It may seem counterintuitive, but MBS backed by reperforming loans, and thus not eligible to be traded in the to-be-announced market, are the ideal assets in collateralized mortgage obligation deals. According to a report from Stifel’s fixed income strategy division, the reason is simple — most modified loans are unlikely to be refinanced as they have “a unique and desirable prepayment profile.” Borrowers with modified loans have already had their rates dramatically reduced. They're unlikely to ...

The transition away from the London Inter-bank Offered Rate could prompt significant tax issues for MBS and ABS investors. The Structured Finance Industry Group wrote to the Internal Revenue Service and Treasury last week requesting guidance on the issue. LIBOR won’t be available after 2021 and market participants are looking for an alternative reference rate. Various securities are tied to the London benchmark rate in terms of the loans that back the deals and their ...

Store closures by J.C. Penney, as part of its plan to turn around operations and return to the black, are putting pressure on mall-focused real estate investment trusts to reduce their risk exposure, Moody’s Investors Service said in a new report. J.C. Penney in February announced plans to close 27 stores this year, including 18 full-line department stores and nine home and furniture stores, spanning at least 13 states. Moody’s expects the retailer to announce more closures in ...

As a result of numerous inquiries, Ginnie Mae has provided additional clarity on the seasoning for VA refinances to help issuers comply with its 2018 guidance on pooling eligibility requirements. Under the Dodd-Frank reform act, to qualify for a Ginnie guarantee, a VA refi loan must have a recoupment period of 36 months and provide a net tangible benefit to the borrower. The seasoning requirement is aimed at curbing serial churning — the repeated refinancing of a loan to generate ...

Rating services are getting more comfortable with ABS and MBS stocked with loans originated by marketplace lenders. The share of such issuance with credit ratings is increasing and credit enhancement requirements for the deals are declining. Marketplace lenders, also known as fintech lenders, started by matching individual investors with borrowers, and funding evolved in recent years to institutional investors and ABS and MBS. Some $2.6 billion of marketplace lending ABS ...

Thanks to rising long-term interest rates, the negative yield curve that investors fretted about two weeks ago has been snuffed out, causing some market watchers to worry less about a coming recession. As Inside MBS & ABS went to press, the yield on the benchmark 10-year Treasury was at 2.51%, compared to 2.33% for the two-year and 2.44% for the three-month T-bill. As recently as March 25, the 10-year was at 2.36%, lower than short-term rates. Opinions differ, but some analysts ...

Production of new MBS and ABS fell in almost every category during the first quarter of 2019, but several markets showed rebounding volume in March, a new Inside MBS & ABS analysis shows. Preliminary estimates indicate that a total of $310.04 billion of MBS and ABS was issued in the first three months of 2019, a 10.3% decline from the previous three-month period. It marked the softest quarter in new issuance since the April-June cycle ... [Includes three data charts]

China’s residential mortgage-backed securities industry, which is younger and smaller than the U.S. RMBS market, has grown rapidly over the last few years, according to a new report from Moody’s Investor Service. Spurred by a growing mortgage market, China securitized an estimated $87 billion of residential loans in 2018. Though modest compared to the U.S. annual production, it was a record year for China, having tripled from the previous year’s total issuance and even surpassing ...

The Department of Labor in March proposed a new threshold for overtime eligibility. The proposal leaves untouched standards that have been in place since 2010, which make mortgage loan officers eligible for overtime pay. Currently, certain employees that make at least $455 per week ($23,600 per year) are exempt from overtime pay, which is paid at 1.5 times the employee’s regular rate of pay when working more than 40 hours a week. The DOL proposed increasing the overtime ...

More states are joining the chorus of calls to enforce consumer laws more rigorously, as the Consumer Financial Protection Bureau shows signs of reducing its oversight responsibility. So far, at least four states have created state watchdog agencies akin to the CFPB. The Pennsylvania Attorney General’s Office in July 2017 established a consumer financial protection unit, which focuses on mortgage issues, debt collection, payday lending and auto financing. Roughly 15 of its 25 attorneys ...