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Inside MBS & ABS

May 28, 2010

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Despite Signs of Life, Non-Agency MBS Market Is A Long Way from Seeing Significant New Production

Despite the emergence of the first new non-agency MBS deal in two years, the non-agency sector has a long way to go before it regains any meaningful presence in the secondary mortgage market. In particular, a combination of tough new market requirements and still-developing legislation and regulations could delay any significant production of non-agency MBS for at least a year or two... Read More

Ineffective Repurchase Provisions Blamed on Lack of Mechanism to Confirm Breaches of Reps, Warrants

The absence of enforcement mechanisms in mortgage securitization transactions requiring any of the parties to investigate an actual or apparent breach of representation and warranties constitutes a growing problem in existing deals, according to market participants.The problem is causing investors to question the effectiveness of repurchase obligation provisions... Read More

Conferees Likely to Settle on Senate Bill Language On Risk Retention, Credit Rating Agency Oversight

Most of the final financial reform legislative language on risk retention and credit rating regulation will likely come from the Senate version rather than the House bill as the two sides hammer out a compromise bill over the next couple of weeks, according to industry sources. Sources familiar with ongoing negotiations between Senate and House conference staffs indicated that... Read More

Bank Investment in Non-Agency Securities Declines In Early 2010; Modest Gain in CMBS Holdings

Commercial banks pulled back slightly from the non-agency asset securities market in the first quarter of 2010, although some of the retreat was the result of a shift in accounting treatment. Commercial banks and bank holding companies reported a total of $346.2 billion of non-agency securities in their retained portfolios as of the end of the... [Includes one chart] Read More

New GNMA President Looks to Wall Street and Investors for Guidance in Enhancing MBS Program

Ginnie Mae’s new president has a fairly simple mission, but one that no recent head of the agency has really figured out, much less successfully implemented. That is how to leverage Ginnie Mae’s unique full faith and credit backing of the U.S. government and make its securities a more attractive choice for MBS investors around the world. With just a little more than... Read More

FHFA Calls for More Private Capital Securitization, Tells Congress to Start Working on New Models Now

The head of the Financial Housing Finance Agency favors pushing ahead with planning for a revamped mortgage finance industry to replace a system that now relies heavily on two failed institutions in government conservatorship by tackling the fundamental questions of federal policy goals for housing and the government’s role in achieving them. Edward DeMarco... Read More

FDIC’s Court Victory Against ABCP Highlights Risk for Bank-Sponsored ABS

A recent court decision highlights the risk to structured finance transactions when a bank that plays a key role in the deal later enters receivership with the Federal Deposit Insurance Corp. The FDIC’s statutory powers may delay payments or result in other losses to investors, according to an analysis by Moody’s Investors Service. The Eleventh Circuit Court... Read More

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