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Inside MBS & ABS

September 12, 2008

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GSE Takeover Expected to Boost Liquidity, But Big Changes May Lie Ahead for Mortgage Securitization

The Bush administration’s takeover of Fannie Mae and Freddie Mac is expected to boost liquidity in the agency MBS market and lower mortgage rates, but it also sets the stage for a major re-calibration of the government’s approach to mortgage securitization in the years ahead. Under new conservatorships run by the Treasury Department and the Federal Housing Finance Agency, Fannie... Read More

Industry Pros Split on Prospects for GSE Guarantee Business After Fannie, Freddie Enter Conservatorship

This week’s dramatic federal takeover of Fannie Mae and Freddie Mac could lead to an even bigger share of new MBS issuance for the two agencies, especially if new government overseers press the companies to reverse course and lower their guaranty fees and other pricing adjustments. Some industry insiders believe it may be inevitable that Fannie and Freddie will lower their... Read More

S&P Proposes Additional Ratings Focus on Due Diligence, Originator Performance and Warranties

Standard & Poor’s this week proposed three related changes in its MBS ratings process that would put focus on the lending practices of originators supplying loans for new issuance, as well as their ability to honor representations and warranties and due diligence reviews by third parties. The three new ratings analyses are all aimed at improving transparency and the quality of... Read More

FASB to Seek Comment Soon on Exposure Drafts Removing QSPE Concept, Requiring Consolidation

The Financial Accounting Standards Board will soon issue for public comment related exposure drafts that would eliminate the concept of a “qualifying special purpose entity” and require lenders to place currently off-balance sheet securitized assets on the books. The board last week said it will issue the proposed rules “on or around Sept. 15” for... Read More

Securities Industry Balks at Capitol Hill Pressure On Mortgage Servicers to Delay Foreclosures

Pressure from Congress to get the mortgage industry to embrace a newly enacted scheme to bail out underwater mortgage borrowers isn’t sitting well with many servicers or groups representing investors in securities backed by these loans. A major new program authorized by the 2008 Housing and Economic Recovery Act would tap the FHA mortgage insurance program to... Read More

Thrift Mortgage Securities Holdings Decline in 2008 As More Companies Face Financial Challenges

Thrift industry investment in mortgage securities continued to decline during the second quarter of 2008, and ongoing financial pressure may push the industry to back away further in coming months.The Office of Thrift Supervision reported that institutions it supervises had $198.95 billion of mortgage securities on their books as of the end of June. That was down... [Includes three charts] Read More

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