Non-agency MBS with mortgages originated by CDFIs faces scrutiny from rating services; The Change Company pushes back; MBS and ABS investor preferences on credit scoring models.
Issuance of expanded-credit MBS flowed in the first half of the year even as lenders grappled with higher interest rates. Issuance is expected to slow as lenders work to establish a new supply of loans with higher interest rates.
According to Equifax, the 60+ day delinquency rate on subprime auto loans hit a record in March. S&P countered that Equifax is double-counting loans, adding that delinquencies aren’t at record levels in the ABS market.
The Structured Finance Association had asked the Securities and Exchange Commission to hold off on new environmental, social and governance naming and disclosure requirements for asset-backed securities while SFA works on its ESG best practices.
Both delinquencies on securitized student loans and prepayment rates on student loan ABS are up and could increase further due to the Biden administration’s efforts to help distressed borrowers.