The Congressional Budget Office is looking for ways to reduce the budget impact of government-backed mortgage programs and recommends that Fannie Mae and Freddie Mac increase their guarantee fees and/or significantly lower their loan limits. But the CBO admits those changes would result in raising the cost to borrowers and could potentially restrain the housing market. Under CBO scorekeeping, MBS guarantees provided by the two government-sponsored enterprises from 2017 to 2026 will cost the government $12 billion. Reducing subsidies also would help renew private sector participation in the secondary market, the CBO said. It proposes...
Jim Parrott, a senior fellow at the Urban Institute and owner of Falling Creek Advisors, last week outlined three steps industry participants and federal regulators could take to boost issuance of non-agency MBS. The proposal involves the establishment of a self-regulatory organization, regulatory relief for MBS that meet standards set by the SRO, and allowing non-agency MBS to be issued through the common securitization platform being developed by Fannie Mae and Freddie Mac. Parrott detailed...
In the past few years, efforts facilitated by the Treasury Department and the Structured Finance Industry Group have helped develop standards for a deal agent in non-agency MBS. The concept took a major step forward last week when SFIG published a draft deal-agent agreement. However, the agreement didn’t delve into the specifics about how a deal agent would be compensated and industry participants have a wide range of opinions on the issue. A lawyer involved with the creation of the deal agent standards said...
Fitch Ratings edged out Standard & Poor’s as the most active rating services in the non-mortgage ABS market during the first nine months of 2016, a new Inside MBS & ABS analysis and ranking reveals. Fitch also was the top rating service in the more subdued non-agency MBS market. The company rated some $10.80 billion of non-agency MBS, or 64.8 percent of the total market, which includes a substantial volume of unrated private deals. DBRS (37.2 percent market share) and Moody’s Investors Service (34.5 percent) were...[Includes two data tables]
Real estate investment trusts that invest in agency MBS could be in for some turbulence on their book values in the coming quarters if rates continue to rise – as they have since the November election. As Inside MBS & ABS went to press, most analysts had come to the same conclusion: that publicly traded mortgage REITs have underperformed most financial stocks, including nonbank lender-servicers such as Ocwen Financial, PHH Corp. and Walter Investment Management Corp. Then again, investing in so-called mREITs has never been...
This week, for only the first time this year and only the second time in the last decade, the Federal Reserve raised interest rates by 25 basis points, a move widely expected by market participants. What captured more attention was an upward adjustment of the Federal Open Market Committee’s so-called “dot plot,” suggesting that the U.S. central bank anticipates possibly raising rates three times during each of the next three years. Last year at this time, the FOMC raised...
A New York appellate court this week denied Credit Suisse’s motion to dismiss claims made by NY Attorney General Eric Schneiderman in relation to the creation and sale of MBS to investors. In a majority decision, the New York Supreme Court held that the AG’s claims of securities fraud and persistent fraud or illegality are not time-barred, finding that the claims under the state Martin Act and Executive Law are governed by the six-year statute of limitations rather than the three-year limitations found in Section 214(2) of the state’s Civil Practice Law and Rules (CPLR). As of March 21, 2012, the parties entered...
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