The surging multifamily housing market in the U.S. was a major factor in the huge increase in commercial MBS issuance last year, according to a new Inside MBS & ABS analysis. A total of $206.66 billion of income-property mortgages were securitized during 2015, a 22.6 percent increase from the previous year. It was the strongest annual output of commercial MBS since 2007, the year before the wheels fell off the non-agency CMBS market. New issuance rebounded...[Includes one data table]
The credit quality of U.S. conduit/fusion commercial MBS kept degrading during the fourth quarter of 2015, while conduit loan leverage is rising and is expected to continue to do so, according to a new report from Moody’s Investors Service. Conduit loan leverage as measured by the Moody’s Loan to Value (MLTV) ratio ticked upward from 118.2 percent in the third quarter last year to 118.9 percent in the fourth quarter. This is the third time in which that metric has topped the pre-crisis peak level of 117.5 percent, the ratings service said. Further, the conduit loan MLTV rose...
One observer who follows the program had this to say: “It’s nice of them [FHA] to give money away in an election year. It’s not like they need the volume.”
The average daily trading volume for agency MBS fell to a yearly low of $149.2 billion in December, as trading desks from coast to coast continued to assess how to make money in what’s become a business of tight profit margins. Late this week, Barclays Bank unveiled a massive restructuring of its MBS and whole-loan trading business, cutting the number of employees in the division – including traders – down to 50 from roughly 100. As a structural matter, the bank is moving...
MBS backed by multifamily mortgage loans would be exempt from a proposed rule that would establish margining requirements for multifamily agency finance. Had it been implemented as originally proposed, the rule would have amended the Financial Industry Regulatory Authority’s Rule 4210 to establish margin requirements in the single-family “to-be-announced” (TBA) market. At the same time, it would have also scoped in the multifamily housing programs of Fannie Mae and FHA/Ginnie Mae, according to the Mortgage Bankers Association. FINRA filed...
The Department of Justice announced in December that a structured finance supervisor at RBS Securities pleaded guilty to participating in a multi-million dollar securities fraud scheme and is cooperating with the government’s ongoing investigation. Adam Siegel was co-head of U.S. ABS, MBS and commercial MBS trading at RBS between 2008 and 2014. The U.S. Attorney’s Office in the District of Connecticut said Siegel admitted that he and others conspired to increase RBS’s profits on trades of residential MBS and collateralized loan obligations at the expense of customers. “His crime included...
Exams by the Securities and Exchange Commission in 2015 uncovered a number of problems at rating services large and small, according to a report released by the SEC at the end of December. However, the firms weren’t identified by name because the exams aren’t public. The report is a laundry list of findings involving the 10 nationally recognized statistical rating organizations, six of which are involved in the MBS and ABS markets. The findings came from exams that focused on activities in 2014. Offending rating services generally were referred to solely based on their size, with Fitch Ratings, Moody’s Investors Service and Standard & Poor’s referred to as “larger” rating services and the other companies referred to as “smaller” rating services. The SEC said...
The seven-year-old era of zero interest rates finally came to an end this week when the Federal Reserve began what may be the first in a series of small rate hikes, opting for a modest 25 basis point rise in the federal funds rate. However, the U.S. central bank also implied it expects four more quarter-point interest rate increases next year. The median projection among Fed Open Market Committee participants for the federal funds rate rises gradually to nearly 1.50 percent in late 2016 and 2.50 percent in late 2017, Fed chair Janet Yellen said in discussing the central bank’s latest moves. Further, as the factors restraining economic growth continue to fade over time, in their view, the projected median rate rises...
In the past, the duty to serve rule has received a great deal of attention from manufactured housing executives who argue the GSEs are not purchasing enough of their loans.
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