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Inside MBS & ABS

July 20, 2007

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FDIC Looking at Prepayment Penalties on Subprime Mortgages, Hears of Borrowers’ Loan Modification Woes

An advisory panel this week urged the Federal Deposit Insurance Corp. to limit prepayment penalties on subprime mortgages and raised questions about the difficulties some borrowers are having in trying to get loan modifications. Members of the FDIC’s Advisory... Read More

Surge in Vehicle Deals Helps Sustain Rebound In Non-Mortgage ABS Issuance During 2Q07

Issuance of non-mortgage ABS increased by 8.4 percent during the second quarter, putting the market on pace to top the $300 billion mark for only the second time ever by the end of the year. A total of $78.66 billion of non-mortgage ABS was... [Includes four charts] Read More

Rising Default Rates Spur Moody’s to Review Alternative A MBS for Possible Downgrades

Analyst and investor concern about the subprime contagion spilling into the Alt A market is growing as Moody’s Investment Services put 66 tranches from 33 MBS on review for possible downgrades this week. The reviews follow a rapid increase in Alt A delinquency rates... Read More

Mortgage Fraud a Growing Concern for Investors as Losses are Difficult to Recoup from Bankrupt Issuers

As regulators work to clean up the practices of subprime lenders, mortgage fraud is still a concern for MBS issuers and investors.At a seminar this week sponsored by the American Securitization Forum, Karen Gelernt, a partner at Cadwalader, Wickersham... Read More

S&P’s Loan Modification Guide Can Adversely Impact Certain Loans, Servicer Reimbursements, Says MBA

Treating modified loans as delinquent and counting them toward a delinquency trigger could result in anomalous classifications and an inaccurate opinion of loan performance, according to the Mortgage Bankers Association. The comment was just one of several concerns... Read More

OFHEO Pushes GSEs to Embrace Federal Guidelines On Nontraditional Mortgages, Subprime Hybrids

The primary regulator of Fannie Mae and Freddie Mac is pushing the government-sponsored enterprises to make sure their MBS guaranty programs and non-agency MBS investments comply with new primary market guidelines on nontraditional mortgages and subprime loans... Read More

Ginnie Mae Begins Designing Securitization Program for FHA-Insured Reverse Mortgages

Ginnie Mae recently released program specifications for issuers of MBS backed by home-equity conversion mortgages, or HECMs, the reverse mortgage program insured by the FHA. Some $3.72 billion of FHA HECMs were securitized during the first half of 2007 in... Read More

Downgrades of 2006 Subprime MBS Continue, and More Are Predicted

Standard & Poor’s downgraded the majority of the subprime MBS it put on CreditWatch last week but spared a fair amount of the classes as well, although analysts expect more downgrades ahead. Of the 612 subprime MBS classes originated from the fourth quarter of 2005... Read More

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