A proposal from S&P would have a wide-ranging impact on ratings of commercial MBS. Fitch is also considering allowing data center ABS to carry additional leverage.
Recurring revenue loans are primarily underwritten based on the borrower’s annual recurring revenue rather than on loan cash flows. RRL ABS issuance is expected to reach $14.3 billion this year.
Although traditional underwriting can adequately predict and price for the risk of default on individual mortgages, large pools are subject to risks from unobserved correlations between those loans.
If the GSEs are released from conservatorship, some participants in the agency MBS market insist the to-be-announced market, uniform MBS and Fannie/Freddie CRT activity should remain untouched.
The Trump administration is likely to take actions that will reduce regulation for the MBS and ABS markets. Industry participants are working to shape the actions while also staying nimble.
Fannie/Freddie MBS pools with maximum credit scores of 700 or less were the most sought-after “story” in 2024, with issuance jumping 64% from the previous year. (Includes data table.)
It will be the 11th issuance of its type by loanDepot.
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