Michael Stegman, a counselor to the Treasury on housing finance policy, said the exercise aims to solve the “chicken-and-egg” issue that some see as holding back non-agency MBS activity.
New issuance of single-family MBS by Fannie Mae, Freddie Mac and Ginnie Mae fell 4.6 percent from December to January, according to a new Inside MBS & ABS ranking and analysis. The three agencies produced $85.18 billion of new single-family MBS last month. The good news is that was up a hefty 24.3 percent from January 2014; the bad news is January 2014 came toward the end of a nine-month swoon in agency MBS production. All of the decline in monthly MBS issuance resulted...[Includes two data charts]
The Department of Justice and other allied parties this week reached a $1.375 billion settlement with Standard & Poor’s to resolve allegations that the firm’s investment-grade ratings misled investors into buying securities backed by badly underwritten mortgages. The agreement resolves the DOJ’s 2013 lawsuit against S&P and its parent, McGraw Hill Financial Inc., along with the suits filed by 19 states and the District of Columbia. Each of the lawsuits alleges that investors incurred substantial losses on residential MBS and collateralized debt obligations that carried S&P’s ‘AAA’ ratings, which effectively masked their true credit risks. S&P was accused...
BlackRock Financial Management plans to issue a unique ABS backed by peer-to-peer consumer loans originated via the platform established by Prosper Marketplace. Moody’s Investors Service assigned ratings to Consumer Credit Origination Loan Trust 2015-1 last week, noting a number of issues for investors to consider. The ABS is expected to have a balance of $344.85 million. The loan pool Moody’s examined had a balance of $306.71 billion as of the end of December. Approximately 14 percent of the total assets are expected to be added after closing. The deal doesn’t have a projected closing date yet, according to Moody’s. The rating service assigned...
A few months, back there was scattered talk in the market that a wave of consolidation might hit publicly traded real estate investment trusts that specialize in agency MBS. But thanks to continued low interest rates and the fact that mortgage REITs continue to trade below book value, such a rollup is looking highly unlikely. “I don’t see it happening,” said Credit Suisse analyst Doug Harter. “Why would you sell for below book value when you can just liquidate?” Jason Stewart, an analyst at Compass Point Research & Trading, agrees...
Issuance of jumbo MBS and ABS has grown since 2010, but pending Federal Reserve actions regarding interest rates could stop the trend this year, according to industry analysts. The Fed is expected by many to increase interest rates for the first time in years, perhaps as soon as the end of the second quarter of 2015. Standard & Poor’s warned last week that interest rate hikes could threaten the still-rebounding structured finance market. “The Fed’s normalization of monetary policy could create...
The Mortgage Bankers Association has secured a favorable clarification from the Financial Accounting Standards Board regarding the treatment of seriously delinquent mortgages in Ginnie Mae pools. The clarification was requested after one of the Big Four accounting firms began requiring lenders that service 90 days plus delinquent loans to put the loans on the balance sheet with an offsetting liability even if they do not intend to buy the loans out of the pool. The requirement would have been...[Includes one data chart]
If issuers were to include agency-eligible mortgages with slightly less than pristine underwriting standards in new non-agency mortgage-backed securities, the deals could receive ratings with credit enhancement levels similar to the levels on recent jumbo MBS, according to the results of an exercise released this week by the Treasury Department. Treasury asked six rating services to assign ratings to hypothetical non-agency MBS comprised of $19.75 billion of mortgages ...
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