While agency MBS trading typically slows towards the end of the year, the average daily volume of trades in December 2022 was the lowest on record since the beginning of 2020. Banks are showing weak demand for the securities.
The FHFA will significantly reduce a controversial fee for comingled securities in UMBS; no consistent trend in delinquencies and losses across MBS and ABS in December; term SOFR not an option as GSEs leave LIBOR behind.
Prices on non-agency MBS took such a hit in 2022 that the market is now gaining popularity with investors, even with the threat of a recession. Still, new issuance in 2023 is expected to come in lower on an annual basis.
Increasingly, nonbanks are using their “owned” MSRs as collateral for repo lines. And why not? Servicing values continue to be strong, and prepayments are almost non-existent.
If the Second Circuit reverses a district court ruling and holds that a syndicated term loan is a security, the implications would be immense for banks, CLOs and other parties.
Spreads tightened this week for a new CRT transaction from Fannie and new non-agency MBS; prepayment rates on agency MBS exceptionally low; lessons from Silvergate Bank’s crypto activity.
In late December, Ginnie seized HECM servicing from Reverse Mortgage Funding, which had recently filed for bankruptcy. Other HECM servicers are also facing liquidity pressure, according to industry analysts.
A tough beginning to 2023 for non-QM lenders and securitizers? It looks that way, but the irony is that money managers, insurance companies and others continue to have a strong appetite for yield.
With lenders pushing mortgages that include a temporary buydown feature, MBS investors are pondering prepayment behavior for the loans. Expect loans with temporary buydowns to exhibit prepayment speeds similar to ARMs, according to an industry analyst.
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