Progressives and other “Dump DeMarco” advocates are looking to a “Plan B” to replace the current acting head should Rep. Mel Watt’s nomination be significantly prolonged or even stall.
While non-agency MBS participants largely oppose a credit rating assignment system proposed by Sen. Al Franken, D-MN, some of the main players in the market endorse a model based on ratings rotation. At a roundtable hosted by the Securities and Exchange Commission this week, Martin Hughes, CEO of Redwood Trust, said issuer-paid rating conflicts could be reduced by requiring non-agency MBS issuers to alternate rating services so that one firm didn’t rate more than two consecutive deals from the issuer. He noted that Redwood has established a self-imposed rotation between Moody’s Investors Service and Standard & Poor’s on its non-agency MBS issuance. “The requirement to frequently alternate among the nationally recognized...
Freddie Mac is offering $1.0 billion of its non-agency MBS holdings for sale, according to a spokesman for the government-sponsored enterprise, part of efforts to meet requirements set by the Federal Housing Finance Agency. Fannie Mae also plans asset sales of some sort, but wouldn’t commit to selling its non-agency MBS holdings. Freddie held $70.28 billion in non-agency MBS at the end of the first quarter of 2013 and Fannie held $31.22 billion. The GSEs purchased the non-agency MBS before 2009 and have allowed the holdings to run off ever since. The FHFA recently required...
Rating services are putting considerable energy into assessing the companies that are originating loans for the new breed of jumbo non-agency MBS, in addition to thorough due diligence reviews of the collateral itself, industry experts say. The rating services don’t even begin the rating process until the major loan originators in a transaction clear the “gating” process, said Kathryn Kelbaugh, a senior analyst at Moody’s Investors Service, during a panel session at last week’s secondary market conference sponsored by the Mortgage Bankers Association. “We want to know what originators are doing, have third-party reviews and look at reps and warranties. You have to pass those gates before we can do a rating.” Margaret Sweeney, a director at Fitch Ratings, said...
Real estate investment trusts that specialize in the MBS market saw another decline in the industry’s aggregate holdings during the first quarter, although the trends varied considerably among different institutions, according to a new Inside MBS & ABS analysis of REIT earnings reports. A group of 16 publicly traded mortgage REITs held a combined portfolio of $345.9 billion of MBS as of the end of March, down 3.8 percent from the previous quarter. That was still 16.3 percent higher than year-ago levels, but REIT MBS holdings peaked in the third quarter of last year, just as the Federal Reserve launched the third round of its quantitative easing program. The vast majority of REIT mortgage securities holdings, 95.4 percent, were...[Includes one data chart]
RSS