Less than $1 million separated Fitch Ratings and DBRS in the ranking of top rating agencies serving the non-agency MBS market in the first quarter of 2017, a new Inside MBS & ABS analysis reveals. Fitch was on top, although both companies had equal shares (36.5 percent) of the market. Kroll Bond Rating (21.7 percent) and Moody’s Investors Services (17.5 percent) ranked third and fourth. S&P Global was the least active rater of non-agency MBS with just an 11.5 percent share. A significant share of non-agency MBS are issued...[Includes two data tables]
The Structured Finance Industry Group called for an appeals court to enforce industry-established payment priority provisions in a significant case involving Lehman Brothers’ collateralized-debt obligations and a bankruptcy filing. Lehman Brothers Special Financing Inc. v. Bank of America N.A. centers on a “flip clause” included in 44 CDOs issued by the failed investment bank. SFIG noted that a flip clause redirects or reprioritizes cash flow upon bankruptcy, and is often incorporated in securitizations that include swaps. “As is common in the market, in structuring these transactions, the parties bargained...
An expert in the commercial real estate debt market is calling on industry participants to “reset the business to where it used to be” to stop the commercial MBS market from shrinking any further. In a recent blog, Rick Jones, partner and co-chair of Dechert’s finance and real estate practice, noted CRE securitization, or at least the conduit part of the business, continues to dwindle. It has fallen from $800 billion in outstanding principal balance in 2007 to approximately $400 billion currently, with a run rate of about $50 billion annually. The downward trend is...
The Federal Reserve took some pointed criticism on Capitol Hill this week over its handling of monetary policy since the end of the Great Recession, including its support of the housing and mortgage markets through its unprecedented quantitative easing programs. “I don’t think the added gross domestic product growth we’ve had over the last 90 months will be proven to have been worth ballooning the balance sheet from $900 billion to $4.5 trillion,” Rep. French Hill, R-AR, said during a hearing this week by the House Financial Services Subcommittee on Monetary Policy and Trade. He also said...
FUN FACT: Between 2000 and 2007, roughly $2.726 trillion of subprime residential loans were originated nationwide. Last year, just $2.0 billion were funded.
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