Moody’s proposed establishing ESG “issuer profile scores” and “credit impact scores” for structured finance transactions rated by the firm. DBRS, too, has released its approach to ESG risk factors in credit ratings.
Non-agency MBS with mortgages originated by CDFIs faces scrutiny from rating services; The Change Company pushes back; MBS and ABS investor preferences on credit scoring models.
Issuance of expanded-credit MBS flowed in the first half of the year even as lenders grappled with higher interest rates. Issuance is expected to slow as lenders work to establish a new supply of loans with higher interest rates.
The Structured Finance Association had asked the Securities and Exchange Commission to hold off on new environmental, social and governance naming and disclosure requirements for asset-backed securities while SFA works on its ESG best practices.
After a two-week lull in issuance of jumbo MBS, a handful of deals hit the market. MBS issuers are facing weak demand from investors, with whole-loan outlets often offering better pricing.
A handful of real estate investment trusts acquired non-QMs at a discount as interest rates increased during the first quarter. Lenders selling the loans took some losses but appear to have weathered the storm.
MFA Financial took a large loss in the first quarter as rising interest rates reduced the value of non-QMs on the REIT’s balance sheet. Lima One, a business-purpose lender now owned by MFA, was a bright spot.