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Inside MBS & ABS

October 27, 2017

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GSE Credit-Risk Transfer Activity Slowed in 3Q17, Though Freddie Tested New Version Early in 4Q17

New issuance of credit-risk transfer debt notes by Fannie Mae and Freddie Mac slowed during the third quarter of 2017, according to a new Inside MBS & ABS analysis. However, Freddie recently issued a small CRT variation that’s designed to expand participation in the market by real estate investment trusts and foreign investors. During the third quarter, the two government-sponsored enterprises issued $3.62 billion of traditional CRT notes through ... [Includes one data chart] Read More

Trump Team Working on Principles for Housing-Finance Reform, ‘Discussion Draft’ Expected in Senate This Year

Work on housing-finance reform looks likely to ramp up in the coming weeks and months, including a document from the Trump administration and legislation in the Senate. But many policy analysts believe that passage of comprehensive legislation is still years away, giving great power to the next director of the Federal Housing Finance Agency. The Treasury Department will likely release principles on housing-finance reform within weeks, according to David Stevens ... Read More

Between Multiple Hurricanes and Wild Fires, a Market Develops for a New Breed of ‘Scratch and Dent’ Loans

With just over 4.5 million mortgage borrowers potentially affected by hurricanes Harvey and Irma, a secondary market is beginning to develop for mortgages that were originated and closed prior to the storm – but had not yet been placed into a security. According to bidders in the market, the early action focuses on loans that are “stuck” on warehouse lines. But the mortgages cannot be securitized until the property (if damaged) can be brought up to code and re-inspected ... Read More

Most Non-QM Securitized Loans Have Stayed Current, CE Should be Adequate in a Downturn

Nearly all of the securitized loans which failed to meet qualified-mortgage standards that took effect in 2014 are holding up well, and the MBS credit enhancement should be enough to handle any problems that emerge in an economic downtown, according to a new report from DBRS. The credit rating service did an analysis of the collateral and performance trends associated with the 20 securitizations backed by substantial numbers of non-QM loans that have been ... [Includes one data chart] Read More

Groups Seek Explicit MBS Guarantee, Preservation of TBA Market in GSE Reform to Successfully Serve Borrowers

Maintaining the government MBS guarantee and the agency to-be-announced market is vital to a reformed housing-finance system, according to industry trade groups testifying during a House Financial Services Subcommittee hearing this week. Kevin Chavers, a managing director at BlackRock speaking for the Securities Industry and Financial Markets Association, said the cost of credit would go up without a government MBS guarantee, and banks would not be able to ... Read More

Business Looking up for Due Diligence Firms, But Troubles Continue at The Clayton Group

With the non-agency securitization market showing signs of life this year, firms that specialize in due diligence reviews on such products should be rubbing their hands with glee. But not so with some operators, including The Clayton Group, considered one of the largest players in the market. Late this week, Radian Group, the parent company of Clayton, revealed a $12 million charge against third-quarter earnings because of restructuring charges to the unit. Last week, in a filing with ... Read More

Due Diligence Providers Call for Creation of Working Group to Draft Third-Party Review, Grading Rules

The residential mortgage securitization industry could do better with a new due diligence working group that would help establish consensus and standards for third-party reviews (TPR), according to participants in a recent TPR roundtable hosted by Fitch Ratings. Fitch’s Residential MBS Group and TPR firms generally agreed on the need to set uniform standards for testing, grading and reporting compliance with federal and state regulatory requirements. There was consensus that the ... Read More

GSE Shareholders Look to Supreme Court To Intervene in Lawsuits Against FHFA

A handful of shareholder lawsuits challenging the government’s net worth sweep of Fannie Mae and Freddie Mac earnings have landed at the Supreme Court of the United States, asking the top court to review the constitutionality of the Federal Housing Finance Agency. Back in September, the FHFA filed a motion to dismiss in Atif Bhatti, et al., vs. The Federal Housing Finance Agency, stating that the plaintiffs lack standing to bring claims of their alleged injuries being related to ... Read More

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