity in the Sector

Standard & Poor’s is evaluating comments on a proposal to incorporate new criteria for rating residential MBS backed by mortgage servicer-advance receivables. Issuance of servicer-advance MBS has been scarce in 2014 due to the heightened regulatory scrutiny on nonbank servicers and potential ratings volatility, leading to fewer purchases of mortgage servicing rights. So far, only one deal – a $400 million unrated servicer-advance securitization in early April – has been seen this year. But with additional clarity being provided in S&P’s proposed ratings criteria and the revised methodology getting finalized over the near term, “issuers may start feeling...


September 5, 2014 - Inside MBS & ABS

SEC Issues New Rule for Credit Ratings on a Split Vote, Dissenting Commissioner Questions Legality

The rating services are set for increased oversight after the Securities and Exchange Commission approved a final rule addressing internal controls, conflicts of interest and procedures in an attempt to protect the integrity of rating methods. The SEC approved the final rule on a 3-2 vote last week, with the two Republican commissioners voicing strong opposition to provisions required by the Dodd-Frank Act. Among other issues, the final rule aims at preventing sales and marketing considerations from influencing the issuance of credit ratings on structured finance products. Under the rule, rating services are prohibited from issuing or maintaining a credit rating when a person within the rating service that participates in determining or monitoring the rating also participates in sales or marketing of a product or service of the rating service or an affiliate. The rule also targets...


September 5, 2014 - Inside MBS & ABS

SEC’s New Disclosure Rule Seen as Costly for Issuers, But Enticing Alternative May Be Unregistered Securities

Issuers of non-agency MBS and commercial MBS, among other structured finance asset classes, are set to face increased costs to comply with a rule from the Securities and Exchange Commission that increases disclosure requirements. But deals that are not issued publicly would avoid the increased costs. Last week, the SEC unanimously adopted a wide-ranging final rule known as Reg AB2, which was first proposed in 2010. By the beginning of 2017, newly issued, publicly registered non-agency MBS will have to include 270 loan-level data points disclosed via the SEC’s Electronic Data Gathering, Analysis, and Retrieval system, known as EDGAR. The required disclosures include...


August 29, 2014 - Inside FHA Lending

Over $65B in FHA Loans Securitized in 1H14

An estimated $65.5 billion of FHA-insured mortgages, excluding reverse and modified loans, were included in Ginnie Mae mortgage-backed securities issued during the first six months of 2014, according to an Inside FHA Lending analysis of agency securitization data. Ginnie Mae FHA MBS issued during the first half of the year nearly matches the total number of new FHA loans originated over the same period (see related chart, p. 4-5). FHA purchase home mortgages served as collateral on 76.3 percent of Ginnie Mae MBS issued over the six-month period, while loans to first-time homebuyers accounted for 63.0 percent of Ginnie MBS issued during the period. The FHA loans in Ginnie pools over the last two quarters showed an average FICO score of 681, a loan-to-value ratio of 92.5 percent and an average loan amount of $169,093. Except for fifth-ranked Freedom Mortgage, the rest of the top five ... [1 chart]


August 29, 2014 - Inside FHA Lending

GNMA Unable to Use $200 Million Windfall

Roughly $1 billion in damages will flow through to the FHA and Ginnie Mae from Bank of America’s record $16.65 billion global mortgage-backed securities settlement with the Department of Justice. Although most of the DOJ’s case centered around faulty private-label MBS that BofA and its forbears (namely Countrywide and Merrill Lynch) underwrote during the housing boom, a small piece of the settlement is tied to servicing chores that the bank did for Ginnie Mae. And apparently, BofA didn’t do a very good job of servicing the underlying product. The bank took over as the subservicer on roughly $26.2 billion in mortgage servicing rights that once belonged to Taylor, Bean & Whitaker, a large nonbank based in Ocala, FL. When TBW went bust in the second half of 2009, BofA was given the subservicing contract. “BofA serviced the loans for us,” said Ginnie Mae president Ted Tozer. “And they did a ...


August 29, 2014 - Inside Nonconforming Markets

SEC Sets New Rule for Ratings, Due Diligence

The Securities and Exchange Commission this week approved a final rule with new requirements for rating services and due diligence providers. The rule was approved on a 3-2 vote, with the SEC’s two Republican-appointed commissioners chafing at standards required by the Dodd-Frank Act. Among other provisions, the SEC is requiring nationally recognized statistical rating organizations to strengthen their internal controls, establish new procedures designed to protect the integrity of rating methods ...


Poll

Over the next six months we plan to hire this many more additional loan officers:

1 to 10 (We're being careful.)
11 to 30 (We're optimistic.)
More than 30 (We're in a growth mode as the banks get out.)
We're cutting back. (Are you nuts? It's ugly out there.)

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