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Inside MBS & ABS

November 4, 2011

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Agency MBS Production Up Again in October for Third Month in a Row But Still Not at Full Speed

Agency residential MBS production bounced higher again in October, but the latest refinance boom – if it even qualifies as one – is still well short of the last cyclical high in late 2010. A new Inside MBS & ABS ranking and analysis reveals that $103.03 billion of agency single-family MBS were issued last month, a 7.0 percent gain from September. And October marked the third straight monthly increase after the agency MBS market hit a 30-month low back in July. Production in October still trailed the levels generated in the first two months of 2011, when the previous refi boom was...(Includes one graph and one data chart) Read More

Witnesses: House GOP Bill to Jumpstart Private MBS Market a ‘Thoughtful Approach’ But Needs Work

The proposed bill that would increase standardization and uniformity in the mortgage securities market – without Fannie Mae or Freddie Mac – contains many worthy components, but it needs more details and further tweaking, according to industry experts testifying at a House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises hearing this week. The Private Mortgage Market Investment Act, drafted by Subcommittee Chairman Scott Garrett, R-NJ, would create a heavily regulated mortgage-backed securities market made up solely of private entities that would function with no federal... Read More

Can the TBA Market Survive a Radical Shift in GSE Servicer Compensation?

Fannie Mae, Freddie Mac and their federal conservator are trying to devise a new servicing compensation scheme without upsetting the to-be-announced agency MBS market that Wall Street dealers and Main Street mortgage lenders depend on. In a recent white paper outlining two alternatives for reforming servicing compensation so that more resources are available for distressed loans, the Federal Housing Finance Agency said “promoting continued liquidity” in the TBA market is one of its primary objectives. The agency also mused that a new servicer compensation system for the government-sponsored enterprises could... Read More

Time for a Second Round of PPIP, Analysts Say, While Fed Stands Pat on Added MBS Purchases

With the non-agency MBS sector still languishing, it’s time to put the approximately $6.3 billion in unused purchasing power at the Public-Private Investment Program to use in a revamped iteration, according to analysts at Deutsche Bank. “The Public-Private Investment Program has been having a tough time in 2011 despite a remarkable initial success in facilitating price discovery and supporting market functioning in the residential MBS market,” said two Deutsche Bank analysts in a recent report. They note that all eight of the Public-Private Investment Funds suffered a declining internal... Read More

Higher Ratings of Structured Products Appear Driven by Revenue Considerations, Study Contends

Credit rating agencies appear to be more generous in rating structured finance products over other bond types because they tend to bring in more revenue, according to a recent study by academics. Researchers at Indiana University, American University and Rice University said that, contrary to assertions by the top credit rating agencies, asset classes are not equal when it comes to ratings. The study “Credit Ratings Across Asset Classes: A=A?” claims there is overwhelming evidence that structured products, such as MBS, receive significantly higher, more optimistic ratings than those assigned to bonds issued by... Read More

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