The Treasury Market Practices Group announced last week that a margining recommendation for agency MBS initially set to be implemented in June will be delayed until the end of 2013. The provisions apply to primary dealers working with four broad categories of forward-settling agency MBS transactions as part of an effort to manage counterparty exposures. The implementation date was delayed in response to concerns from market participants. Timothy Cameron, managing director and head of the Securities Industry and Financial Markets Associations asset management group, said buy-side participants need to negotiate agreements for each of their accounts, which can include thousands of documents. It is clear many market participants will not be able...
The International Accounting Standards Board has proposed an accounting treatment that would force holders of all but the most senior tranche of an MBS to account for those assets at fair value through net income something that has the Mortgage Bankers Association expressing concern. The MBA generally supports the introduction of fair value through an other comprehensive income (OCI) classification for financial assets held within a business model in which assets are managed both in order to collect contractual cash flows and for possible sale, according to James Gross, vice president of financial accounting and public policy for the trade group. However, the MBA has...
A white paper issued last week by the Securities Industry and Financial Markets Association recommends that a Securities and Exchange Commission mandated, but still nascent, automated securities monitoring system should and will eventually incorporate ABS and MBS products into its field of supervision. Last summer, the SEC approved a final rule requiring national securities exchanges, known as SROs, to establish a consolidated audit trail. The SEC rule requires securities exchanges and securities associations to submit to the SEC a plan to create a CAT system that will capture information regarding securities quotes and orders. In particular, the CAT system will have to track...
The key to advancing tomorrows big picture housing finance reform should begin today through a series of smaller steps starting with targeted, nearly ready-to-go reductions to Fannie Maes and Freddie Macs credit risk, according to a proposal by Moodys Analytics.
It will take about five years for the new common mortgage securitization platform being developed by Fannie Mae and Freddie Mac to become fully functional, according to Edward DeMarco, acting director of the Federal Housing Finance Agency.Testifying before the House Financial Services Committee, DeMarco explained that the plan for a single MBS platform that would be run by a new government entity separate from Fannie and Freddie does not mean we are consolidating the companies. The platform would have its own CEO and chairman and office space separate from the two government-sponsored enterprises. It could, in time, be sold to the private sector, he said.
Credit Suisse issued a $422.2 million non-agency jumbo mortgage-backed security last week with some of the loans in the private placement sourced from Two Harbors Investment. Two Harbors a real estate investment trust that has been working to issue its own non-agency MBS for more than a year is also expected to be the initial investor in the subordinate tranche of the MBS. CSMC Trust 2013-TH1 received AAA ratings from DBRS, Fitch Ratings and Standard & Poors, with 7.05 percent credit enhancement ...
Banks with major Ginnie Mae portfolios and even smaller firms increased their purchases of delinquent mortgages out of MBS pools in the fourth quarter compared to the third as a way to save money and refinance troubled loans. According to an analysis by Inside FHA Lending, the top 50 Ginnie Mae issuers bought $12.65 billion of problem loans out trusts in fourth quarter compared to $11.17 billion in the third, an increase of 13 percent. Once you buy the loan it goes into your portfolio, said Tim Rood, a partner in The Collingwood Group, a Washington-based advisory firm. You can try to re-perform it and then re-securitize it, he said. Wells Fargo, the largest Ginnie Mae servicer in the nation with a portfolio of $412 billion, purchased ... [1 chart]
Firms are looking to issue new non-agency mortgage-backed securities with looser representation and warranty standards than most post-crisis issuance, according to Fitch Ratings. The rating service issued a report this week critical of looser reps and warrants and pointed to Redwood Trust as an issuer with high standards for reps and warrants. We believe that transactions with these more aggressive rep and warranty provisions have the potential to weaken a transaction and effectively reduce ...
The volume and market share of non-agency jumbo mortgage-backed security issuance increased significantly in 2012 compared with other post-crisis years. However, volume remains well below activity seen even before the 2005 boom in non-agency MBS issuance. Some $3.46 billion in non-agency jumbo MBS were issued last year, according to the Inside Mortgage Finance MBS Database, more than four times the volume issued in 2011. Redwood Trust issued six deals last year totaling ... [Includes one data chart]
After including a significant amount of ARMs in its first deal of 2013, Redwood Trust relied largely on 30-year fixed-rate mortgages for its second non-agency jumbo mortgage-backed security of the year, according to presale reports released this week. The $666.13 million Sequoia Mortgage Trust 2013-2 is set to receive a triple-A rating with characteristics largely similar to other recent issuance from the real estate investment trust. While ARMs accounted for 21.0 percent of the dollar volume of SEMT 2013-1 ...