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Inside MBS & ABS

March 3, 2006

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Fannie Mae’s Botched Accounting for MBS Holdings Due To Ineptitude, Not Earnings Manipulation, Study Finds

Fannie Mae badly fumbled its accounting for MBS held in its portfolio but the company’s failures were caused by ineptitude – rather than deliberate attempts to massage its financial statements – according to an independent investigation launched by the government-sponsored enterprise. The massive report by former Sen. Warren Rudman released late last week concluded that Fannie Mae violated an “unambiguous accounting rule” on the classification of securities as either held-to-maturity, HTM, or available-for-sale, AFS. However,… Read More

Predatory Lending Law in Upscale Maryland County Roils Sec-ondary Mortgage Market

Several non-agency MBS issuers have announced they’ll stop doing business in Montgomery County, MD, as a result of concerns about the jurisdiction’s new predatory lending statute. Mortgage industry groups have mounted a court challenge to the controversial ordinance in the affluent suburb of Washington, DC. But even as lender interests called more attention to the law, Standard & Poor’s this week announced that it would continue to rate mortgage securities backed by loans governed… Read More

Thrifts Lean More Toward Non-Agency MBS In Expanding Mortgage Securities Holdings

Thrift institutions added to their mortgage securities holdings in 2005, although at a slower pace than the growth rate in the overall market, according to a new analysis by Inside MBS & ABS. Institutions regulated by the Office of Thrift Supervision reported MBS holdings of $172.56 billion as of the end of last year, an increase of 10.3 percent from the same point in 2004. That was still well below the MBS investments of OTS… [Two data tables included] Read More

Loan Size Determines Severity of Defaults in Jumbo and Alt A MBS Pools, Moody’s Finds

A decrease in the size of collateral pools supporting some jumbo and Alt A mortgage securitizations coupled with an increase in the size of the largest loans included in such pools puts loan concentration risk in the spotlight, according to Moody’s Investors Service. In its “Sizing RMBS Large Loan Concentration Risk” report, Moody’s said large balance loans generally add more risk to a securitization as the pool size shrinks. And loan concentration risk takes on… Read More

Subprime MBS Production Soars to Record Level in 2005, And So Forth

According to data compiled by Inside MBS &ABS, a record $507.65 billion in new subprime mortgages were securitized last year, a 26.4 percent jump from 2004’s $401.47 billion in volume. The volume story was helped by a surge in issuance in the fourth quarter. Some $137.44 billion in loans were securitized during the period, making the fourth-quarter the best three month period on record, just ahead of the second quarter of last year. … [Two data tables included] Read More

GSE Portfolios Decline in January, New MBS Production Up from Last Year

Business volume at Fannie Mae and Freddie Mac slowed down in the first two months of the year, although new MBS guaranty volume is ahead of the pace set in 2005. New business activity – which includes traditional MBS guaranty volume plus purchases of non-agency MBS – dropped 11.7 percent from December to January at Fannie Mae, and fell 26.8 percent at Freddie Mac. Purchases by both government-sponsored enterprises for their retained portfolios were down… [One data table included] Read More

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