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Inside MBS & ABS

May 19, 2006

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Increasingly Competitive Mortgage Market Demands More of Those Who Will Survive

The U.S. mortgage marketplace is still strong, but it’s becoming increasingly competitive – and demanding – for those players that survive, according to some of the participants at the Bear Stearns Mortgage Finance and Housing Markets Conference in New York this week. Panelists noted that there has been some dramatic change in the marketplace recently. “It used to be the government-sponsored enterprises dominated the market,” said S. A. Ibrahim, chief executive officer for the Radian… Read More

Secondary Market Issues Pose Problems For Securitizers of Subprime Mortgages

Demand for securities backed by subprime mortgages remains strong. But issuers are still facing a bumpy road in the secondary market. That was the message that emerged from conference calls held last week by some of the industry’s largest originators and issuers, where talk focused on the lingering challenges confronting efforts to securitize loans in a market where an influx of alternative mortgage products has altered pricing and forced strategic changes. … Read More

S&P Claims Lead in Non-Mortgage ABS Ratings, Loses Some of Its Edge in Prime MBS Sector

A shift in the business of rating prime jumbo non-agency MBS nicked a few points off Standard & Poor’s market-leading penetration of the non-agency MBS world, but the company also edged into the lead in rating non-mortgage ABS during the first quarter. According to the Inside Mortgage Finance MBS Database, S&P still was the most active rater of non-agency MBS, having graded some 91.6 percent of first quarter business on a dollar basis. That was… {Two data tables included] Read More

Alternative Mortgages Changing the Risk Profiles of Subprime MBS, Analysts Find

The composition of the subprime mortgage market is changing – and whether those changes are for the better is open to debate. On the one hand, analysts point to a rising number of alternative mortgage products as a potentially bad sign for performance in the years ahead. But on the other hand, there are indications that concerns about risk layering may be overblown. … Read More

Two Lenders Stand Behind 25% of Mortgage Securities Issuance in Early 2006; Scores More Divvy Up the Rest

Countrywide Financial and Wells Fargo accounted for more than one fourth of the total volume of mortgage securities produced during the first quarter of 2006, in a market that still makes room for much smaller institutions to play a role. Countrywide produced $81.84 billion of mortgage securities during the first quarter of this year, giving the company a hefty 16.1 percent share of the market. The company’s MBS production during the first three months of… [One data table included] Read More

Banks Taking a Different View of Mortgage Securities Market, Likely to Stay, Study Says

Commercial banks have defied expert predictions and continued to increase their holdings of mortgage securities in recent years, and Credit Suisse analysts suggest that trend reflects a structural change in the industry rather than a cyclical oddity. Banks are now motivated to be more active in the liquid agency MBS market than they have been in the past, according to a new study by Credit Suisse. As a group, banks have defied conventional wisdom by… Read More

Mortgage Securities Backed by ARMs, Negative Amortization May Begin to Falter, S&P Predicts

With home prices overvalued nationally, a rise in short-term interest rates could lead to problems on speculative-grade residential MBS, according to a new Standard & Poor’s analysis. “Home prices are currently about 20 percent overvalued nationally, compared with their historical ratio to income,” S&P said. The company found that home prices in the Northeast and West Coast are overvalued by 30 percent and only about 10 percent too high in the rest of the country. … Read More

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