Housing finance reform, especially if it weakens mortgage underwriting standards, could have a negative impact on private-label MBS as well as the government-sponsored enterprises’ credit risk-transfer transactions, according to a newly published report from Moody’s Investor Services. Analysts said that various reform proposals could reduce the influence that Fannie Mae and Freddie Mac have in the market and likely increase credit risk in new MBS in the short-term. Combined with a rising interest rate environment, such reform could have a credit-negative effect. Loan origination processes and the kinds of loans produced could become...
Presumably the bureau is going to keep bringing enforcement actions like this until a final resolution is reached curbing its authority, the attorney noted…
Observers of the subprime auto ABS market are raising concerns as delinquencies rise above peaks seen during the financial crisis as lenders have loosened underwriting standards in search of market share. According to Fitch Ratings’ index of subprime auto ABS, 60+ day delinquencies on loans backing the securities hit 5.45 percent at the end of 2016. Delinquencies were up from 4.70 percent at the end of 2015 and 41 basis points higher than the peak for the sector in 2009. The index tracks an outstanding balance of $38.6 billion from 149 transactions. There were 21 active shelves in the index, up from 12 active issuers in 2010. “Smaller lenders along with recent new entrants are...
The average daily trading volume in agency MBS declined to $202.4 billion in February, one of the worst readings over the past six months, according to figures compiled by the Securities Industry and Financial Markets Association. In January, volume was a bit healthier at $229.8 billion, but that was before concerns began to mount about President Trump’s business agenda and how successful the new White House might be in rolling back regulations – financial and otherwise. As Inside MBS & ABS went to press this week, fears were...
Sometime during the second quarter of 2019, Fannie Mae and Freddie Mac will begin issuing the new uniform MBS, a completely fungible security that will replace the separate to-be-announced MBS currently issued by the two government-sponsored entities. The Federal Housing Finance Agency announced the deployment date for Release 2 of the single-security initiative this week. The new implementation date was moved back from the previous estimate of some time in 2018. The delay was...
Esaki and White propose allowing issuers to choose any number of rating services to submit credit support levels for a particular MBS or ABS, paying a bid-preparation fee for each estimate.
Two months after it was revealed that Fannie Mae would provide $1 billion in financing to single-family rental operator Invitation Homes, certain factions of the mortgage industry are starting to yell “charter creep.” Moreover, the National Association of Realtors and other trade groups are complaining that perhaps Fannie is spending too much of its limited resources helping Wall Street – the Blackstone Group grubstaked Invitation Homes initially – and not enough to help the first-time homebuyer. “What’s...
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