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Inside MBS & ABS

June 20, 2008

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FBR Analysts to Form New Firm, Mortgage Opportunities Fund

Two analysts at Friedman Billings Ramsey are splitting to form “a new investment management and advisory company” of their own, as well as a “mortgage opportunities fund” that will specialize in mortgage loans, agency MBS and non-agency mortgage securities. The pair, long-time mortgage-backed securities analyst Michael Youngblood and his partner, Steve Gaenzler, announced their... Read More

FASB’s Decision to Eliminate QSPE Prompts Reconsideration of Accounting for MBS Swaps

The Financial Accounting Standards Board is considering revising the rules for “swaps” of loans for agency MBS as part of its efforts to eliminate qualifying special purpose entities, or QSPEs. The issue was presented at a FASB board meeting June 4 during a discussion regarding transferred financial assets and guaranteed mortgage securitizations. The discussion stemmed from the board’s... Read More

FBI Arrests Execs in Charge of Bear Stearns Hedge Fund; Firms Holding Subprime MBS Face Lawsuits

The arrest this week by the Federal Bureau of Investigation of two former Bear Stearns managers is the latest and possibly most drastic action taken against firms involved in subprime MBS. Attorneys warn that increased litigation is likely, though private action is an even bigger concern. In a complaint filed this week, the Securities and Exchange Commission alleged that the Bear Stearns managers... Read More

Treasury Chief Calls on Congress to Promptly Consider New Authorities for the Fed to Combat Systemic Risk

Treasury Secretary Henry Paulson this week called on Congress to quickly begin a review of how best to bolster the Federal Reserve’s authority to respond to systemic risk issues before they become a crisis like the one that torpedoed investment bank powerhouse Bear Stearns. “The Bear Stearns episode and market turmoil more generally have placed in stark relief the outdated nature of our financial... Read More

Rating Service Market Shares Skewed by Severe Slump In Non-Agency MBS, But ABS Show No Big Changes

The freefall in new non-agency MBS issuance during early 2008 yielded sharp swings in market share for the major rating services – although volume was so low that the results don’t necessarily point to any significant change in the market. Standard & Poor’s, long the industry leader in non-agency MBS, saw its share of new ratings drop from 93.6 percent in 2007 to just 54.1... [Includes two charts] Read More

Resecuritizations Emerge as a Major Component of Non-Agency MBS Market, But Some Deals Wobbling

Nearly a quarter of the feeble supply of new non-agency MBS issued in 2008 were resecuritizations of older deals, but a number of these transactions are already being looked at for possible downgrade as underlying collateral performance continues to deteriorate. A total of $8.92 billion of re-securitizations were issued during the first five months of 2008, up 182 percent from the... [Includes one graph] Read More

Senate Compromise Housing Bill Faces Political Challenges from White House, GOP Opponents

Bipartisan leaders in the Senate unveiled a compromise omnibus housing bill that would permanently expand Fannie Mae’s and Freddie Mac’s market penetration – and likely boost Ginnie Mae’s share of MBS issuance. But the measure also faces stiff resistance from the White House and conservative Republicans this week, and an uncertain future in the House. The revamped Senate bill crafted by... Read More

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