Securitization of home equity loans increased again in the first quarter, driven by closed-end second liens. Issuance is growing exponentially, helped by nonbanks and investor demand. (Includes two data tables.)
Banks are reducing their appetite for mortgages, providing opportunities for nonbanks to boost their investment in the mortgage market. Redwood Trust looks to be leading the way in terms of bank partnerships.
The Structured Finance Association, which is developing a compliance tool to facilitate uniformity in the non-agency MBS market on QM standards, has run into a vexing issue regarding the definition of a QM.
Regulators are pushing higher capital requirements on banks and looking favorably at credit-risk transfer transactions, helping to increase CRT issuance. Investor demand for bank CRT is also outstripping supply.
New prohibitions against conflicts of interest in the MBS and ABS market will take effect in June 2025. But SEC officials are urging industry participants to raise compliance concerns, if any, as soon as possible.
Fed stays course on MBS sales; SFA close to revising data tape for prime non-agency MBS; MBS on watch for rating upgrades by Fitch; subprime auto ABS impairments rise; commercial MBS delinquencies decline; Fannie sees tighter spreads for latest CRT; Morningstar not ready to give positive commercial MBS credit for “mass timber” construction.
Nonbanks are fueling securitization of home-equity lines-of-credit, closed-end second liens and home equity investments. Issuance jumped in 2023 as refi business dried up. (Includes two data tables.)
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