Banks and rating services have strong concerns regarding proposed revisions to the Basel securitization framework that would impact capital requirements for securities holdings. They warn that the proposal would discourage banks from participating in the securitization markets.In December, the Basel Committee on Banking Supervision proposed a revised securitization framework it said would make capital requirements more prudent and risk sensitive, mitigate reliance on external credit ratings and reduce the so-called cliff effects in capital requirements. The BCBS proposed two possible hierarchies for assigning capital, enhancements to current ratings-based approaches, and new approaches.
The Federal Reserve looks like it will stay the course on its asset purchase program for the foreseeable future, but with more flexibility than some on Wall Street were expecting. The Fed’s Open Market Committee this week decided to continue its additional monthly purchases of $40 billion of agency MBS, along with $45 billion in longer-term Treasury securities “until the outlook for the labor market has improved substantially in a context of price stability.”
A federal judge in Los Angeles last week denied a motion by Bank of America’s Countrywide Financial unit to dismiss securities fraud claims by the Federal Housing Finance Agency on behalf of Fannie Mae and Freddie Mac for toxic MBS purchased by the government-sponsored enterprises.The FHFA’s complaint alleges that Fannie and Freddie purchased approximately $26.6 billion in residential MBS that Countrywide sold from Aug. 30, 2005, to Jan. 23, 2008. The agency alleges negligent misrepresentations and fraud related to the offerings of Countrywide MBS.
A hefty 84.0 percent of home mortgages originated in 2012 were packaged into MBS, coming up just short of the record 84.4 percent securitization rate set back in 2009, according to a new Inside MBS & ABS analysis. (Includes one data chart)
JPMorgan Chase and EverBank Financial are separately working on non-agency jumbo mortgage-backed security deals, according to presale reports released this week. Issuance by the two banks will double the number of post-crisis non-agency jumbo MBS issuers, and they are doing things a little differently than standard-setter Redwood Trust. After the pending deals close, $3.59 billion in non-agency jumbo MBS will have been issued in 2013, according to the Inside Mortgage Finance MBS Database, more than the ...
Redwood Trust continues to pump out strong non-agency jumbo mortgage-backed securities with originations from a number of lenders. The real estate investment trust’s latest MBS features lower credit enhancement levels and low loan-to-value ratios. The $576.4 million Sequoia Mortgage Trust 2013-4 issued this week received AAA ratings from Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service, with credit enhancement of 6.25 percent on the top-rated tranche. The first non-agency jumbo MBS Redwood ...
Officials at EverBank Financial said demand for non-agency jumbo mortgages is strong from borrowers and investors. The bank has increased its jumbo originations and is in the process of issuing its first non-agency mortgage-backed security. “We see strong demand for the high-quality preferred jumbo product we originate,” Rob Clements, chairman and CEO of EverBank, said this month during an investor presentation. The bank originated $397.5 million in non-agency jumbos during the fourth quarter of 2012 ...
Members of Congress remain divided on the ability of the non-agency market to sufficiently take over some or all of the housing finance functions currently supported by the government-sponsored enterprises. While Republicans are in favor of a significant expansion of the non-agency market, Democrats are calling for some sort of government guaranty for the mortgage market. “Simply put, much of the private market has not been able to re-enter the market and compete with the federal government,” said ...
Chimera Investment made progress toward resolving its non-agency mortgage-backed security-related accounting problems last week by filing its annual report – for 2011. The real estate investment trust had plans to issue non-agency MBS but those efforts have stalled as Chimera deals with its accounting issues. The annual report for 2011 included a restatement of Chimera’s financial condition as of the end of 2010 as well as restatements for consolidated statements of cash flows for 2009 and 2010 ...
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