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Inside MBS & ABS

November 13, 2009

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Dodd Embraces Retained Interest Concept in Massive Reform Legislation, Tackles Credit Rating Services

Senate Committee on Banking, Housing and Urban Affairs Chairman Christopher Dodd, D-CT, this week unveiled legislation that would subject securities issuers and other market participants to tougher oversight and enforcement, including risk-retention requirements. Flanked by Democratic lawmakers and without Republican support, Dodd introduced the massive... Read More

Ratings Services Paying Closer Attention To Recovery Potential of Depressed MBS

The issues of defaults, loss severities and eventual recoveries for battered residential MBS are becoming increasingly visible of late and driving the major ratings services to elevate their game when it comes to fully evaluating the bonds they’re reviewing. Fitch Ratings recently updated its Recovery Ratings to make its analyses more relevant and useful to investors... Read More

Life Insurers Apply Some Pushback

Moody’s Investors Service last week came out in defense of the accuracy of its ratings for residential MBS, particularly when it comes to projecting probability of default and expected loss severity.The National Association of Insurance Commissioners has been considering modifying its risk-based capital requirements for... Read More

As Big Quarterly Losses Continue, Fannie, Freddie Brace for Massive Accounting Hit to Balance Sheets

Fannie Mae and Freddie Mac are bracing for a major accounting wallop as they prepare to bring trillions of dollars of MBS exposure onto their balance sheets in 2010 at a time when the government-sponsored enterprises are still trying to dig their way out from under massive credit-related losses. “The adoption of these new accounting standards will have a major impact on the presentation of... [Includes one chart] Read More

No Action on Horizon for Covered Bond Market; Comprehensive Legislation Needed to Provide Spark

The collapse of the secondary mortgage market for non-conforming loans opened a potential opportunity for covered bond securitization to take root in the U.S., but the topic is too low on the list of priorities for policy makers to do anything to stimulate investor interest. Although covered bonds are used heavily in Europe, experts at the recent ABS East conference sponsored by Information... Read More

HELOCs, Second Liens Weigh on Borrower Debt As MBS Investors Look for More Transparency

Secondary market investors are clamoring for transparency and more complete data about the loans backing their pools, and vendors are stepping up to answer the call. At a recent industry conference in Miami, industry experts said investors who don’t use the new tools available will find themselves at a major disadvantage as the securitization market re-shapes itself. “The complexity of... Read More

FDIC Extends Safe Harbor Protection Allowing Securitizations to Retain ‘Isolation’ Designation

The Federal Deposit Insurance Corp. this week approved a proposed interim rule creating a transitional safe harbor for existing securitization and participation transactions that may lose their “legally isolated” status as a result of an accounting change. Effective immediately, the new provision would amend the FDIC’s 2000 “Securitization Rule,” which provides assurance... Read More

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