Securitization of commercial mortgages was down slightly in 2016 as a result of a sharp drop in the non-agency commercial MBS market, according to a new Inside MBS & ABS analysis. Meanwhile, the agency multifamily MBS platforms cranked out record new issuance last year. In total, some $209.03 billion of commercial-property MBS were issued last year, a 3.1 percent drop from 2015. It still ranked as the second most-productive year in commercial MBS issuance since 2007, the year before the financial market meltdown. But non-agency CMBS issuance fell...[Includes one data table]
This year, the commercial MBS market will see the influence of the newly effective Securities and Exchange Commission rule on CMBS risk retention, which likely will mean higher credit quality but also a degree of unpredictability when it comes to issuance, according to industry analysts. At Wells Fargo Securities, analysts who cover the CMBS space are forecasting non-agency issuance of $65.0 billion in 2017. “While CMBS issuance has historically grown with the economy, this is not exactly the typical cycle,” they said in a recent client note. “Economic growth has been uneven and property fundamentals seem to be maturing.” Requiring CMBS issuers to retain at least 5 percent of the credit risk adds...
Higher capital charges and the cost of capital associated with risk retention mandated by the Dodd-Frank Act will make commercial MBS less competitive with portfolio lending for loans backed by high-quality collateral, according to a new report from Moody’s Investors Service. The report stems from a Moody’s fourth-quarter 2016 analysis of three conduit transactions that were structured to comply with risk-retention prior to its implementation on Dec. 24, 2016. In each of the transactions, issuers retained 5 percent of either the securities or the collateral pool’s cash flows. In addition, the Moody’s report noted...
The average daily trading volume in agency MBS fell to $192.1 billion in December, the lowest reading of the year, according to the Securities Industry and Financial Markets Association. For the full year, however, average daily trading volume in agency product came to $206.6 billion, compared to $193.0 billion in 2015 and $178.0 billion in 2014. The last time trading volume was higher than in 2016 came three years earlier when $222.8 billion in agency product was traded on a daily basis. What the numbers actually mean is...
Moody’s says HAMP Replacement Program Credit Neutral for CRTs. The GSEs’ new Flex Modification foreclosure prevention program that will replace the expired Home Affordable Modification Program has a neutral credit impact on GSE risk-risk transfer deals. Moody’s said that the volume of modifications and the re-default performance under the Flex program will be comparable to modification levels and performance under the current programs. The firm also noted that the new program will not result in increased modification volume. Servicers have until Oct. 1, 2017, to implement the new program.Freddie’s Recent ACIS Transaction. Last week, Freddie Mac announced its last Agency Credit Insurance Structure of 2016 in the form of a $285 million offering. The GSE said it...
Origination of commercial mortgages could reach $515 billion this year, a slight improvement over 2015, but more lenders – life insurance companies and banks, in particular – are keeping the loans on their books, which doesn’t bode well for CMBS issuance. It’s the same conundrum facing the jumbo residential market: plenty of lending, but not so much in the way of securitization. As Inside MBS & ABS reported recently, issuance of CMBS increased...
ResCap Liquidating Trust last week filed two new lawsuits against lenders as it continued its efforts to recover losses due to bad loans purchased from correspondents that later forced the company into Chapter 11 bankruptcy. No other details were provided by defendant attorneys with American Mortgage Law Group, which warned that the Dec. 2 filings in Minnesota federal district court may trigger a second wave of litigation by the trust. AMLG said it has been helping a number of lenders with pre-litigation demands from the trust and has seen increased activity on that front. On Nov. 16, a federal judge dismissed...
Securitization of residential and commercial loans with Property Assessed Clean Energy (PACE) assessments has been growing over the last few years despite having only a few market players, prompting analysts to predict continued growth for the PACE securities market. Residential PACE financing has increased to $2.9 billion with 130,000 home upgrades since 2010, according to second quarter 2016 data from industry group PACE Nation. Commercial PACE financing, meanwhile, has grown to $304 million with 820 commercial projects over the same period. Three programs accounted...
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