For several quarters now, commercial banks have been hanging onto underwater non-QMs originated by their warehouse clients because a sale or securitization would blow a hole in the originator’s financial hull. But one of these days, the situation will come to a head, if it hasn’t already.

Spreads on auto ABS issuance are tightening and issuers are upsizing deals amid strong demand.

The GSEs’ social disclosures should be as granular and specific as those reported for credit-risk transfer deals, according to investors.

Standards involving delinquencies and in-person audits of issuers will remain on hold through at least the end of June.

Governance and social risks are the main ESG factors that affect credit ratings of MBS and ABS, while environmental relevance remains low, according to Fitch Ratings.

While agency MBS trading typically slows towards the end of the year, the average daily volume of trades in December 2022 was the lowest on record since the beginning of 2020. Banks are showing weak demand for the securities.

The FHFA will significantly reduce a controversial fee for comingled securities in UMBS; no consistent trend in delinquencies and losses across MBS and ABS in December; term SOFR not an option as GSEs leave LIBOR behind.

Prices on non-agency MBS took such a hit in 2022 that the market is now gaining popularity with investors, even with the threat of a recession. Still, new issuance in 2023 is expected to come in lower on an annual basis.

The SEC’s rulemaking agenda includes climate-related disclosures, cybersecurity disclosures and other rules aimed at the MBS and ABS markets.

Increasingly, nonbanks are using their “owned” MSRs as collateral for repo lines. And why not? Servicing values continue to be strong, and prepayments are almost non-existent.