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Inside MBS & ABS

February 19, 2010

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Securitization Law Experts Warn Policymakers About Proposed Risk-Retention Requirements for MBS, ABS

Proposed new risk-retention requirements could change the economics of asset securitization so much that they end up stalling new MBS and ABS issuance, according to a group of attorneys who work on securitizations. “Legislative mandates that, intentionally or unintentionally, change the economics of securitization, including those to require a 5 percent or 10 percent retained risk exposure... Read More

Ratings Business in 2009 Shows Broader Diversification, Fragmented MBS Market

The business of rating non-agency MBS and non-mortgage ABS changed dramatically in 2009, with Fitch Ratings emerging as the most active company in the MBS market and greater dispersion in ABS ratings than in prior years. Fitch rated 74.6 percent of the non-agency MBS issued last year, up from just 23.3 percent back in 2008. While Standard & Poor’s continued to rate... [Includes two charts] Read More

MBS Credit Quality Remains in the Dumps, Borrower Credit Expected to Worsen in 2010

The credit quality of the loans supporting residential MBS continued to weaken in the fourth quarter, according to a new analysis by Standard & Poor’s, which warned that a slowdown in ratings downgrades doesn’t mean 2010 will be much better than last year. S&P lowered 9,898 ratings on 2,975 U.S. non-agency MBS transactions in the fourth quarter, down 62.5 percent... Read More

Student Loan ABS Provides Consistent Opportunity Through Legislative Changes

Major overhauls of the student lending infrastructure are under serious consideration on Capitol Hill, but the investor appetite for securities backed by these assets hasn’t waned, industry experts say.A major piece of legislation that will affect the student loan sector is the Student Aid and Fiscal Responsibility Act, which passed the House in September 2009, said Reed Auerbach, chair of the... Read More

Some Fed Policymakers Favor More Aggressive Plan to Dump Agency MBS Holdings – Eventually

Although aggressive sales of the Federal Reserve’s massive holdings of agency MBS still rank as a long shot on the agency’s priority list of exit strategies, a number of officials want the central bank to do more than just watch the portfolio drain off. Minutes released this week from the Federal Open Market Committee’s most recent meeting in late January... [Includes one chart] Read More

Fitch Drops ABS Seller/Servicing Ratings Service, Citing Tepid Market Interest

Fitch Ratings discontinued its seller/servicer ratings for non-mortgage ABS issuers in response to weak market interest in the product. The company had maintained separate seller-servicer ratings for credit card ABS and three categories of student loan securitizers: private student ABS seller-servicers, private student... Read More

Analysts Plot Impact of GSE Buyouts of Defaulted Loans from MBS, See Opportunities for Market

Mortgage-backed securities analysts welcomed last week’s announcements by Fannie Mae and Freddie Mac in which the two government-sponsored enterprises addressed widespread expectations about their purchases of seriously delinquent loans from outstanding MBS. In addition to resolving uncertainty about MBS prepayment speeds in the coming months, the buyouts will put about $60 billion of cash in the hands of MBS... Read More

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