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Inside MBS & ABS

July 31, 2009

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Obama Administration Pushes Servicers to Ramp Up Loan Mods; New Guidance May Spur More Activity

Mortgage servicers came out of a meeting with increasingly impatient Obama administration officials this week with a pledge to step up their loan modification efforts, but more detailed instructions from the government may prove to be a more important factor. After meeting with officials from the Treasury Department and other federal agencies, servicers participating in the... Read More

MBS Investors Face Increased Prepayment Risks As Uncertainty Grows Over Delinquency Buyouts

The uncertainty of delinquency buyouts and how vigorously Fannie Mae and Freddie Mac intend to pursue them poses the biggest prepayment risk to MBS investors, according to Barclays Capital. Barclays analysts Derek Chen, V.S. Srinivasan and Nicholas Strand predict that delinquency buyouts by the two government-sponsored enterprises will become the major driver of prepayments, with an... Read More

GSEs’ Need for More Capital Won’t be Taxing; FHLBank Securitization Not Likely Anytime Soon

Fannie Mae and Freddie Mac are likely to need additional capital, their regulator said this week, but probably nowhere near the level that would exhaust the federal government’s existing commitment to keep the two companies afloat. On the other hand, the two government-sponsored enterprises have already suffered massive losses, and the companies probably won’t be able to pay all of it back... Read More

Standard & Poor’s Tops in MBS/ABS Ratings In 2009; Moody’s Takes Biggest Downturn

Standard & Poor’s was the most active rating service in the MBS and ABS markets during the first half of 2009, although the company isn’t as dominant as it has been in the past. S&P rated 57.8 percent of new non-agency MBS issued with ratings during the first six months of the year, edging past Fitch Ratings as the top player in the market. Although S&P’s rating... [Includes two charts] Read More

Principal Forbearance Should Be Treated As Principal Forgiveness, S&P Says

Standard & Poor’s this week revised its ratings methodology for residential MBS that allow loan modification using interest or principal forbearance, noting that these types of mods should be treated similarly to principal or interest forgiveness. A forbearance plan typically allows a delinquent borrower to become current over a specified period of time... Read More

Deterioration in Bond Insurer Financial Strength Prompts Moody’s to Revise Ratings Methodology

Moody’s Investors Service is updating the methodology it uses for rating structured finance securities that are backed by financial guarantors in light of the deterioration that is occurring in those companies’ financial strength and the continuing challenging environment in which they operate. Specifically, “Moody’s will withdraw the ratings on those structured finance securities... Read More

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