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Inside MBS & ABS

September 22, 2006

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Thrifts Retreat Slightly from MBS Market in 2nd Quarter, Shift to Non-agency Products

Savings institutions let their holdings in mortgage-related securities drain down slightly during the second quarter while continuing to shift more of their MBS investments into non-agency securities. Institutions regulated by the Office of Thrift Supervision reported $174.77 billion of mortgage securities in their portfolios at the end of June, down 0.9 percent from the previous quarter. Compared to a year ago, however, the MBS holdings of these institutions were up 10.0 percent... [Includes three data charts.] Read More

Credit Rating Agency Reform Could See Vote Soon; How Versions are Merged Will be Key

Congress might spend some of its precious time before its session ends addressing credit rating agency certification and competition, according to securities industry analysts. The House approved its rating agency legislation, H.R. 2990, in July, but that version did not sit well with several of the rating services or the American Securitization Forum. Earlier this month, Sen. Richard Shelby, R-AL, introduced a similar bill, S. 3850, which was quickly placed on the Senate’s legislative calendar... Read More

Fannie Mae Overhauls its Securities Trading Desk, Provides More Services

Fannie Mae has quietly merged its whole loan, mortgage-backed securities and early funding desks into one entity, but the government-sponsored enterprise declined to provide much detail about the newly branded Capital Markets Sales Desk. The CMSD is “a one-stop outlet with dedicated account executives to assist with trading Fannie Mae and Ginnie Mae MBS, selling whole loans, hedging pipelines, providing best execution information, training and more,” according to Fannie’s Web site. “In addition, the sales desk will... Read More

GMAC’s Mortgage Businesses Look for Ways to Combine Operations After Spinoff

GMAC’s highly profitable mortgage subsidiary, Residential Capital Corp., is quietly positioning itself for life after separation from its ailing parent, General Motors. ResCap includes both Residential Funding Corp., a leading private MBS conduit, and GMAC Residential Holding Corp., a top residen-tial mortgage banker. Cerberus Capital Management, a hedge fund, is currently set to close on a $14 billion deal to ac-quire GMAC by the fourth quarter of 2006. Once the sale is completed, ResCap will dispose of its in-terests in GMAC Bank... Read More

CDO Issuance Through First Half of 2006 Tops all of 2005, More Growth Expected

Issuance of collateralized debt obligations keeps hitting record highs and shows no signs of slowing, according to recent reports from Moody’s Investors Service and Fitch Ratings. Moody’s expects to see at least a 35 percent increase in the total dollar volume of CDO transactions rated this year. In fact, Moody’s rated more CDOs in the first half of 2006 than all of 2005. The “expectations of ‘usual’ and ‘normal’ have undergone something of a sea change” for CDOs, according to Moody’s... Read More

Will Federal Regulators Squash the Hottest Segment of the Residential Mortgage Market?

Banking regulators and lenders are coming under growing pressure to tighten up the methods used to originate so-called nontraditional home loans, the hottest corner of an otherwise cooling primary mortgage market. Whether tighter underwriting and better consumer disclosures will actually slow down the production of option ARMs, interest-only mortgages and minimalist documentation programs is a big unanswered question. Similar moves by regulators to raise standards in the subprime and home-equity markets in recent years... Read More

Outstanding Mortgage Securities

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U.S. Securitized Asset Issuance; MBA Mortgage Application Index

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