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Inside MBS & ABS

September 19, 2008

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Industry and Regulators Try to Get a Handle On New Securitization Accounting Proposals

The Financial Accounting Standards Board this week released highly anticipated proposed rules that will redefine how issuers account for their securitization of financial assets, giving the market its clearest view yet of its future. The biggest change envisioned by FASB’s proposed change to FAS 140 is the elimination of the qualifying special purpose entity, or QSPE, which allowed issuers... Read More

Federal Regulators Weigh Impact of FASB’s Plan to Drop QSPE Concept, Compel Consolidation of SPEs

Federal thrift and banking regulators are consulting with their financial institutions to gauge the potential impact of proposals by the Financial Accounting Standards Board that may force currently off-balance sheet mortgage securitizations to be placed on the books. The Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of... Read More

Stunning Collapse of Lehman, Buyout of Merrill Lynch Radically Reshape Landscape; Mortgage Risk Remains

Two of the major players in the mortgage securities market – Lehman Brothers and Merrill Lynch – saw their worlds turned upside down this week as financial markets continued to pummel Wall Street investment brokers. Together, Lehman and Merrill handled over a quarter of the underwriting for agency structured mortgage securities transactions last year. They also held a combined $102... Read More

Senators Say Regulators Should ‘Take Own Advice,’ Implement Loan Mods for GSEs

Democrats in the Senate called upon the new executives of Fannie Mae and Freddie Mac to freeze foreclosures for 90 days and examine the possibility of widespread loan modifications for mortgages in the government-sponsored enterprises’ retained portfolios. Sens. Charles Schumer, NY, Robert Menendez, NJ, Sherrod Brown, OH and Bob Casey, PA, wrote a joint letter to Herb... Read More

Industry Group Opposes SEC Bid to Diminish Role of Ratings in ABS Shelf Registrations

A proposal by the Securities and Exchange Commission to eliminate references to credit ratings as a factor in determining which asset- and mortgage-backed securities can use more streamlined registration procedures would reduce liquidity and undermine transparency in the market, according to Wall Street observers. MBS and ABS issuers can currently use Form S-3 for public offerings of their... Read More

With Volume Up and Ongoing Market Tumult, Ginnie Mae Stiffens MBS Issuer Standard

Ginnie Mae late last week announced tougher eligibility rules for companies that want to be approved securities issuers in its rapidly growing MBS program. One of the most significant changes made is to the agency’s net worth requirements. According to the updated eligibility requirements, applicants must have an adjusted net worth of at least $1 million... Read More

Wells Fargo Takes Over as Top Agency MBS Issuer In August; Chase and Citi Are Gaining Ground

Wells Fargo ranked as the top issuer of agency MBS during August as the company boosted its production volume by 10 percent while the rest of the market slumped 3 percent. Wells Fargo issued a total of $17.48 billion of agency MBS last month, which amounted to 21 percent of total production by the industry. The company ranked as the top issuer of Ginnie Mae MBS... [Includes two charts] Read More

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