Fannie Mae remains on track to securitize $30 billion in multifamily loans this year, compared with nearly $34 billion in 2012, which would meet the FHFA scorecard target.
Securities issuers won a major victory as the revised proposed rule on risk retention issued by federal regulators last week removed the requirement for a premium capture cash reserve account. The highly controversial PCCRA was replaced with a fair value calculation requirement for retention which regulators said will increase the value of retained risk compared with the original proposal. “The ASF is extremely pleased to see the elimination of the premium capture cash reserve account provisions from the re-proposed rule,” said Tom Deutsch, executive director of the American Securitization Forum. “The provisions would have completely eliminated the economic incentives of securitizers to issue residential MBS and commercial MBS.” The original proposal generally measured...
Revised risk-retention requirements proposed last week by federal regulators for certain non-mortgage ABS and commercial MBS are somewhat looser than the standards initially proposed in 2011. Perhaps most significantly, “blended pools” would be allowed for commercial mortgages, commercial real estate loans and auto loans, allowing issuers to mix qualifying loans and non-qualifying loans in the same security. Securitized loans that don’t meet qualifying underwriting standards will be subject to the 5 percent risk retention as required by the Dodd-Frank Act. Blended pools would be eligible for reduced risk retention, as low as 2.5 percent. “The agencies believe...
According to the Department of Housing and Urban Development, FHA has nearly exhausted its $25 billion authority for FY 2013 to insure multifamily, risk share and health care programs.
Securitization of income-property mortgages declined by 7.9 percent during the second quarter of 2013, with the biggest drop coming in non-agency commercial MBS issuance, according to a new market analysis by Inside MBS & ABS. A total of $43.92 billion of commercial mortgage securities were issued during the second quarter, which still ranked as the second strongest quarter since the third quarter of 2007. For the first six months of 2013, total commercial mortgage securitization was up 78.5 percent from the same period, and the market appears likely to set another post-crash record by the time the year is over. The non-agency CMBS market has seen...[Includes one data chart]
Former rating analysts at two of the major rating services told the Securities and Exchange Commission that problems with the rating system are due to management at the rating services, not the analysts in charge of assigning ratings. “The management sets the policies, goals and corporate culture,” said David Jacob, the executive managing director of global structured finance at Standard & Poor’s from 2008 through 2011. “Management serves its firm’s shareholders, who look to maximize profit. There is nothing wrong with this. However, invariably there is potential for a conflict of interest.” In a comment letter submitted to the SEC last week, Jacob said...
While non-agency MBS participants largely oppose a credit rating assignment system proposed by Sen. Al Franken, D-MN, some of the main players in the market endorse a model based on ratings rotation. At a roundtable hosted by the Securities and Exchange Commission this week, Martin Hughes, CEO of Redwood Trust, said issuer-paid rating conflicts could be reduced by requiring non-agency MBS issuers to alternate rating services so that one firm didn’t rate more than two consecutive deals from the issuer. He noted that Redwood has established a self-imposed rotation between Moody’s Investors Service and Standard & Poor’s on its non-agency MBS issuance. “The requirement to frequently alternate among the nationally recognized...
Fannie Mae’s and Freddie Mac’s multifamily businesses hold “little inherent value” and would be less viable absent the government guarantees the two government-sponsored enterprises currently enjoy, according to the Federal Housing Finance Agency. In a new report, the agency also noted that the sale of the GSEs’ multifamily businesses would yield “little or no value” to the U.S. Treasury or to taxpayers, while at the same time it could be a huge disruption to the commercial real estate markets. “The new ‘stand-alone’ businesses would primarily depend...
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