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Inside MBS & ABS

November 21, 2008

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Loan Modification Crusade Gathers Strength as FDIC Fleshes Out Plan for Non-GSE Mortgages

The Federal Deposit Insurance Corp. is drumming up considerable political support for its proposal to guaranty modified loans in subprime and Alt A MBS, but the program may be put on hold until the Obama administration takes over in January. FDIC Chairman Sheila Bair this week won informal support from many Democrats on the House Financial Services Committee for her... Read More

Treasury Stays the Course on Capital Purchases, Asset Purchase Not a Wise Use of TARP Funds

Treasury Secretary Henry Paulson said he is committed to injecting more capital into financial institutions rather than purchasing troubled assets to stabilize the financial system and spur lending.Facing hostile Democrats on the House Financial Services Committee during a hearing this week, Paulson expressed no remorse for his decision to stray from the original intent of the Troubled Asset... Read More

Moody’s Ranks as Top Rating Service In Depleted MBS and ABS Markets

Moody’s Investors Service ranked as the top rating service in non-agency MBS and non-mortgage ABS through the first nine months of 2008. With new issuance dropping off sharply, especially in the public market, rating activity has also declined dramatically in 2008. Only $49.2 billion of non-agency MBS were rated through the first... [Includes two charts] Read More

Continued Market Pounding Forces GSEs to Take $11 Billion of Writedowns on Their MBS Holdings

Fannie Mae and Freddie Mac lost an astonishing $54.3 billion in the third quarter between the two of them, including $10.9 billion in writedowns on their mortgage-backed securities holdings for the period. Freddie Mac this week said it lost $25.3 billion, driving shareholder equity into the red and compelling the company to ask Treasury for $13.8 billion from its backstop funding authority... Read More

CMBS Sector Shows Expected Signs of Turbulence, Anticipated Plunge Looms

Two major commercial MBS deals neared default and yield indexes soared this week, as all signs are pointing to a turn for the worse in the weakening CMBS market. A $209 million loan for Westin hotels in Tucson, AZ, and Hilton Head, SC, was transferred to a special servicer in October “due to imminent default,” Credit Suisse analysts said in a research note Tuesday. In addition... Read More

Re-REMICs Designed to Avoid Ratings Downgrades May Actually Perform Worse

Despite bleak investor appetite in recent months, re-securitization of existing MBS has been one of the brighter spots of the non-agency MBS market in 2008. But a new analysis by Fitch Ratings raises concerns about the performance of these deals. Many re-securitizations are designed to provide additional credit support for an existing senior bond to avoid a potential downgrade... Read More

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