A lack of demand from investors continues to stymie efforts to revive issuance of non-agency MBS. While issuers have made concessions to potential investors, wide gaps remain in various areas. Some of the frustrations were discussed last week at the ABS Vegas conference produced by Information Management Network and the Structured Finance Industry Group. Diane Wold, a managing director at Two Harbors Investment, said that while non-agency MBS investors have repeatedly called for increased disclosure, issuers’ disclosure efforts sometimes go unnoticed. The Securities and Exchange Commission requires issuers to disclose results from third-party due diligence reviews at least five days before a non-agency MBS prices. The disclosures offer extensive loan-level details and are required for both publicly-registered deals and private ...
There’s got to be a better way for investors in non-agency MBS to communicate with each other than taking out ads in the Wall Street Journal, according to various attendees at the ABS Vegas conference produced by Information Management Network and the Structured Finance Industry Group. Owen Cyrulnik, a partner at the law firm of Grais & Ellsworth who has represented investors in buyback disputes, said non-agency MBS investors that have wanted to force buybacks have been “paralyzed” by the voting requirements in most non-agency MBS. The deals typically require a certain share of investors in an MBS – at least 25 percent of investors in many cases – to approve of actions. “It was literally impossible to find other certificate holders,” ...
Fannie Mae and Freddie Mac are wading into the testing phase for the Single Security initiative for to-be-announced MBS, and they agreed on common names for the new product. The first-level securities – the equivalent of Fannie’s MBS and Freddie’s participation certificates – will be called “Uniform MBS.” The second-level deals – replacing Fannie’s Megas and Freddie’s Giants – will be known as “Supers.” Fannie has already registered the trademarks for these names. It appears that domain names for both, at least the .com variety, have been grabbed up. Both government-sponsored enterprises continue to prepare for conversion, and Common Securitization Solutions continues to release software for system-to-system testing, according to the Federal Housing Finance Agency’s 2015 Scorecard Progress Report released late last week. These ...
Real estate investment trusts that focus on residential MBS continued to pare their investments in the fourth quarter, a trend that may last through the remainder of the year. Interest rate volatility and continued reports of “illiquidity” in the MBS market remain key factors plaguing the sector. Still, prices for agency product remain strong and, as Inside MBS & ABS noted recently, commercial banks and thrifts continue to add to their holdings, which reached a record $1.643 trillion at yearend 2015. The 16 public mortgage REITs tracked by this publication held $233.17 billion of MBS at year-end, 92.4 percent of which included Fannie Mae, Freddie Mac and Ginnie Mae product. The non-agency market continues to shrink as legacy nonprime securities ...
With the Consumer Financial Protection Bureau declining to provide any more formal guidance on legal liability for secondary market players when originators make errors in TRID mortgage disclosures, a group of due diligence firms is moving ahead with their own clarifications. High-level sources familiar with the matter, and who spoke to Inside MBS & ABS under the condition of anonymity, said the forthcoming clarifications have been vetted by legal counsel and are almost ready for viewing. Several top third-party review/due diligence firms are involved in the effort, including Clayton Holdings and Opus. All the major rating agencies are involved as well. “We’re working to calibrate our methodology, to bring it in line with the spirit of the CFPB letter,” said ...
Commercial banks and savings institutions reported another decline in their holdings of non-mortgage ABS in late 2015, continuing an industry pullback that’s been ongoing for two years. Banks held $135.01 billion of ABS as of the end of 2015, according to a new analysis of call-report data by Inside MBS & ABS. That was down 4.2 percent from the third quarter and off 15.9 per-cent from the end of 2014. The supply of outstanding ABS itself fell slightly in the fourth quarter, down 2.3 percent to $704.91 billion, according to data from the Securities Industry and Financial Markets Association. The ABS market had been growing more-or-less steadily since bottoming out in 2012 before fading in the second half of last ...
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