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Inside MBS & ABS

July 11, 2008

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SIFMA, ASF and ESF Announce Global Working Group, Plan to Restore Confidence in Securitization Markets

The Securities Industry and Financial Markets Association, the American Securitization Forum and the European Securitisation Forum announced Monday the formation of a joint group that will create actionable recommendations to revitalize the securitization and structured credit markets, and try to bolster investor and broader public confidence in those markets. Sean Davy, managing... Read More

Despite Flaws, Industry Support for Fair Value Accounting Remains Strong

Given its imperfections, fair value accounting has worked well for users and preparers of financial statements, although fair value disclosures could be more informative and existing accounting standards could be clarified further by additional guidance, according to accounting experts. Panelists in a roundtable discussion of fair value accounting hosted this week by the... Read More

ASF Expands Teaser-Rate Freeze to Resets Following Initial Reset on Subprime ARMs

The so-called teaser-freezer loan modification for distressed subprime borrowers announced by Wall Street in December now applies to any resets on subprime ARMs, rather than only the initial rate reset that was required in the original guidance. This major revision to the American Securitization Forum’s “Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime... Read More

Fitch Offers Plan to Enhance Structured Finance Ratings

Risk in structured finance deals may be more transparent thanks to a new proposal made by Fitch Ratings to issue complementary indicators and analysis to enhance the company’s ratings of future and existing transactions. The credit rating service proposed a complementary Loss Severity Rating scale, the adoption of an opinion scale for collateral quality assessment, and an extension of their “rating... Read More

Rating Services to Review MBS and CDO Rating Procedures After Troubling Findings by SEC

The three major rating services struggled to measure risk accurately in MBS and collateralized-debt obligations in recent years, according to an investigation by the Securities and Exchange Commission. The federal regulator used the findings to shape its recently proposed rules for the rating services. Standard & Poor’s, Moody’s Investors Service and Fitch Ratings all received poor... Read More

SEC and Federal Reserve Formalize Oversight Plan For Broker-Dealers as Prequel to Bigger Changes

The formal agreement to bolster oversight of Wall Street broker-dealers that was announced this week by the Federal Reserve and the Securities and Exchange Commission represents a downpayment on a broader effort to strengthen regulation of the industry. Under a memorandum of understanding finalized this week, the Fed and the SEC will share information on bank brokerage activities, clearance... Read More

Portfolio Securitizations Continue to Provide Most Of the Fuel for New Non-Agency MBS in 2008

The non-agency MBS market remained mired in the doldrums during the second quarter, with a handful of large securitizations of seasoned loans in bank portfolios accounting for most of the new issuance during the period. A total of just $25.12 billion of non-agency MBS were issued during the second quarter. That was up 14.6 percent from the first three months of the year... [Includes two charts] Read More

Senate Still Wrestles With More Delays on GSE Legislation While Market Ponders Liquidation

The mortgage market came face to face with the unthinkable this week, as Fannie Mae and Freddie Mac came under unprecedented pressure from skittish investors and analysts began to consider the impact of a government take-over of the two firms. But not even a rout in the stock prices of the government-sponsored enterprises – Freddie shares were trading below $9 a share as Inside MBS & ABS... Read More

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