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Inside MBS & ABS

March 28, 2014

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Looking for Higher Yield, Investors Expect To Increase Their Holdings of Esoteric ABS

Investors plan to increase their holdings in what are known as esoteric ABS – such as container, timeshare, whole business and franchise loans, structured settlements and solar and renewables – more so than consumer or commercial ABS, according to a new survey from the DBRS credit rating agency. Higher-yield opportunities are likely a key reason investors will look toward esoteric assets in a period of exceptionally low interest rates, the survey found. “Over the next 12 months, market participants are...[Includes two data charts] Read More

BofA’s $9.3 Billion Settlement Doubles Overnight FHFA’s MBS Litigation Recovery; S&P Moves to Split Fraud Trial

With just one accord this week, the Federal Housing Finance Agency more than doubled the amount it has recovered on behalf of Fannie Mae and Freddie Mac from issuers and underwriters that sold subprime and Alt A MBS to the government-sponsored enterprises. Bank of America agreed to a $9.3 billion settlement that covers its own dealings as well as those of Countrywide Financial and Merrill Lynch, which it acquired in 2008. The agreement covers some $57 billion of MBS issued or underwritten by these firms. BofA did not admit...[Includes one data chart] Read More

High-Cost Conforming Loan limits, Once Deemed an ‘Emergency’ Measure, On Track to Remain In Place

It’s too soon to reduce agency loan limits, according to numerous trade groups involved in the securitization and mortgage origination markets. Momentum in Congress also appears to be moving toward maintaining the high-cost loan limits, a category of loans that was created in 2008 on an “emergency” basis. In December, the Federal Housing Finance Agency issued a request for input on a proposal to set loan purchase limits for Fannie Mae and Freddie Mac. Ed DeMarco, the FHFA’s acting director at the time, was considering reducing the loan amount eligible for purchase by the government-sponsored enterprises from $625,500 in high-cost areas to $600,000 and reducing the national loan purchase limit for the GSEs from $417,000 to $400,000. DeMarco said... Read More

Issuers Concerned About Disclosure Mandate In SEC’s Re-Proposal of Reg AB2 Provisions

Issuers of MBS and ABS are concerned about new liabilities they are likely to face if they have to disclose loan-level information at issuance under a rule recently proposed by the Securities and Exchange Commission. In February, the SEC proposed requiring issuers to disclose loan-level data to investors on issuers’ own websites instead of on the Electronic Data-Gathering, Analysis, and Retrieval system, better known as EDGAR, the current platform for SEC-required disclosures. The comment period on the proposal was scheduled to close March 28. Preliminary comment letters submitted... Read More

House Democrats Tout More Flexibility for Private First-Loss Share in New MBS Reform Proposal

Rep. Maxine Waters, D-CA, this week unveiled a mortgage-finance reform bill that would replace Fannie Mae and Freddie Mac with a private cooperatively-owned entity that would issue a new form of conventional MBS backed by a mix of public and government credit support. The “Housing Opportunities Move the Economy Forward Act” adds a few new twists to the notion of creating an explicit government MBS guaranty that would stand behind a first-loss position funded by the private sector. Rather than allow a variety of private-sector firms to issue these securities, as the bipartisan Senate bill would, Waters’ proposal would create a single, cooperatively-owned entity that would be open to all lenders. The regulator of this new market, the National Mortgage Finance Administration, would have... Read More

Another SFR MBS Hits the Market, But Investors Grow Leary of the Sector; Concerns Surface on Vacancies

Colony American Homes has come to market with a $513.6 million security backed by single-family rental homes, but some players in the space are starting to wonder if the returns on the bond will be anything special. Moody’s Investors Service and Kroll Bond Rating Agency rated the deal, which marks the second SFR securitization in four months. The other was a $479 million deal from Deutsche Bank and the Blackstone Group, which turned out to be oversubscribed. KBRA’s ratings on the Colony bond range... Read More

S&P Tops in Ranking Non-Agency MBS In 2013, Fitch First in Non-Mortgage ABS

Standard & Poor’s rated $11.72 billion of non-agency MBS issued in 2013, making it the most active rating service in the market by dollar volume, although DBRS rated considerably more deals, according to a new ranking and analysis by Inside MBS & ABS. In its heyday, S&P used to rate more than 90 percent of new issuance of non-agency MBS, but in 2013 it accounted for just 40.0 percent of the market by dollar volume. DBRS wasn’t too far behind with a 36.0 percent share, followed by Kroll Ratings and Fitch Ratings. Moody’s Investors Service rated...[Includes two data charts] Read More

Non-Agency MBS Issuance by Type - 4Q13

The amount in dollars of non-agency MBS issuance from 2003-3Q13. Categories include prime, subprime, Alt A, S&D, seconds, re-MBS, other and total issuance. Quarterly data for 2012-4Q13 included. [Includes one data chart] Read More

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