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Inside MBS & ABS

September 25, 2009

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Credit Rating Agencies to Disclose History of Ratings, Share Ratings Data under New Rules for NRSROs

Credit rating agencies will have to publish ratings histories for all their subscriber- and issuer-paid ratings and share data used for a credit rating with other rating agencies to encourage competition, under rules approved by the Securities and Exchange Commission last week. The SEC adopted several final regulations based on previously proposed rules and proposed some new... Read More

Commercial Banks Move to Top of MBS Investor Ranking But U.S. Government is Closing Fast

Commercial banks increased their holdings of residential MBS by 3.9 percent in the second quarter of 2009, but it was enough to lift the industry to the top ranking among different classes of investors in mortgage securities. The fastest-growing investor in the MBS market is the federal government. Together, the U.S. Treasury and the Federal Reserve held some... [Includes one chart and one graph] Read More

Pressure on Servicers to Improve Loan Modification Performance Remains as TARP Extension is Eyed

The head of the Treasury’s Troubled Asset Relief Program told lawmakers this week that more scrutiny and greater pressure will be forthcoming on mortgage servicers to ramp up their loan modification efforts, after lawmakers repeatedly gave voice to the continuing frustration their constituents are expressing as they struggle to stay in their homes. “In many cases, we have servicers telling... Read More

ASF Proposes Two Approaches to Update FDIC’s Securitization Rule

The American Securitization Forum released two alternative approaches that the Federal Deposit Insurance Corp. could adopt in changes to its “Securitization Participation” rule governing the treatment of securities and interest transferred between failed institutions and the FDIC. The ASF has been consulting with the FDIC over possible changes to update the agency’s securitization... Read More

Shrinking Thrift Industry Holds Smaller Piece of Mortgage Securities Market

Thrift institutions continued to drift further toward the sidelines in the MBS market during the second quarter, as the industry’s aggregate holdings of mortgage securities fell to a 12-year low.Thrifts held $185.92 billion of MBS in their portfolio as of the end of June, according to the Federal Deposit Insurance Corp., a decline of 4.6 percent from the previous quarter... [Includes two charts] Read More

Loan Mods Won’t Undermine REMIC Status Under New Rules from the IRS

The IRS issued new tax rules last week that will make it easier to restructure some at-risk commercial mortgages that are held in commercial MBS trusts structured as real estate mortgage investment conduits. IRS Revenue Procedure 2009-45 describes the conditions under which modifications to the terms of certain commercial mortgages that are at risk of default will not cause the IRS to... Read More

Fannie Gears Up for High-LTV Refinance Loans, Growing Government-Backed Securitization

Fannie Mae next week will open a new mortgage-securities program that will be backed by refinance mortgages with loan-to-value ratios as high as 125 percent in an effort to generate more activity in an Obama administration program designed to help performing underwater borrowers. Both Fannie Mae and Freddie Mac announced in July that they would expand their Home Affordable... Read More

Moody’s Updates Criteria for Evaluating Reps & Warranties for Seasoned Loans

Moody’s Investors Service this week issued revised criteria the company will use when assessing the representations and warranties associated with seasoned mortgages in rating non-agency MBS. The changes were made to better reflect the risk of older collateral, the rating service said. The “baseline” reps and warranties should include appraisals done by licensed or certified appraisers... Read More

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