Fannie Mae and Freddie Mac have found deep investor appetite for credit-risk transfer transactions, but their exploration of new structures may not get to the front-end tradeoff of deeper mortgage insurance for reduced MBS guaranty fees. During a panel session at last week’s secondary market conference sponsored by the Mortgage Bankers Association, Kevin Palmer, a Freddie vice president, said the government-sponsored enterprises launched their credit-risk transfers to reduce taxpayer exposure and distribute risk more broadly in the mortgage finance system. Fannie and Freddie have...
Morningstar Credit Ratings may increase its presence in the residential MBS market after rating its first re-securitization last week and revising its rating criteria for new non-agency MBS. The push follows Morningstar’s initial effort to rate non-agency MBS in 2012, which didn’t generate any business. The company has rated commercial MBS and single-family rental securities. Last week, the rating service published...
Banks and thrifts held $155.55 billion of non-mortgage ABS on their books as of the end of March, a 2.3 percent decline from the previous quarter, according to a new Inside MBS & ABS analysis of call-report data. The first-quarter figures mark the fifth straight quarterly decline in bank ABS holdings, which peaked at $173.80 billion at the end of 2013. Bank ABS holdings were down 9.9 percent from the first quarter of last year. Almost every ABS category was...[Includes two data tables]
The Chicago Federal Home Loan Bank hopes to issue its very first Ginnie Mae MBS by the third quarter, and if all goes well certain other FHLBanks may become issuers as well. In a recent speech, Federal Housing Finance Agency Director Mel Watt noted the interest in the program, saying the agency has “approved the requests of several other FHLBanks to participate.” Watt did not identify...
A pilot jumbo loan program between the Federal Home Loan Bank of Chicago and Redwood Trust has grown to include three more FHLBanks, with the potential to expand to more. Mortgage Partnership Finance Direct is specifically a high-balance loan product that connects the Mortgage Partnership Finance conduit program with Redwood Trust to offer access to private capital when selling fixed-rate mortgages in the secondary market. Eric Schambow, senior vice president and director of the Chicago FHLBank’s MPF Program, said...
A federal appeals court in Chicago has set aside a $2.46 billion judgment against HSBC’s Household International unit and three of its top executives and ordered a new trial. Investors won the judgment in 2009 based on charges that the bank and its top executives misled them about its mortgage lending practices. The price of the stocks subsequently collapsed as the subprime mortgage market unraveled, causing huge investor losses. The class-action lawsuit alleged...
A new analysis by an economist at the Federal Reserve suggests that the Dodd-Frank Act’s risk-retention requirements won’t adequately address the issues that caused the structured finance market to essentially freeze in 2007. A paper by Alyssa Anderson suggests a deposit insurance-like agreement between investors and private market firms or the government would better protect investors from losses and reduce ambiguity. She stressed that increased uncertainty about securities, the potential length and depth of a downturn and possible government intervention contribute to investors shying away from securitization markets. “Given the presence of ambiguity, the market freeze can persist...
Slowing growth, looser underwriting and increasing regulation are likely to tap the brakes on the joyride U.S. auto lenders have enjoyed in recent years, according to recent research from Standard & Poor’s Ratings Service. “Despite the robust performance of the auto sector in the past few years, we believe bumpier roads may lie ahead,” S&P Credit Analyst Igor Koyfman said in a recent report. “As lenders compete for market share, they have extended loan terms and increased the average financing amount, while yields have declined.” Lenders have also increased...
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