It’s a good time to be on the playing field in the consumer ABS sector, as long as you’re on top of the trends in a perhaps more focused market environment characterized largely by shifting supply and demand dynamics, top industry representatives suggest. John McElravey, senior analyst and head of consumer ABS research at Wells Fargo Securities, told participants at last week’s national meeting of the American Securitization Forum that he’s seeing a revival of consumer ABS, noting rising issuance with a focus on the auto sector, along with a shorter maturity profile. Prime auto is about 32.1...

The government’s multi-billion dollar investment bailout of Fannie Mae and Freddie Mac allowed the two government-sponsored enterprises to avoid an insolvency that could have triggered the collapse of the U.S. housing finance system, concluded a new report by the official watchdog of the GSEs’ regulator. The Federal Housing Finance Agency’s Office of Inspector General’s report – “Fannie Mae and Freddie Mac – Where the Taxpayers’ Money Went” – noted that the U.S. Treasury had dropped some $185 billion into the two GSEs since early September 2008 through the end of last year. “The enterprises’ shareholders lost...

Most of the non-mortgage securitization market seems to be approaching the more normal levels that were seen prior to the financial crisis, according to market participants, analysts and observers gathered for the annual meeting of the American Securitization Forum this week in Washington, DC. “We’ve come a pretty long way, if you think about 2008, pre-2008 and post-crisis,” said Bob Behal, principal with The Vanguard Group. He noted that there have been healthy pricing levels in auto loan and credit card ABS and more active student loan and container sectors, as well as some interesting niche products and...

Collateralized loan obligations and the securitization of esoteric ABS are gaining momentum in a market that is still missing one of the key ingredients of the boom years – non-agency residential mortgages – according to experts at the American Securitization Forum annual meeting this week. When Sara Bonesteel, managing director and head of alternative investments at Prudential Fixed Income, described the appeal of CLOs, she may as well have been outlining the antithesis of the current RMBS market. The CLO sector has fewer regulatory issues, relatively strong performance in the underlying asset and the...

The Federal Deposit Insurance Corp. late last week filed separate lawsuits against a number of companies that issued or underwrote non-agency MBS purchased by Citizens National Bank and Strategic Capital Bank, two Illinois banks that failed in May 2009. The two banks purchased some $140.5 million of non-agency MBS issued by Bear Stearns, Citicorp, Credit Suisse and Merrill Lynch. The lawsuits also name JPMorgan Securities, Citigroup, Credit Suisse, Deutsche Bank, Ally Securities, HSBC Securities, RBS Securities and UBS Securities as underwriters of these transactions. The FDIC is seeking $77.0...

The Securities and Exchange Commission has given Royal Bank of Canada the green light to issue residential mortgage covered bonds registered in the U.S. The SEC granted permission through a no-action letter shortly after RBC submitted plans for a program through which covered bonds backed by U.S. home loans will be offered to U.S. investors. RBC is a “foreign private issuer” under U.S. securities laws and, as a Form S-3 issuer, has a registered shelf with the SEC through which it can offer multiple securities on an immediate, continuous or even on a delayed basis. Covered bonds are debt securities backed by cash...

Uncertainty lingers in the wake of last week’s announced $8.7 billion settlement between non-agency MBS investors and Ally Financial’s subsidiary Residential Capital as the details and implications of the deal resonate throughout the market. The agreement with 17 residential MBS investors was struck in a photo finish shortly before ResCap’s bankruptcy filing, and it represents the second major settlement between non-agency MBS investors and the sponsors of non-agency securitizations. Bank of America’s controversial $8.5 billion proposed settlement with investors that purchased Countrywide non-agency MBS...

Banks and thrifts held $150.1 billion of non-mortgage ABS in their investment portfolios at the end of the first quarter of 2012, according to a new Inside MBS & ABS analysis of call report data. Commercial banks accounted for $135.4 billion of that amount, which was down 2.1 percent from the end of last year. Thrifts did not report their ABS holdings until the first quarter of 2012. The biggest category of bank and thrift ABS holdings were consumer loans – mostly student loans – which accounted for 32.6 percent of the institutions’ ABS investments. Credit card ABS...(Includes one data chart)

Wall Street is trying to cope with the considerable ambiguity that officials see in emerging rules on conflicts of interest in securitization and a potentially troublesome federal program that changes how issuers arrange credit ratings for their deals. The conflict-of-interest rule was included in the Dodd-Frank Act as an attempt to prevent participants in the securitization process from structuring deals that allow them to profit at the expense of investors. “When this rule first came out, it was not bad; you could probably live with this in most cases,” said Kenneth Morrison, a...

“There are a number of developments that are reflective of a more mature and fully functioning securitization market,” Brett Nicholas, president of Redwood Trust, said last week. Among other issues, he noted the recent jumbo mortgage-backed security issuance by a subsidiary of Credit Suisse Group. Nicholas’ remarks at the JMP Securities research conference last week were some of the first by Redwood officials regarding competition on jumbo MBS issuance. Until the $741.94 million issuance by Credit Suisse ...