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Inside MBS & ABS

June 19, 2009

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Securitization Industry Faces Tough Oversight Under Obama’s Regulatory Restructuring Plan

Efforts to restore confidence and volume to the non-agency MBS and non-mortgage ABS market could slow down as a result of government regulatory restructuring initiatives to address a breakdown in credit underwriting and market discipline that precipitated the financial meltdown. The proposals were unveiled by President Obama this week to improve and strengthen government oversight... Read More

ASF Extols the Benefits of Securitization, Concedes Negative Outcomes; Project ReSTART Progresses

The American Securitization Forum released a study this week defending residential mortgage securitization as vital to providing abundant and affordable mortgage credit, while conceding there have been some associated downsides by funding unaffordable or unsuitable lending products, or by concentrating risk instead of dispersing it.Based on a review of loan-level and other data... Read More

Banks Urged to Factor FASB’s New Securitization Standards into Planning for Capital Compliance

The Federal Reserve Board last week urged banks to consider the full impact of two new accounting standards that will change the way entities account for securitizations and special-purpose entities, or SPEs. Issued June 12, Statements of Financial Accounting Standards 166 and 167 will have a material effect on banks’ accounting for off-balance sheet vehicles used in the securitization of... Read More

Fitch, DBRS Take Over Non-Agency MBS Market; S&P Backs Down in ABS Ratings

The relatively sparse volume of new issuance in the non-agency MBS market of 2009 has been marked by a significant retreat in ratings by the sector’s perennial leaders, Standard & Poor’s and Moody’s Investors Service. S&P’s share of new non-agency MBS ratings fell to just 37.3 percent during the first quarter of 2009. The company had been... [Includes two charts] Read More

Treasury, IRS Mulling REMIC Changes To Allow Restructuring of Loans in CMBS

Industry groups are prompting federal agencies to revise the rules governing real estate mortgage investment conduits so loans pooled in commercial MBS could be restructured without endangering the deal’s REMIC status. REMICs have become the principal vehicle for CMBS, according to the Commercial Mortgage Securities Association. The REMIC framework enables a trust to hold the loans... Read More

Covered Bond Bill Introduced

Lawmakers on Capitol Hill this week re-introduced legislation that would put covered bonds on a more equal footing with MBS under rules governing failed banks. The Federal Deposit Insurance Corp. has issued formal policy statements affirming that it would respect the rights of investors in covered bonds that were issued by banks that later fail and go... Read More

Comprehensive Knowledge of Rules Is Crucial to Successful Re-REMIC Transactions, Study Says

Understanding the differing accounting, tax and regulatory rules and interpretations are critical to a successful re-securitization transaction, which is practically the only activity in the non-agency MBS market these days, according to a new Deloitte & Touche analysis. A re-REMIC transaction may be put together as a regulatory capital play or as a defensive response... Read More

Re-REMIC Deals Evolving

The steady pace of new re-securitization transactions is bringing with it changes in structure of these deals and the collateral on which they’re built, according to a new report from DBRS. More prime jumbo MBS are being mixed in with Alt A securities in re-REMIC deals as a result of increased downgrade activity in the jumbo market, the rating service notes. But as... Read More

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