After complaints from MBS investors regarding the reporting of performance of loans in non-agency deals, the Structured Finance Association released voluntary standards that could address the issue.
Issuance of non-agency MBS increased by 84% on a sequential basis in the first quarter of 2021. Chase accounted for nearly a third of all issuance. (Includes data chart.)
Two non-agency MBS issued in March included a significant number of loans that didn’t receive full appraisals due to GSE policies. Rating services penalized the collateral by increasing assessed LTV ratios.
AIG is set to issue a jumbo MBS with new production and MFA Financial has a non-QM deal with loans that have seasoned for 16 months. A surge of issuance also looks likely later this month.
A 30-day average of SOFR would make a good replacement for LIBOR when pricing new MBS and ABS, according to a recommendation from a committee of industry participants convened by the Fed.
Issuers of MBS and ABS should use a 30-day average of SOFR rather than LIBOR when setting adjustable-rate terms for new deals, according to recommendations from a group convened by the Fed.