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Inside MBS & ABS

June 9, 2006

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Commercial Banks Buy Aggressively in MBS Market During Early 2006, BofA Top Investor

Commercial banks regained their affection for mortgage securities, adding nearly $43.00 billion to their aggregate holdings of single-family MBS in the first quarter. Recently released data from the Federal Deposit Insurance Corp. show commercial banks held a record $940.04 billion of mortgage-backed securities on their books at the end of March. That was up 4.8 percent from the end of 2005 – a year in which banks generally let their MBS holdings decline. … [One data table included] Read More

Tight Securities Spreads Are an Ongoing Concern To Investors, And They May Not Improve Much

Mortgage securities investors are facing ever-tightening spreads, though some investors admit that widening margins could also signal unfavorable trends in the market. At the American Securitization Form’s annual meeting this week in New York, Robert Flowers, managing director of hedge fund D.B. Zwirn & Co., captured the sentiment of many. “Arguably, there’s almost nothing of value to invest in out there,” Flowers said. … Read More

MBS Investors Concerned That Chase for Volume Is Leading to Borrowers With Lower Credit

A voracious appetite for loan volume has lead mortgage originators to lower credit standards, and MBS investors are getting nervous about it. Credit issues are not the only problems popping up in the subprime market, and there does not seem to be a quick fix. One of the main concerns raised by investors at the American Securitization Forum’s annual meeting this week in New York was the deterioration of credit standards and what that means… Read More

Shelby Predicts GSE Reform to Reach Senate Floor Soon; Lockhart Says OFHEO Needs More Legislative Authority

Sen. Richard Shelby, R-AL, the man currently directing traffic in the drive to reform the oversight of mortgage giants Fannie Mae and Freddie Mac, expects long-stalled GSE reform legislation will be brought to the floor of the full Senate by the end of summer. Speaking to reporters immediately after a confirmation hearing on the nomination of James Lockhart as permanent director of the Office of Federal Housing Enterprise Oversight, Shelby said he and his colleagues… Read More

Ginnie Mae Announces IO-MBS Program Backed by Excess Mortgage Servicing Fees

Ginnie Mae is providing guarantees for a new interest-only mortgage-backed securities program backed by the excess portion of monthly fees paid to service mortgage loan pools backing previously issued Ginnie Mae II securities. A final rule published by the Department of Housing and Urban Development in the June 5 Federal Register affirmed Ginnie Mae’s authority to implement the “Excess Yield Securities” program. The rule also creates a regulation for the program. … Read More

Mortgage Securitization Volume Drops Slightly In May, Market Correction May Continue

Preliminary data suggest that mortgage securitization volume slipped to its lowest level of the year during May, as new issuance was down in virtually every corner of the market. A total of $147.71 billion of mortgage securities were issued during May, a decline of 6.8 percent from the previous month. Production reached its peak for the year in March, when a total of $178.78 billion of new MBS were brought to market. … [Two data tables included] Read More

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