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Inside MBS & ABS

January 16, 2009

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Second Phase of TARP May Include Asset Purchases, More Aggressive MBS Servicing

Congress and the incoming Obama administration worked feverishly this week to put together a deal to release a second installment of $350 billion for the controversial Troubled Asset Relief Program, raising the likelihood that the program may yet be targeted to distressed mortgage assets. That’s what a number of federal financial regulators say should be done with the TARP money... Read More

Wall Street Tries to Soften the Blow of Bankruptcy Reform Being Crammed Down on Mortgage Industry

Wall Street securities dealers and issuers said they are willing to cooperate with Congress on a more palatable cramdown bill but warned of potentially damaging economic fallout if courts were allowed to modify residential mortgages in bankruptcies. Reacting to the agreement between Citigroup and key lawmakers announced this week, the Securities Industry and Financial Markets Association... Read More

Industry Works to Boost Liquidity, Broaden Investor Base In Mortgage Bond Market With Plan to Repackage CMOs

Representatives of the securities industry are moving ahead with a plan they hope will restore investor confidence and improve overall liquidity by repackaging existing collateralized mortgage obligations and trading them in the “to-be-announced” market. Late last week, the Mortgage-Backed Securities and Securitized Products Division Executive Committee of the Securities Industry and... Read More

FASB to Vote on Final OTTI Guidance to Reduce Disputes Between Banks, Auditors

The Financial Accounting Standards Board will soon vote on final guidance on other-than-temporary impairment, which should reduce the extent of OTTI charges banks are taking on distressed MBS and other assets under pressure from their auditors. In a meeting last week, the board ordered its staff to draft a final FASB Staff Position for vote by written ballot. The proposed FSP would improve... Read More

Federal Home Loan Banks Begin to Face Up To Writedowns on Non-Agency MBS Holdings

The 12 Federal Home Loan Banks face the potential for some hefty writedowns stemming from the deteriorating non-agency MBS in their portfolios, but outright devastation seems improbable because actual losses may not be too severe and the system enjoys a federal backstop. And although some FHLBank member institutions are worried they might have to write down the value of... Read More

Wells Fargo Ends 2008 as Biggest Agency MBS Issuer in Increasingly Top-Heavy Mortgage Securities Industry

Wells Fargo accounted for an impressive 17.9 percent share of new agency MBS issued in 2008, taking over a title formerly held by Countrywide Financial.Wells generated $208.24 billion of agency MBS last year, more than $60 billion more than its nearest rival, Bank of America. The company’s total production in 2008 was up 44 percent from the previous year... [Includes one chart] Read More

Another Option on the Table for Lenders Looking for Liquidity

Although it’s been used sparingly, early results on the liquidating trust structure suggest that the product is performing well as a source of liquidity for lenders stuck with growing portfolios of defaulted mortgages and foreclosed properties. DBRS says liquidating trusts are backed by distressed assets that stay on the issuer’s balance sheet but the notes are sold to outside investors... Read More

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