Risk-retention requirements for the majority of MBS and ABS sectors were in effect by the end of December, and industry participants have largely adjusted to them, according to analysts. The Dodd-Frank Act generally requires sponsors of ABS, non-agency MBS and commercial MBS to retain at least 5.0 percent of each deal. The retention requirements for residential mortgages took effect at the end of 2015, though most deals have been backed completely by qualified mortgages, which makes them exempt from risk retention. Other asset types have...
Industry observers and groups expressed support this week for President Trump’s move to put the Dodd-Frank Act under the microscope, with an eye toward scaling back its regulatory burden and possibly replacing at least parts of it with more pro-market reforms. Late last week, Trump signed an executive order that directs the Treasury secretary to consult with the heads of the agencies that comprise the Financial Stability Oversight Council, review the current regulatory structure for the U.S. financial system, and report back in 120 days. The order also lays...
Only 69.1 percent of home mortgages originated in 2016 wound up in agency or non-agency MBS issued last year, according to a new Inside MBS & ABS analysis. It was the second-lowest annual mortgage-securitization rate on record, and the third year in a row that the rate failed to reach the 70.0 percent mark. The low securitization rate mostly results from the fact that relatively few jumbo mortgages get out of bank portfolios and into the non-agency MBS market. According to Inside Mortgage Finance estimates, some $381.0 billion of jumbo mortgages were originated...[Includes one data table]
The average daily trading volume in agency MBS increased to $229.8 billion during January, the second best reading of the past year, and a sign that liquidity is improving, thanks in part to higher interest rates. According to figures compiled by the Securities Industry and Financial Markets Association, the January reading was better than the daily trading averages posted for the past four years, which ranged from a low of $178.0 billion in 2014 to a high of $222.8 billion in 2013. Agency trading volumes peaked...
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