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Inside MBS & ABS

October 13, 2011

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Agencies Continue Redesigning Securitization Infrastructure for a To-Be-Determined Future

Fannie Mae, Freddie Mac and Ginnie Mae dominate the mortgage market as they never have before, but all three MBS agencies are committing significant resources to overhauling their systems to prepare for an uncertain future. Freddie Mac “fully gets” the idea that the company does not control its future, said Ed Haldeman, CEO at the government-sponsored enterprise, during a panel session at this week’s annual convention of the Mortgage Bankers Association. But reform proposals that feature multiple MBS securitizers funded with private capital, such as the one put forth by the MBA, look like “a pretty decent road map to the... Read More

Chase Edges Toward Second Place in Agency MBS Production as 2011 Hits the Three-Quarter Mark

Chase Home Finance surged past Bank of America to become the second most prolific producer of agency MBS during the third quarter, according to a new ranking by Inside MBS & ABS. Chase has played third fiddle behind BofA and Wells Fargo for the past few years, and still ranked third in agency MBS production on a year-to-date basis. But BofA has been dumping mortgage production capacity and trying to claw its way to higher ground while Chase has made modest gains in market share. Those trends are likely to accelerate in coming months as BofA closes down its correspondent business after failing to find a...(Includes two data charts) Read More

Mortgage Finance Industry Still Finds Plenty of Concerns in Revised Shelf Eligibility Proposal

The Securities and Exchange Commission has made a good bit of progress in updating its proposal for shelf eligibility conditions for ABS in light of industry comments and the passage of the Dodd-Frank Act. However, there are still numerous areas that concern major players in the mortgage finance industry. A number of commenters took issue with the SEC’s proposal to impose an additional executive officer certification requirement. The agency originally proposed requiring the issuer to file an exhibit to the registration statement consisting of a certification of the chief executive officer of the depositor that, to his or her knowledge, “the securitized assets backing the issue have... Read More

Policymakers Look North for Ideas To Fix U.S. Mortgage Finance System

U.S. policymakers are studying the Canadian mortgage market, which endured a far less costly downturn during the economic recession, for ideas that could be imported in the reform of the domestic mortgage finance system. “We must find characteristics in other countries similar to our own system,” said Rep. Carolyn McCarthy, D-NY, during a hearing in the House Financial Services Subcommittee on International Monetary Policy and Trade this week. In many ways, the U.S. mortgage market is unique. The ubiquity of the 30-year fixed-rate mortgage, a standard mortgage product here, is unparalleled elsewhere. While a 30-year... Read More

House Republican Seeks Answers About Outside Law Firms Hired to Recover GSE MBS Losses

The chairman of the House Committee on Oversight and Government Reform wants the Federal Housing Finance Agency to explain why it hired two outside law firms in a massive legal action to recover losses suffered by Fannie Mae and Freddie Mac on their investments in non-agency MBS. Rep. Darrell Issa, R-CA, wrote FHFA Acting Director Edward DeMarco on Sept. 29 asking why the agency hired outside counsel from Quinn Emanuel & Sullivan and from Kasowitz Benson Torres & Freidman to initiate lawsuits against financial institutions and how much the agency is paying them. Issa posed detailed questions and requested documents regarding... Read More

Agency Prepayment Speeds Rise Overall for Lower Coupon MBS, Much Slower for Higher Coupons

Prepayments increased overall in September, particularly on agency fixed-rate MBS, with faster pay-downs occurring in lower coupons, according to analyst reviews of prepayment speeds. The experts expressed surprise at unexpectedly high prepayments for recent low coupon vintages and greater weakness for higher coupons. Deutsche Bank analysts reported that speeds for 4.0 percent Fannie Mae MBS issued in 2010 and 2009 more than doubled in September compared to the previous month. Speeds for similar MBS with 4.5 percent coupons increased also as much, they noted. For example, prepayment speeds for 2010 Fannie MBS with a 4.0 percent coupon... Read More

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