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Inside MBS & ABS

May 22, 2009

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Fannie Portfolio Securitizations Push Agency MBS Issuance Toward All-Time High in May

Fannie Mae’s newfound ability to securitize huge chunks of its massive portfolio of single-family mortgages is pushing new agency MBS issuance to record levels. A whopping $187.57 billion of agency MBS have already been issued in May, smashing past the previous monthly recent high of $179.64 billion set back in March. The all-time record in agency MBS issuance... [Includes one graph] Read More

FASB Tightens Rules for Consolidating VIEs, Requires More Disclosures on Transferred Assets

The Financial Accounting Standards Board will soon finalize proposals to tighten the accounting rules for consolidating off-balance sheet securitization transactions, provide additional disclosures about a company’s involvement in securitization vehicles and transferred mortgage assets, and make asset transfers more transparent to investors. This week, the board concluded... Read More

Investors Lash Back in Opposition of Legislative Servicer Safe Harbor

Congress this week quickly completed work on legislation designed to help borrowers avoid foreclosure, including a controversial provision to give mortgage servicers more legal comfort to pursue loan modifications. Although the servicer safe harbor provisions were re-drafted earlier this month in the Senate, some MBS market participants aren’t any happier with the final version than they... Read More

Assignees, Loan Purchasers Face New Disclosure Obligations, Hefty Civil Penalties under S. 896

Although the servicer safe harbor provision in the new foreclosure prevention act signed into law this week drew considerable opposition from Wall Street, industry attorneys say MBS participants should also pay attention to a little noticed provision that creates new disclosure requirements and civil penalties for assignees and purchasers of residential mortgages. Specifically, under... Read More

Banking Industry MBS Investments Hold Steady In 2009 as Government Agencies Dominate Market

Commercial banks appear to be holding their own as investors in the MBS market despite the huge volume of mortgage securities acquired by the Federal Reserve and U.S. Treasury. According to Federal Reserve data, domestically chartered commercial banks held $1.064 trillion of mortgage securities as of early May, up about $34.5 billion since the end of 2008... [Includes two charts] Read More

Non-Agency Writedowns Force FHLBanks, FHFA To Regroup with Common Framework Response

The Federal Housing Finance Agency has directed the 12 Federal Home Loan Banks, after writing off $2 billion in their non-agency mortgage-backed securities portfolio last year, to respond to their continuing struggles with the holdings by adopting a common framework to more consistently address their “other-than-temporary impairment” for such investments. Under the new guidance... Read More

Credit Default Litigation on the Rise with the Collapse of CDO, CDS Markets, Experts Say

Litigation involving credit default products has exploded in the last year and a half as the market for these complex, mortgage-related transactions collapsed, and the trend will most likely continue, according to legal experts. Since 2008, parties to these soured transactions have filed lawsuits to recoup or minimize losses when the mortgages underlying these transactions lost value as... Read More

Lawmakers Look to Give SEC More Oversight Over Credit Rating Agencies

Lawmakers are proposing much stricter oversight of credit rating agencies in response to increasing criticism and blame for their role in the economic crisis. During a hearing in the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises this week, subcommittee chairman Rep. Paul Kanjorski... Read More

Geithner Says Financial Markets Are Mending, But More Work Lies Ahead

Treasury Secretary Timothy Geithner told Congress this week economic recovery efforts such as the Troubled Asset Relief Program have helped yield some encouraging signs that the financial system is starting to heal, but he warned that the U.S. is not out of the woods quite yet. In a hearing in the Senate Banking, Housing and Urban Affairs Committee, Geithner said... Read More

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