The alternatives to credit ratings mandated by the Dodd-Frank Act aimed to address contributors to the financial crisis have their own challenges, according to a new report from the Treasury Department’s Office of Financial Research. John Soroushian, a research analyst for policy studies at the OFR, noted that before the financial crisis, rating services had an incentive to inflate ratings for MBS, ABS and other investments to expand their business. He said rating services were “key enablers” in the creation of MBS and collateralized-debt obligations. “Without ratings, it would have been...
Structured finance investors don’t have much of an appetite for new non-agency MBS, but they appear to be hungry for fast-food business securitizations. Taco Bell is the latest firm to enter the market, offering a $2.10 billion securitization. The planned Taco Bell Funding LLC Series 2016-1 received preliminary BBB ratings from Standard & Poor’s late last week. It’s the second whole-business securitization to price this year, following a $575.0 million deal involving Sonic Drive-In that also priced in April. The Taco Bell securitization is backed...
The Federal Reserve Open Market Committee concluded its regularly scheduled meeting earlier this week and, to no one’s surprise, decided yet again to keep its interest rate powder dry for the time being. The people who parse FOMC statements for a living derived some nuanced significance from a few wording changes, but are split on whether and when there will be an increase this year. The Fed noted that labor market conditions have improved further even as growth in economic activity appears to have slowed. “Growth in household spending has moderated, although households’ real income has risen at a solid rate and consumer sentiment remains high,” said the U.S. central bank. “Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft.” Meanwhile, inflation has continued...
The Financial Accounting Standards Board has proposed technical corrections and changes to its codified accounting handbook for private companies, including revisions to guidance relating to FHA and VA loans as well as transfers and servicing of financial assets. The proposed updates respond to suggestions by stakeholders and affect a wide variety of topics in the Accounting Standards Codification, which was established in September 2009 as a comprehensive source of authoritative generally accepted accounting principles used by the private sector. Among other things, a proposed amendment to Subtopic 860-20, Transfers and Servicing – Sales of Financial Assets would add...
Fannie, Freddie and Ginnie continue to dominate in multifamily mortgage securitization, capturing a combined 93.6 percent of the market in the first quarter.
Christopher Whalen, senior managing director at KBRA, noted that most of the megabanks “are showing lower mortgage banking lines, which includes MBS desk P&L [profit and loss]. Gain-on-sale is also down about 50 percent year-over-year, so that’s another factor in the balance.”
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