The enormous amount of capital flowing into the commercial real estate financing industry is the biggest factor that has shaped the market in recent years, according to Brian Stoffers, global president at CBRE Capital Markets. “It’s recognized as a good place to be if you’re an asset allocator, and it’s recognized as an institutional play with growth opportunities and cash flow,” he said speaking on a recent real estate panel in Miami. “So that kind of capital flow has driven [capitalization] rates lower.” Commercial real estate lending levels are exceeding...
With interest rates expected to increase at some point in the future, federal regulators continue to raise concerns about mortgage-related interest rate risk for banks. The risk perspective report issued last week by the Office of the Comptroller of the Currency was the sixth-consecutive semi-annual report from the federal regulator to warn about the risks posed to small banks by holdings of agency mortgage-backed securities. “Material concentrations in MBS could make...
No matter how cleverly hidden, the Securities and Exchange Commission can eventually ferret out bad business practices – a costly lesson learned by AlphaBridge Capital Management. The SEC ordered AlphaBridge, a registered hedge-fund adviser, and two of its principals to pay a $5 million penalty for allegedly inflating the prices of illiquid MBS held in hedge-fund portfolios managed by the firm. The SEC charged...
The Royal Bank of Scotland may face having to pay a potential settlement of $13 billion amid claims that it sold faulty MBS to Fannie Mae and Freddie Mac, according to court documents. RBS was part of a string of litigation initiated in 2011 by the Federal Housing Finance Agency against 18 financial institutions. The suits alleged violations of federal securities laws and state laws in the sale of the non-agency MBS between 2005 and 2007. “MBS volumes linked...
Issuance of jumbo mortgage-backed securities leveled off in the second quarter of 2015 after posting strong gains in the previous three quarters, according to a new ranking and analysis by Inside Nonconforming Markets. Some $3.11 billion in jumbo MBS was issued in the second quarter, down 32.5 percent from the first three months of the year. After unexpected fluctuations in interest rates in mid-2013, jumbo MBS issuance averaged ... [Includes one data chart]
Two rating services in the past month have completed reviews of jumbo mortgage-backed securities issued in 2010 and later. The reviews led to numerous rating confirmations, some upgrades and no downgrades, prompting questions about whether criteria for rating jumbo MBS are too stringent. “I’d guess the rating services internally said ‘never again’ for downgrades,” said one participant in the jumbo MBS market. Officials at Fitch Ratings and DBRS ...
While a number of structural issues continue to limit activity in the non-agency mortgage-backed security market, reform of the government-sponsored enterprises would dramatically help the sector’s recovery, according to officials at the Securities Industry and Financial Markets Association. “Issuers and investors are not likely to build the infrastructure necessary for a vibrant private-label securities market until they have a better understanding of how the government’s role ...
Increases to guaranty fees charged by the government-sponsored enterprises along with cross-subsidization policies could prompt bank lenders to shift more of their originations from the GSEs to portfolio. According to a report released last week by the Federal Housing Finance Agency, Fannie Mae and Freddie Mac charged an average g-fee of 60 basis points for 30-year fixed-rate mortgages in 2014, up from 55 basis points the previous year and ...
For the non-agency market, the impact of anticipated action by the Federal Reserve on short-term interest rates depends on whether interest rates on mortgages also increase, according to industry analysts. Industry participants continue to wait for the Fed to increase the federal funds rate and ponder the impact higher rates will have on originations and performance. “The effect of an interest rate increase on new residential mortgage-backed security transactions will ...
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