New issuance of mortgage- and asset-backed securities faltered in the third quarter, although production levels were gaining strength in September. A new Inside MBS & ABS analysis reveals that $330.12 billion of ABS and residential MBS were issued during the third quarter, a decline of 6.3 percent from the previous three-month period. The surprisingly tepid increase in residential MBS issuance was not nearly enough to offset a substantial drop in non-mortgage ABS activity. Non-mortgage ABS issuance fell 43.4 percent from the second to the third quarter, sinking to $24.84 billion and reversing the very...(Includes one data chart)
Moodys Investors Service continued to rank as the top credit rating agency in the non-mortgage ABS market, putting its stamp on 66.9 percent of dollar volume of deals issued in the first half of the year, according to a new Inside MBS & ABS analysis. Moodys was particularly strong in the vehicle finance and business loan sectors, with market shares approaching 75.0 percent in both categories. The company showed relatively little interest in the student ABS market, but ranked second in rating credit card deals. Standard & Poors ranked second overall with a 58.3 percent share of ABS ratings. That included a near...(Includes two data charts)
Lenders looking to participate in Redwood Trusts jumbo securitization efforts must meet high standards, according to a review of the real estate investment trusts new jumbo mortgage-backed security. The major originators in the $375.2 million jumbo MBS Redwood issued last week were all considered above average by Fitch Ratings. Redwood has invested significant resources into its jumbo conduit and correspondent program in an effort to revive non-agency securitization. ...
The Treasury Market Practices Group late last week clarified its recommended fails charge trading practice for agency MBS to limit the scope to pass-throughs, where fails are most likely to happen. The agency debt and agency MBS trading practice has been updated to reflect the TMPGs recommendation that a fails charge apply to agency pass-through MBS issued or guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae, the group said. The original recommendation was that the charge apply to agency MBS issued or backed by Fannie, Freddie and Ginnie Mae, which also issue most REMICs backed by agency pass-throughs. The TMPG has not...
Redwood Trust is set to issue a non-agency mortgage-backed security backed by $375.2 million in jumbo mortgages, marking the issuers and the mortgage markets second new jumbo deal this year. Fitch Ratings is giving a AAA rating based on its new tougher standards, though it remains unclear whether another service will rate the transaction. A presale report issued last week by Fitch noted the strong characteristics of Redwoods Sequoia Mortgage Trust 2011-2. ...
In order to provide a benchmark that helps the private sector price mortgage credit, policy makers need to make an effort to replicate the standardization and uniformity currently provided by agency mortgage-backed securities, the managing director of Barclays Capital told lawmakers last week.
Standard & Poors and Fitch Ratings have announced separate ratings of two new non-agency MBS over the past two weeks, making a little noise in the long slumbering non-agency MBS market. Fitch this week released a presale report on Redwood Trusts next prime jumbo transaction, while S&P rated a securitization of seasoned subprime mortgages that drew flak because it got higher grades than the agency gave the U.S. government. The new Redwood transaction, Sequoia Mortgage Trust 2011-2, looks a lot like the companys last issuance back in February. Its backed by $375 million of squeaky-clean prime jumbo mortgages, most of which were originated by...
The Securities and Exchange Commission is weighing possible changes to a key rule that allows MBS and ABS issuers to avoid being classified as investment companies. Although the agencys primary focus is on whether it should ditch existing references in the exemption to credit ratings, officials are also looking at other potential changes. Rule 3a-7 was promulgated nearly 20 years ago so that asset-backed securities issuers would not be classified...
The American Securitization Forum this week announced a credit risk-retention model which, it claims, imposes requirements more powerful than those proposed by federal regulators. The ASF Model Residential Mortgage-Backed Securities Principles spell out steps for investigating, resolving and enforcing remedies in connection with representations and warranties in non-agency MBS transactions involving newly originated mortgages. Essentially, the ASF model requires...
Judge Rosemary Collyer of the U.S. District Court in Washington, DC, has rebuffed the Federal Deposit Insurance Corp.s effort to dismiss a $10 billion lawsuit filed by a unit of Deutsche Bank AG over pools of mortgage loans made by Washington Mutual that later went bad. Deutsche Bank, as trustee for the securitized pools at issue, filed suit against the FDIC as well as JPMorgan Chase, arguing that one or the other should be liable for losses suffered by the pool from WaMus allegedly fraudulent or poorly underwritten residential mortgages. The trusts involved had been investigated by a Senate subcommittee, which revealed that internal reviews performed by WaMu had determined that loans marked as containing fraudulent information had nevertheless been securitized and sold to investors.