Mounting fears that student loan debt will lead the way to the next credit crisis and legislative proposals to deal with those concerns appear to be having relatively little impact on the student loan ABS market, where new issuance has held fairly steady since the financial crisis. According to Bank of America Merrill Lynch analysts, the spreads for student loan ABS are attractive enough to “turn more positive on (the) private student loan sector.” New issuance of private student loan ABS fell off sharply following the financial crisis. Investors demanded higher risk premiums, said Jonathan...

Moody’s Investors Service is cautioning that the securitization market is again seeing elevated levels of risk, though not as bad as the go-go days before the 2008 bubble burst. In a report issued last week, Moody’s cited relaxed underwriting standards, more complex structures and the entrance of untested market participants over the last two years as signs of credit easing in a number of asset classes, including autos, credit cards, and commercial and residential property. “This reversion is not unusual for this phase of the credit cycle, when providers of credit typically start to relax standards...

The Federal Housing Finance Agency is calling for Fannie Mae and Freddie Mac to conduct an analysis of the viability of each company’s multifamily operations without government guarantees, suggesting the possibility of separating the two government-sponsored enterprises’ multifamily and single-family businesses. The GSEs’ mandated review of their multifamily operations is part of the FHFA’s 2012 “conservatorship scorecard” unveiled two weeks ago, which outlines the specific objectives and timelines for the Finance Agency’s strategic plan for the conservatorships of Fannie and Freddie. The multifamily...

The Financial Industry Regulatory Authority, a non-governmental watchdog of the securities industry, has asked the Securities and Exchange Commission to approve proposed amendments designed to increase transparency in to-be-announced transactions involving agency pass-through MBS. The proposed rule changes would establish clear requirements for reporting TBA transactions that are “for good delivery” (GD) or “not for good delivery” (NGD) to enhance the ability of investors to negotiate fair and competitive prices for agency MBS. Based on market standards, the GD and NGD classifications were...

A conservative, non-partisan public interest group has filed suit against the Federal Housing Finance Agency, claiming the FHFA has improperly denied the group’s request for documents relating to the Finance Agency’s decision to sue 17 financial institutions last fall on behalf of Fannie Mae and Freddie Mac over alleged misrepresentations of mortgage-backed securities.Last week, Judicial Watch filed its lawsuit in the U.S. District Court for the District of Columbia after the FHFA denied the group’s Freedom of Information Act request for documents related to the agency’s litigation. The Finance Agency argued that as private companies, FOIA requests do not apply to Fannie and Freddie.

Ally Financial may be getting closer to ridding itself of its non-agency mortgage unit, ResCap, the residual of a business formerly known as Residential Capital that helped invent the jumbo securitization and Alt A markets. According to reports, Ally is weighing putting ResCap into bankruptcy as a prelude to selling the business to Fortress Investment Group or another suitor. Ally’s primary mortgage business, GMAC Mortgage, is a top seller-servicer in the agency market. ResCap and GMAC Mortgage are separate entities that are both subsidiaries of the holding company that also owns Ally...

By the end of 2012, the Federal Housing Finance Agency will see a plan for a new mortgage securitization platform as a key component in its strategic plan for the conservatorships of the two government-sponsored enterprises, even as analysts warn that transferring credit risk from the GSEs to private investors is fraught with hazard. Late last week, the FHFA unveiled a new “conservatorship scorecard” that provides more details about the agency’s revamped strategic plan for a post-Fannie and Freddie secondary market. “It’s important to see the scorecard itself as further evidence of our commitment to the work...

Even though approximately $10.0 billion in non-agency representation and warranty payouts have already been included in proposed or completed settlements, another $34.0 billion in payouts are probably waiting in the wings, with Bank of America and JPMorgan facing the largest exposure by far, according to analysts at Barclays Capital. “Total payouts to non-agency investors from rep and warranty related recoveries will be $26.0 billion to $52.0 billion, using the $8.5 billion Countrywide settlement deal as a template. This corresponds to an average of 3-6 points of recoveries on non-agency securities...

Many non-agency MBS investors are upset with the $25 billion servicing settlement involving 49 state attorneys general, eight federal agencies and the nation’s five largest servicers, the full terms of which were filed in U.S. District Court this week. Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial will receive some credit for modifying loans they service but do not own, although several of these firms have indicated that they plan to focus their efforts on portfolio loans. The Association of Mortgage Investors said the settlement establishes a precedent under which the bad debts of...

More than half of the government-sponsored enterprises’ single-family guarantee book of business during the fourth quarter of 2011 consisted of loans it had purchased or guaranteed since the start of 2009, which has prompted Fannie Mae and Freddie Mac to declare the companies’ efforts to reduce the credit losses on their legacy books of business a success so far. Freddie reported $619 million in net income during the fourth quarter, compared to a net loss of $4.4 billion during the third quarter. For the full year, the GSE reported a net loss of $5.3 billion compared to a net loss of...(Includes one data chart)