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Inside MBS & ABS

June 27, 2008

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GSEs Continue to Dominate Ranks of Non-Agency MBS Investors in Early 2008

With virtually no new production and no attractive place to sell existing holdings, investors with substantial positions in non-agency MBS when the market collapsed last year have had little choice but to watch the assets slowly drain away. At the top of the heap are Freddie Mac and Fannie Mae, the two largest investors in the non-agency MBS market, a new analysis by.... [Includes one chart] Read More

U.S. Bankruptcy Court Finds Repo Safe Harbor Applies to Mortgage-Backed Subordinated Notes

A federal bankruptcy court has issued a potentially far-reaching ruling that expands special protections for non-debtor counterparties in repurchase agreements to subordinated notes secured by residential mortgage loans. Ruling in American Home Mortgage Investment Corp. v. Lehman Bros., Inc., the U.S. Bankruptcy Court for the District of Delaware held that a... Read More

FDIC Policy on Covered Bonds Could Boost U.S. Market, But Substantial Changes Would Help

Mortgage security experts are applauding efforts by the Federal Deposit Insurance Corp. to help make covered bonds more mainstream in the U.S., but they suggested a number of improvements that could make the agency’s new policy statement even more effective. With global issuance topping an estimated $2.75 trillion, covered bonds are a major source of mortgage funding in Europe. While only... Read More

GSE Retained Portfolios Swell in May Mostly Through Retention of New MBS Issuance

Freddie Mac and Fannie Mae continued to beef up their retained portfolios last month, with most of the gains coming from MBS the government-sponsored enterprises issued themselves. Together, the two GSEs held $1.507 trillion in mortgages and MBS in their retained portfolios at the end of May. That was up 2.8 percent from the previous month and represented a 4.3 percent... [Includes one chart] Read More

Freddie Teams With BofA to Complete First Wrap Deal Since Market Disintegrated in Early 2008

Bank of America delivered some $8.14 billion of seasoned mortgages to Freddie Mac through a wrap securitization that marked just the second such transaction by a government-sponsored enterprise in 2008.Banc of America Funding 2008-FT1 is backed by a variety of prime-credit, fixed-rate mortgages with an average seasoning of 60 months, according to an analysis by Inside MBS & ABS... [Includes one graph] Read More

Housing Bill’s New GSE Regulatory Authority Will Likely Mean Higher Capital Rules for Fannie, Freddie

Despite a last-minute glitch that forced a delay in the Senate’s consideration of omnibus housing legislation this week, a new regulator for the government-sponsored enterprises now seems inevitable, and that will most likely mean higher capital requirements for Fannie Mae and Freddie Mac. H.R. 3221, the Foreclosure Prevention Act of 2008, would give a new GSE... Read More

New SEC Proposal to Limit Regulatory Reliance on Ratings Gets Better Reviews Than Earlier Plans

The Securities and Exchange Commission this week approved staff proposals to reduce the weight given to securities ratings across a variety of SEC regulations. The latest SEC proposal follows a two-part initiative announced earlier this month that was designed to reduce conflicts of interest in the ratings process and push the rating services to revise... Read More

Non-Agency MBS Investors Expect Secondary Market Will Recover, With Changes, When Home Prices Stabilize

The biggest impediment to a resurgence of the non-agency MBS market may be the ongoing decline in housing prices. Investors at the Securities Industry and Financial Markets Association’s MBS due diligence conference this week in New York suggested that they could return to a revamped secondary market within a year if the housing market stabilizes. Joe Swartz, chairman of SIFMA’s MBS due... Read More

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