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Inside MBS & ABS

February 17, 2011

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Obama Reform Options Could Boost Non-Agency 
Securitization, But Uncertainty Slows Recovery

Some of the long-term housing reform options suggested by the Obama administration late last week could eventually revitalize the non-agency securitization market, but the continued lack of a cohesive, detailed plan and the resultant uncertainty is keeping private-sector players on the sidelines. On Friday, the Treasury Department released its report to Congress on possible reforms to the nation’s mortgage finance system that would start off by... Read More

Redwood Shops New Jumbo MBS, Ends Up With 
Fitch After Moody’s Set Enhancement Level High

Redwood Investment this week filed a preliminary term sheet for a new prime jumbo MBS that could help open up the non-agency MBS market a little more while earning the company a slightly better return than it got on its 2010 transaction. Sequoia Mortgage Trust 2011-1 will be backed by $296.3 million of prime jumbo loans originated by First Republic Bank and PHH Mortgage. Most of the loans were... Read More

Regulators Say They Want to Get Risk-
Retention Rule ‘Right’ the First Time

Federal regulators said this week that the much-anticipated proposed rule on risk retention in securitization is nearing completion, but they provided no details about what would be in the rule. “The [qualified residential mortgage] rule is close to being done,” said Sheila Bair, chairman of the Federal Deposit Insurance Corp., during a hearing this week before the Senate Banking, Housing and Urban Affairs Committee. “The direction of the rule will... Read More

Non-Mortgage ABS Production Dropped
 Again in 2010, Cards Hit the Hardest

New issuance of non-mortgage ABS declined for the fifth consecutive year in 2010, falling to the lowest level of annual output since 1995. A total of $109.6 billion of non-mortgage ABS were issued last year, down 29 percent from the previous year. The market was fairly steady over the course of the year, but production did slump to its lowest level during the fourth quarter. Given all the regulatory uncertainty, the huge impact of... [Includes two data charts] Read More

MBS/ABS Market Wrestles With New SEC
 Rules on Asset Review, Reps & Warranties

New federal regulations on asset reviews and representations and warranties may take some getting used to, but most analysts at last week’s American Securitization Forum annual meeting agreed that they should be a positive for the MBS and ABS markets. A key sticking point in the new rule on asset reviews is the potential liability of third-party contractors that conduct these reviews, which is underscored by a general preference for... Read More

Mortgage Bankers Ask Administration to
 Keep HARP Going, Make Improvements

The Obama administration’s program to refinance performing underwater mortgages has generated only modest success, but the Mortgage Bankers Association says the plan could be re-tooled and should be given more time. The Home Affordable Refinance Program has generated about 550,000 loans since it was launched in the second quarter of 2009, according to the latest available data. Only about... Read More

While MERS Fights Legal Challenges, Advises Members
 Not to Use Its Name, Investors Lose, Say Experts

Whatever the ultimate outcome of the various legal challenges against the Mortgage Electronic Registration Systems electronic registry of mortgage rights, experts say the real loser will be MBS investors as the continued delays in the foreclosure process will cost them money. A U.S. Bankruptcy Judge in New York last week held that... Read More

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