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Inside MBS & ABS

July 20, 2012

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Non-Mortgage ABS Issuance Hits 3-Year High In Second Quarter as Card Securitization Surges

Issuance of new non-mortgage ABS jumped 16.3 percent from the first quarter of 2012 to the second, with big gains in credit card and student loan securitization, according to a new market analysis and ranking by Inside MBS & ABS. A total of $48.01 billion of non-mortgage ABS were issued during the second quarter, the market’s biggest three-month output since the third quarter of 2009. It brought year-to-date issuance to $89.28 billion, up 19.6 percent from the first six months of 2011. Credit card issuance more than tripled from the first quarter, surging...[Includes three data charts] Read More

ASF, SIFMA Launch Salvos at Eminent Domain Plan, CA County Defends Its Consideration of Options

Securitization representatives are forcefully pushing back against a proposal under review by three jurisdictions in California to use eminent domain to seize performing, underwater mortgages out of non-agency MBS pools, renegotiate them on terms more favorable to the borrowers, and repackage and sell them off to another group of private investors. Last Friday, a joint powers authority created by San Bernardino County and two of its cities, Ontario and Fontana, formally convened for the first time for an organizational meeting. Two groups that represent the securitization industry, the American Securitization Forum and the Securities Industry and Financial Markets Association, expressed their opposition during the meeting. The ASF said that “this inappropriate use of government power,” which is based on a plan by San Francisco-based Mortgage Resolution Partners, a private investment firm, was “designed... Read More

LIBOR Manipulation Would Have Impact on MBS And ABS Investments, Though Extent Is Unknown

Alleged manipulation of the London Interbank Offered Rate could have had a significant impact on investments in MBS and ABS, according to industry analysts. However, three weeks after Barclays Bank reached a settlement with regulators on LIBOR manipulation, major securities investors have yet to voice concerns about potential losses tied to the interest rate benchmark. Tom Deutsch, executive director of the American Securitization Forum, said he has not heard any “hubbub” from investors thus far about the impact of potential LIBOR manipulation. The Securities Industry and Financial Markets Association, the Association of Mortgage Investors and the Association of Institutional Investors did not reply to requests for comment on the issue. Laurie Goodman, a senior managing director at Amherst Securities Group, said it is unknown... Read More

Federal Judge Permits Investors’ MERS Lawsuit Against BofA to Stand, Dismisses Claims Against Bank Executives

Bank of America shareholders may proceed with their securities fraud lawsuit which claims that BofA concealed its potential problems with the Mortgage Electronic Registration System, exposing investors to risky mortgage securities, a federal judge ruled last week. However, U.S. District Judge William Pauley of the Southern District of New York determined that the shareholders, led by the Pennsylvania Public School Employees’ Retirement System, can move forward only against the company itself and not against BofA executives. The investors filed suit in September 2011 alleging they had been misled into... Read More

Federal Reserve Hints at Further MBS Purchases, Experts Question Effectiveness of Additional Easing

The Federal Reserve is pondering the potential of another round of MBS purchases if Fed officials collectively decide that more bond buying is required to spur growth, but industry observers say that the central bank’s repeat of such a course of action will have a marginally helpful effect at best. The Fed has been sending out signals that it is considering taking further action to encourage the sputtering recovery, including Chairman Ben Bernanke’s testimony before both chambers of Congress this week in which he said the central bank is “prepared to take further action as appropriate,” although he wouldn’t commit to a specific action. “There are a range of possibilities. A logical range includes... Read More

Bank Domination Indicates Securitization is ‘Less Shadowy’ Than Previously Thought, Fed Reps Say

In the aftermath of the collapse of the financial markets and the resulting recession, there has been a good deal of anxiety and concern that large, critical components of the U.S. and global finance markets may be vulnerable to exploitation by so-called shadow banking institutions and other entities that may be less regulated than major retail and investment banks. But such fears may be overblown, new research from the Federal Reserve Bank of New York suggests. “Financial intermediation has evolved over the last few decades toward shadow banking. With that evolution, the traditional roles of banks as intermediaries between savers and borrowers are increasingly performed by more specialized entities involved in asset securitization,” said Nicola Cetorelli and Stavros Peristiani, two researchers at the New York Fed. However, their research, drawn upon data from 1983 to 2008, has shown... Read More

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