The Securities Industry and Financial Markets Association is opposed to the Financial Industry Regulatory Authority’s recent proposal to begin disseminating data for transactions in ABS and non-agency commercial MBS, out of concern it could compromise market liquidity. At issue are FINRA’s proposed changes in Trade Reporting and Compliance Engine to disseminate additional ABS transactions and at the same time reduce the reporting periods for such securities. The proposal would implement shorter reporting timeframes for ABS transactions (initially 45 minutes for six months, then 15 minutes), as well as real-time dissemination of trade information. “While SIFMA members agree...

A commercial MBS issued in late December that received AAA ratings from Fitch Ratings and Standard & Poor’s wouldn’t have been rated higher than A1 by Moody’s Investors Service. Moody’s said the $375 million RBS Commercial Funding Inc. 2013-GSP Trust lacked structural support to obtain the highest ratings. The deal was a single-asset transaction without subordinate classes to absorb expenses that the trust can’t pass along to the borrower. “In cases where a subordinate class is not present to protect highly rated senior investors, some other feature, such as a reserve fund, has been employed to mitigate the risk,” according to Daniel Rubock, a senior vice president at Moody’s. “The GSP Trust lacks any such structural mitigant.” Fitch said...

Underwriting standards for loans in commercial MBS are loosening due to competition among issuers for volume, according to industry analysts. Issuers have also removed loans from two recent commercial MBS transactions due to pressure to come to the market quickly. “Increasing competition among commercial MBS loan originators raises the risk that they will further lower underwriting standards from the more stringent practices used in early second-generation commercial MBS 2.0 deals,” said Tad Philipp, director of commercial real estate research at Moody’s Investors Service. Analysts at Fitch Ratings said...

The Financial Industry Regulatory Authority, an internal cop for the U.S. securities industry, has proposed a narrower definition of “asset-backed security” to facilitate the reporting of certain transactions, including Rule 144A ABS transactions, to the group’s disclosure system. The new redefined ABS category would apply to a broad group of securities, including ABS pools backed by credit-card receivables, student loans, auto loans and other products and instruments that currently fall under the ABS umbrella. The proposed changes concern required reporting to FINRA’s Trade Reporting and Compliance Engine. Under FINRA’s proposal, ABS is...

Commercial banks and savings institutions reached a record level of investment in non-mortgage ABS during the third quarter of 2013, according to a new Inside MBS & ABS analysis and ranking. Banks and thrifts held a combined $173.12 billion of non-mortgage ABS as of the end of September, up 4.4 percent from the previous quarter. The industry’s aggregate ABS portfolio was up 6.9 percent from the third quarter of last year. Banks and thrifts pushed...[Includes one data chart]

The Federal Housing Finance Agency has directed the two GSEs to accelerate their portfolio trimming by focusing on “less-liquid” assets other than their own MBS.

Fannie Mae and Freddie Mac picked the low-hanging fruit first and sold large chunks of their most liquid “less-liquid” assets during the third quarter of 2013 as the government-sponsored enterprises continued to shift their business away from retained investments. The GSEs reduced their combined holdings of commercial MBS by 32.1 percent during the third quarter, according to a new Inside MBS & ABS analysis of their retained portfolios. The Federal Housing Finance Agency has directed the two companies to accelerate their portfolio trimming by focusing on “less-liquid” assets other than their own MBS. The commercial MBS market has been...[Includes one data chart]

The risk-retention rule re-proposed by federal regulators in September needs significant adjustments, according to issuers of collateralized loan obligations and asset-backed commercial paper. Investors are largely happy with the re-proposed rule, and issuers concede that the re-proposed rule significantly improved on the rule initially proposed by federal regulators in 2011. The Dodd-Frank Act requires federal regulators to establish risk-retention requirements for certain securities that don’t meet qualifying standards. Issuers of such securities will generally be required to retain at least 5.0 percent of the risk from such issuance. “We remain concerned...

A total of $33.16 billion of commercial MBS – including agency MBS backed by multifamily mortgages – were issued during the third quarter of 2013, a new Inside MBS & ABS analysis reveals.

The securitization of income-property mortgages in 2013 remains on track to be the best year since the financial market meltdown, but new issuance dropped sharply during the third quarter. A total of $33.16 billion of commercial MBS – including agency MBS backed by multifamily mortgages – were issued during the third quarter of 2013, a new Inside MBS & ABS analysis reveals. That was down 24.5 percent from the second quarter, but it brought year-to-date issuance to $123.89 billion, just shy of the total securitized in all of 2012. Commercial mortgage securitization through the first nine months of 2013 was...[Includes one data chart]