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Inside MBS & ABS

June 22, 2007

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Federal Reserve Considers Curbs on Subprime Mortgage Lending; Prepay Penalties on the Table

Under pressure from Democrats in Congress, consumer advocates and other regulators, the Federal Reserve Board may use its authority to enforce the Home Ownership and Equity Protection Act to clamp down on prepayment penalties and other popular lending practices in the... Read More

Standard & Poor’s Proposes New Guidelines For Loan Modifications in Non-Agency MBS

Bracing for a surge in loan modification activity in non-agency MBS pools this year, Standard & Poor’s this week outlined new procedures for weighing how these servicing actions may affect delinquency triggers and other issues in rating future transactions. Loan... Read More

Many Subprime Borrowers Due for Reset in 2007 May Find it Easier to Refi into Better Loan Products

While a number of critics have questioned how much Fannie Mae and Freddie Mac are going to support subprime borrowers facing payment shock, officials from the government-sponsored enterprises say there is a lot of potential business for them. Many of the borrowers... Read More

Hybrid ARMs in Alt A Deals May be Performing Worse Than Previously Thought, Study Says

Adjustable-rate mortgages in 2006 vintage Alt A MBS may be performing worse than many experts realize because of discrepancies in data reporting, according to Credit Suisse. One discrepancy is how cumulative default rates are calculated, said analysts at the... Read More

Standard & Poor’s Extends Lead in Rating Non-agency MBS in 2007; Moody’s Still Tops in Non-mortgage ABS

Standard & Poor’s rated 97.0 percent of new non-agency MBS issued during the first quarter of 2007, bolstering the company’s leading position in the market. S&P posted a huge increase in the prime jumbo market, lifting its ratings from just... [Includes two charts] Read More

Moody’s Downgrades 131 MBS Backed by 2006 Subprime Seconds as Poor Performance Continues

Late last week, Moody’s Investors Service downgraded a whopping 131 mortgage-backed securities backed by subprime second liens. The action follows extremely poor performance by the collateral with continued losses and downgrades expected. The MBS downgraded by... Read More

Fannie’s and Freddie’s Appetite for Alt A, Subprime Products Grows for Top Issuers, Hit and Miss With Lesser Players

Although Fannie Mae and Freddie Mac are clearly not playing as big a role in the subprime and Alt A markets as they did back in 2003 and 2004, the two government-sponsored enterprises continue to be significant buyers in the non-agency MBS market this year... Read More

CDO Market Rattled by Problems at Hedge Fund Managed by Bear Stearns

The high-wire collateralized debt obligation market may have dodged a bullet this week when Merrill Lynch reportedly decided to hold off on a fire sale of securities that some observers thought might spark a market-wide sell-off. According to reports, Merrill Lynch early... Read More

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