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Inside MBS & ABS

September 29, 2006

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Congress Passes Credit Rating Agency Reform That Strives to Boost Market Competition

The House of Representatives this week approved legislation designed to boost competition in the credit rating business, sending the measure to the White House to be signed into law. Whether the new law yields any significant change in the business of rating mortgage- and asset-backed securities – a field that is heavily dominated by a few firmly entrenched companies – remains to be seen. Standard & Poor’s, Moody’s Investors Service and Fitch Ratings over the years have dominated the... Read More

Major Players Continue to Dominate MBS and ABS Ratings – Prime MBS Sector More Competitive

Standard & Poor’s and Moody’s Investors Service continued to rate just about every non-agency MBS and non-mortgage ABS issued during the first half of 2006, although some niches appear to be more competitive than they have been. A new Inside MBS & ABS analysis shows that S&P still dominates the non-agency MBS world, rating 93.3 percent of new issuance in the first six months of the year, up slightly from the 92.5 percent market share it held in 2005. The company was especially strong...[Includes 2 pages of charts] Read More

FASB Prepayment Accounting Change Could Harm Secondary Market

If a controversial change to accounting standards is implemented as planned in January, accounting for mortgage-backed securities could be a “nightmare” according to analysts. The Financial Accounting Standards Board is set to change the way prepayments are accounted for, which could signifi-cantly impact MBS, CMOs and even loan rates.FASB plans to implement FAS 155 in January to amend FAS 133 and 140. While the previous accounting standards exempted MBS, the current version of FAS 155 does not, which worries... Read More

Alternative Performance Triggers May Provide Better Protection to Investors Holding Underperforming MBS

Certain alternative performance triggers might provide superior protection to investors in home-equity securitization deals that are performing below expectation, according to a new analysis by Moody’s Investors Service. Most home-equity deals feature two performance triggers to preserve credit enhancement: a cumulative loss trigger, which is activated if the losses on a collateral pool go beyond a certain level, and a delinquency trigger, which kicks in when serious delinquencies... Read More

Ginnie Mae Simplifies Minimum Requirements for Pool Recertification, Expands Securitized Loan Eligibility

Ginnie Mae has simplified its minimum requirements for pool recertification and clarified the different recertification requirements for issues that do not have an executed representations-and-warranties agreement. “An approved R&W agreement permits an issuer’s custodian to recertify pools without receipt and review of security instruments, title policies, and intervening assignments,” said Ginnie Executive Vice President Michael Frenz. “In the normal course of business, however, R&W issuers must... Read More

Countrywide Leads in Securitization of Second Mortgages as Sector Sagged in Second Quarter

Countrywide Financial ranked as the top securitizer of second mortgages through the midway point in 2006, funneling $12.27 billion of these loans into the non-agency MBS market, according to a new ranking and analysis by Inside MBS & ABS. Most of Countrywide’s second mortgage volume was in prime home-equity lines of credit: the company issued $9.00 billion of these deals – nearly two thirds of total HELOC securitization volume in the first six months of the year. Countrywide was also...[Includes chart] Read More

Ginnie Mae Reverse Mortgage MBS: Coming Soon to a Market Near You?

An aging population that is outliving its savings is producing a modest boom in the reverse mortgage market, a fact that hasn’t been lost on the FHA, which currently runs the nation’s largest reverse loan program and is reportedly looking at ways to improve liquidity through securitization. But securitization of FHA-insured home-equity conversion mortgages still has a way to go. Sources tell Inside MBS & ABS that while officials from Ginnie Mae recently met with the Mortgage Bankers Association to talk about... Read More

GSE Reform Discussions on Portfolio Limits Now Revolving Around ‘Regulatory Discretion’

Hope of reviving the comatose effort to overhaul regulation of Fannie Mae and Freddie Mac during a lame duck session of Congress is flickering in the concept of “regulatory discretion” will make room for compromise on the controversial issue of caps on the investment portfolios of the government-sponsored enterprises. In a speech this week to the National Economists Club, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said current discussions about GSE reform are focused on... Read More

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