Fannie Mae and Freddie Mac are likely to find the multifamily MBS space to be noticeably more competitive this year as increasing levels of private capital respond to improving market conditions, one top government-sponsored enterprise official suggests. One of the most influential factors that will determine how much volume the GSEs do in multifamily will be more competition in the market in 2014 than we saw in 2013, thanks to increasing levels of private capital, according to Manny Menendez, senior vice president of multifamily capital markets and pricing for Fannie. Besides Freddie and FHA, the three other main competitors for Fannie in the sector are...
Fannie Mae and Freddie Mac are poised to see enhanced competition in the multifamily mortgage-backed securities market in 2014, but it remains to be seen whether the GSEs regulator will follow through on proposed restraints on their multifamily footprint. The two GSEs await fresh direction from the FHFA in terms of any possible further constriction of their multifamily activity, after they were directed in 2013 to reduce their multifamily loan purchases by 10 percent from the previous year.
The long-anticipated final implementation of the so-called Volcker rule this spring will have a limited impact on securitized products, according to a recent report by Barclays. A requirement of the Dodd-Frank Act to prohibit banking entities from engaging in proprietary trading and making investments with private-equity funds and hedge funds, the Volcker rule was finalized by five federal regulators last month and becomes effective April 1, 2014. Banks should expect...
The Securities Industry and Financial Markets Association is opposed to the Financial Industry Regulatory Authoritys recent proposal to begin disseminating data for transactions in ABS and non-agency commercial MBS, out of concern it could compromise market liquidity. At issue are FINRAs proposed changes in Trade Reporting and Compliance Engine to disseminate additional ABS transactions and at the same time reduce the reporting periods for such securities. The proposal would implement shorter reporting timeframes for ABS transactions (initially 45 minutes for six months, then 15 minutes), as well as real-time dissemination of trade information. While SIFMA members agree...
A commercial MBS issued in late December that received AAA ratings from Fitch Ratings and Standard & Poors wouldnt have been rated higher than A1 by Moodys Investors Service. Moodys said the $375 million RBS Commercial Funding Inc. 2013-GSP Trust lacked structural support to obtain the highest ratings. The deal was a single-asset transaction without subordinate classes to absorb expenses that the trust cant pass along to the borrower. In cases where a subordinate class is not present to protect highly rated senior investors, some other feature, such as a reserve fund, has been employed to mitigate the risk, according to Daniel Rubock, a senior vice president at Moodys. The GSP Trust lacks any such structural mitigant. Fitch said...
Underwriting standards for loans in commercial MBS are loosening due to competition among issuers for volume, according to industry analysts. Issuers have also removed loans from two recent commercial MBS transactions due to pressure to come to the market quickly. Increasing competition among commercial MBS loan originators raises the risk that they will further lower underwriting standards from the more stringent practices used in early second-generation commercial MBS 2.0 deals, said Tad Philipp, director of commercial real estate research at Moodys Investors Service. Analysts at Fitch Ratings said...
The Financial Industry Regulatory Authority, an internal cop for the U.S. securities industry, has proposed a narrower definition of asset-backed security to facilitate the reporting of certain transactions, including Rule 144A ABS transactions, to the groups disclosure system. The new redefined ABS category would apply to a broad group of securities, including ABS pools backed by credit-card receivables, student loans, auto loans and other products and instruments that currently fall under the ABS umbrella. The proposed changes concern required reporting to FINRAs Trade Reporting and Compliance Engine. Under FINRAs proposal, ABS is...
Commercial banks and savings institutions reached a record level of investment in non-mortgage ABS during the third quarter of 2013, according to a new Inside MBS & ABS analysis and ranking. Banks and thrifts held a combined $173.12 billion of non-mortgage ABS as of the end of September, up 4.4 percent from the previous quarter. The industrys aggregate ABS portfolio was up 6.9 percent from the third quarter of last year. Banks and thrifts pushed...[Includes one data chart]
The Federal Housing Finance Agency has directed the two GSEs to accelerate their portfolio trimming by focusing on less-liquid assets other than their own MBS.
Fannie Mae and Freddie Mac picked the low-hanging fruit first and sold large chunks of their most liquid less-liquid assets during the third quarter of 2013 as the government-sponsored enterprises continued to shift their business away from retained investments. The GSEs reduced their combined holdings of commercial MBS by 32.1 percent during the third quarter, according to a new Inside MBS & ABS analysis of their retained portfolios. The Federal Housing Finance Agency has directed the two companies to accelerate their portfolio trimming by focusing on less-liquid assets other than their own MBS. The commercial MBS market has been...[Includes one data chart]