In the end, 2015 produced a solid, if unspectacular, supply of new agency single-family MBS and non-mortgage ABS after peaking in the second quarter of the year. A total of $1.498 trillion of single-family MBS and non-mortgage ABS were issued in 2015, a 28.1 percent increase from the year before, according to a new Inside MBS & ABS analysis. But 2014 ranked as the weakest year since the financial meltdown, and the 2015 output was the fourth lowest in the 21st century during a period of historically low interest rates and steady economic growth. Most components of the market slowed...[Includes three data tables]
A case in bankruptcy court regarding the priority of payment provisions for collateralized debt obligations could have broad ramifications for derivatives transactions at the heart of the structured finance industry, according to the Structured Finance Industry Group and other industry groups. In late December, SFIG filed an amicus brief in Lehman Brothers Special Financing v. Bank of America, which is being heard in U.S. Bankruptcy Court for the Southern District of New York. The Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association filed a separate brief, making points similar to those raised by SFIG. LBSF is suing...
An industry advisory group formed to provide input on the development of the common securitization platform and single security for Fannie Mae and Freddie Mac to-be-announced MBS held its second meeting in December and addressed a wide range of industry concerns. A letter sent to the group by the Housing Policy Council raised questions about the timing of issuance of the single security, policy alignment between the two government-sponsored enterprises and the opportunities for public input and participation. The advisory group noted...
The prospects for consumer ABS in 2016 are a bit mixed. Auto ABS – especially subprime – appear susceptible to the Federal Reserve’s promised raising of interest rates this year and beyond, but credit card ABS are strong and performing well. “Rising interest rates could pressure U.S. auto ABS transactions, especially first on subprime deals,” analysts at Fitch Ratings said in a recent client note. While they expect last month’s initial rate increase by the Fed to have only a marginal near-term impact on borrowers, they said the plan to raise rates gradually over four years could increase the monthly debt burden on auto loan borrowers. “Although the rate increases are expected to affect the entire market, Fitch believes...
Nonbank lenders accounted for nearly half (48.7 percent) of the single-family mortgages securitized by Fannie Mae and Freddie Mac during the fourth quarter of 2015, according to a new Inside The GSEs analysis of mortgage-backed securities disclosures. The nonbank share of new GSE business has been on a steady march higher over the past few years as the top tier of depository institutions has repositioned their mortgage strategies and more lenders have participated directly in the securitization process. Back in 2013, nonbanks accounted for just 31.0 percent of new Fannie/Freddie business. The momentum did slow somewhat in 2015, however. After boosting their aggregate share by 12.9 percentage points to 43.9 percent in 2014, the nonbank...
The flow of new mortgages delivered to Fannie Mae and Freddie Mac declined by 19.9 percent from the third to the fourth quarter of 2015, and a larger share of them came from third-party originators, according to a new Inside Mortgage Trends analysis of mortgage-backed securities data. The two government-sponsored enterprises securitized $179.01 billion of single-family mortgages during the fourth quarter of last year. Although the biggest factor ... [Includes two data charts]
A recent appeals court ruling demonstrates that courts will look to contract terms between correspondent lenders and loan purchasers when determining the validity of buyback claims. In CitiMortgage v. Chicago Bancorp, the loan purchaser prevailed, with judges noting that the correspondent seller breached the contract by refusing to cure or repurchase loans. The two firms had a contract under which Citi agreed to buy mortgages underwritten or originated by Chicago Bancorp ...