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Inside MBS & ABS

November 26, 2008

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Federal Reserve Offers Major Lifeline to Mortgage Securities Market as Liquidity Gradually Improves

The Federal Reserve this week announced a major plan to boost liquidity in the mortgage market by buying up to $600 billion of agency MBS and debt issued by the government-sponsored enterprises.Earlier efforts to boost MBS market liquidity over the past year have generally fizzled and failed to avert an historic widening of spreads. Although some of those efforts appeared to be helping... Read More

Fed Creates ABS Backstop

The Federal Reserve this week announced the creation of a Term ABS Loan Facility through which it will lend up to $200 billion to holders of new and recently issued ABS backed by consumer loans.The Treasury Department will use $20 billion of TARP funds to provide credit protection to the program. The New York Federal Reserve Bank will make non-recourse... Read More

Banks Shed Mortgage Securities in Third Quarter, But Came Back to the Market in the Past Month

Commercial banks reduced their holdings of mortgage-related securities during the third quarter, including significant sell-offs of Fannie Mae, Freddie Mac and non-agency pass-throughs, according to data released this week by the Federal Deposit Insurance Corp.But more recent Federal Reserve data show that large banks have significantly increased their... [Includes three charts] Read More

GSE Regulator Urges Non-Agency MBS Market to Back Emerging Loan Mod Plan for Conforming Mortgages

The Federal Housing Finance Agency this week made an unusual plea to investors, servicers and trustees in the non-agency MBS market to embrace a mass-modification program that’s being developed by Fannie Mae and Freddie Mac. The FHFA is the new agency charged with overseeing Fannie, Freddie and the 12 Federal Home Loan Banks which, collectively, hold some $250 billion of non-agency MBS. “It is... Read More

Impac Advancing Mortgage Rescue Plan Aimed at Resuscitating Non-Agency MBS

While there has been no shortage of plans to help resolve the mortgage crisis, few, if any, of these initiatives are targeted at perhaps the biggest problem confronting policy makers and the mortgage industry: namely, the fact that the lion’s share of troubled mortgages reside in non-agency MBS. But one non-agency MBS issuer, a company that helped pioneer the once booming Alt A... Read More

TARP Developments Spur Some Asset Trading, But Market Still Uncertain about Securitization

The Treasury Department’s acknowledgement that it is not pursuing direct asset purchases under the $700 billion Troubled Asset Relief Program has spurred some private-market activity in trading of non-conforming mortgages and MBS, according to participants in a TARP audio conference sponsored by Inside Mortgage Finance Publications. “People are starting to trade more... Read More

FASB to Issue Interim Guidance on Pending Rules for Asset Transfer, Consolidation

Public entities will soon be required to provide more information about transfers of financial assets and variable interests in qualifying special-purpose entities and additional disclosures about their involvement with securitization entities. The Financial Accounting Standards Board is issuing the temporary guidelines pending completion of its work on proposed amendments to... Read More

Moody’s Strengthens Rating Standards for Loan Originator Reviews, Reps & Warranties and Third-Party Assessments

Issuers of non-agency MBS will have to undergo more extensive reviews of their loan origination practices, representations and warranties and the contractors used for any loan reviews if they want to get ratings from Moody’s Investors Service. The rating company this week issued three reports detailing the upgraded standards for future issues of jumbo, Alt A, subprime... Read More

S&P Updates Its Rating Criteria For Scratch-and-Dent Securities

Standard & Poor’s has released updated criteria for rating “scratch-and-dent” non-agency MBS backed by re-performing and non-performing mortgages, a growing market. “Given the stresses in the 2008 market environment, we have been seeing, and expect to continue to see, an increase in the volume of such collateral in transactions submitted to us for review,” said S&P. The rating... Read More

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