The secondary mortgage market could be in for historic change in the wake of President Trump this week ordering the Treasury Department to end the conservatorships of Fannie Mae and Freddie Mac and come up with a new paradigm.
The market leaders in rating non-agency MBS and non-mortgage ABS retained their top rankings in 2018. S&P Global was the top rating service in the ABS market, according to a new Inside MBS & ABS market analysis, after rating $142.24 billion of new issuance, an 11.6% percent increase from 2017. [Includes two data charts.]
Any administrative overhaul of the government-sponsored enterprises could provide enough incentive for Congress to pass housing-finance reform legislation, according to industry participants.
The Community Home Lenders Association this week asked Congress to increase the pay for Ginnie Mae staffers, arguing that a professional, well-trained workforce would ensure the agency “does not have any unintended incentives to reduce the number of issuers it regulates, merely because it might lack the capacity or expertise.”
LendingClub, which operates an online marketplace, recently issued its first consumer loan-backed ABS of the year. The loans were originated under a model that has been successfully challenged in certain courts, raising concerns from rating agencies.
A panel of the 8th Circuit Court of Appeals, in a ruling earlier this month, said a reseller of mortgages can demand that an originator repurchase defective loans, even though the contract between the two companies did not specify a timeframe within which the originator had to cure any defects. The decision reversed a lower court’s ruling.
In a first, Connecticut Green Bank will issue an ABS backed by solar renewable energy credits. The $38.6 million deal from the nation’s first green bank could provide proof of concept for future issuance.
In a class action lawsuit filed last month in the U.S. District Court for the Southern District of New York, a group of institutional investors allege that several Fannie Mae- and Freddie Mac-approved dealers colluded in a systematic scheme to manipulate prices in the secondary market for agency debt.
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