New issuance of non-mortgage ABS increased by 15.8 percent from 2010 to 2011, according to a new Inside MBS & ABS ranking and analysis. But it was a rebound from a record low level, and the market is less than half the amount typically produced before the financial market collapse in 2008. A total of $126.8 billion of non-mortgage ABS were issued in the U.S. last year, and over half of that amount was in the auto ABS sector. Securities backed by loans and leases to vehicle users rose 22.4 percent from 2010 levels, although the sector was down slightly in the fourth quarter. Overall...(Includes two data charts)

Officials at the Federal Reserve signaled this week the bank will maintain its current level of market support for Fannie Mae, Freddie Mac and Ginnie Mae debt and MBS to help keep long-term interest rates for mortgages and other products at historic lows. The housing market remains mired in a lackluster recovery, shackled by massive foreclosures and a huge overhang of unsold inventory, despite all the unconventional support the Fed has bent over backwards to provide. During its meeting this week, the Federal Open Market Committee decided to maintain its “highly accommodative stance for monetary...

Analysts have mixed expectations for residential mortgage servicing in 2012, with some seeing it as a year of foreclosure-prevention reforms and others anticipating a higher level of vigilance in new deals and loan quality. Although issuance of non-agency MBS will be modest again in 2012, new deals will have more comprehensive reviews of originators, more reliable and better-quality loan-level data, and stronger enforcement of breaches of representations and warranties, according to Moody’s Investors Service. New deals will better address legal issues relating to foreclosure challenges. Some of the deals...

Ginnie Mae said it may begin assigning alphanumeric pool numbers for MBS pools as soon as next month because it is fast running out of available pool numbers. The agency said fixed-rate pool types will be the first recipients of the alphanumeric pool numbers. Issuers should make sure that all their remaining assigned pool numbers are used before using the newly assigned alphanumeric IDs. Issuers were advised in 2009 to have their systems ready to accept alphanumeric IDs by March 1, 2010. In another development, MountainView Servicing Group has announced its offering of a $129 million portfolio of Ginnie...

The fixed-rate mortgage accounts for nine of every 10 loans originated, and it’s easy to see why. Locking into historically low rates makes a lot of financial sense. So who is choosing to buy volatility instead? Who are the 10 percent who still borrow adjustable-rate mortgages? “For some consumers, it’s a better product,” said Frank Nothaft, chief economist at Freddie Mac. “If, for some reason, you know you’ll be leaving your home soon, a 5/1 hybrid ARM is a very fitting instrument. Choosing an ARM could be a matter of timing.” The hybrid ARM is the most common adjustable-rate product...

The transition to a housing market not completely dominated by agency financing will result in higher costs for borrowers, according to some industry participants at the American Securitization Forum annual conference held this week in Las Vegas. Even proposed risk sharing between non-agency mortgage-backed security investors and the government-sponsored enterprises is cause for concern.“I just don’t see it working all that well,” said Garry Cipponeri, a senior vice president and director of capital markets at Chase Mortgage Banking. He suggested that risk sharing could ultimately...

With a price tag of $100 billion required to forgive the principal of underwater Fannie Mae and Freddie Mac mortgages, the best bet for the government-sponsored enterprises and for taxpayers is for the GSEs to pursue a policy of principal forbearance, the Federal Housing Finance Agency said. This week, the FHFA released its analysis conducted in 2010 following numerous requests and an eventual threat of subpoena by House Democrats. The agency’s number crunchers found that “principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure.” As of June 30, 2011, Fannie and Freddie...

The non-agency MBS market sank to a record low in 2011, with just $27.59 billion in total issuance, although performance has steadied in the dwindling supply of outstanding deals. New issuance of non-agency MBS was down 56.6 percent from the level reached in 2010, ending a three-year string of modest gains. As has been the case since 2008, the vast preponderance of new issuance involved seasoned collateral – either whole loans or repackaged MBS. Over half (52.3 percent) of non-agency MBS issued in 2011 were re-securitizations, yet the volume of such deals was down 75.2 percent from...(Includes two data charts)

There has been little progress in the development of new ways to pay for credit ratings even though researchers have seven proposed systems designed to address the conflicts of interest that have plagued the non-agency MBS market, according to a new Government Accountability Office report. The GAO noted that there were five significant ratings compensation models when it last reported on the subject in 2010, and two more have since been proposed. But the authors of these models have done little additional work to flesh them out, and none has been adopted in the marketplace, the GAO said. “Given that the [rating...

New research is helping foment pervasive rumors about a massive government refinancing of agency-backed mortgages intended to bolster – or replace – the underperforming Home Affordable Refinance Program for underwater Fannie Mae and Freddie Mac borrowers. Earlier this month, industry watchers began to speculate about possible HARP changes following a note by the Washington Research Group’s Jaret Sieberg – picked up by an American Enterprise Institute blog posting – that predicts President Obama will appoint a “housing advocate” to the Federal Housing Finance Agency via a recess appointment. Such an...