Issuers of prime non-agency MBS are completing deals with mortgages originated after the market volatility of March while expanded-credit MBS continue to be stocked with older loans.
Growing student debt has exposed ABS backed by such loans to elevated risks, increasing the possibility the notes will not pay off by their final maturities.
The GSE expanded its footprint in the long-term debt market this year, issuing $165.72 billion of instruments as of Aug. 31, compared to $21.55 billion for all of 2019.
Fitch has downgraded 37% of the airline ABS it rates. Kroll and S&P also recently conducted sweeping downgrades. The rating services said air travel isn’t expected to recover until 2023 at the earliest.
Sterling Bank has offered to buy back all non-QMs after uncovering various problems with its lending program. Between May and July, the bank repurchased loans from five MBS, taking a loss.
FHFA Director Mark Calabria hopes to finalize the GSE capital rule before yearend. But the proposal is so controversial that many industry watchers said it most likely won’t survive a change in administration.
The delinquency rate for commercial MBS continued to improve in September, but the “special servicing” rate surged to a seven-year high, signaling that economic fallout from the pandemic is still festering.
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