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Inside MBS & ABS

February 26, 2010

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Banks Increased MBS Holdings in Late 2009, But Ability to Cover Fed Withdrawal Unclear

Commercial banks increased their holdings of mortgage securities in late 2009, although it remains to be seen how big a force the industry will be in absorbing new MBS issuance as the Federal Reserve winds down its operations. Commercial banks held a record $1.162 trillion of residential MBS at the end of last year, a healthy 3.9 percent increase... [Includes three charts] Read More

FDIC Securitization Proposal Opposed By Mortgage Finance Industry Groups

Industry groups representing the MBS and ABS markets and mortgage lenders offered stiff criticism of the Federal Deposit Insurance Corp.’s controversial proposal to create a much narrower and more prescriptive safe harbor for securitizations issued by insured banks.The American Securitization Forum said the FDIC proposal would create substantial uncertainty for investors... Read More

Administration Defers Reform Proposal for Fannie and Freddie Until 2011, Realtors See Nonprofit as Option

The Obama administration has deferred until next year the release of specific proposals for reforming Fannie Mae, Freddie Mac and the mortgage finance business in general, although officials plan to begin researching possible strategies sometime sooner. During a hearing in the House Budget Committee this week, Treasury Secretary Timothy Geithner made the unexpected... Read More

SEC Approves Modified Proposal to Require MBS and ABS Trade Reporting on TRACE

The Securities and Exchange Commission this week approved a revised proposal from the Financial Industry Regulatory Authority to require bond traders to report MBS and ABS transaction information to FINRA’s electronic tracking system. The Trade Reporting and Compliance Engine, TRACE, was developed by FINRA in 2002 to help the agency improve its oversight of the corporate... Read More

Market Value Gains on Securities Helped Freddie Limit the Damage as 4Q Losses Total $6.5 Billion

Freddie Mac took another pounding in the fourth quarter, but it would have been a lot worse had it not been for favorable market value improvements for some of the company’s retained assets. Freddie reported a $2.7 billion decline in unrealized losses as a result of improved values for assets in the firm’s available-for-sale securities portfolio during the fourth quarter. That reversed a lot... Read More

Investors Rely Less on Credit Ratings, Turn to Alternative Advisory Services

MBS and ABS investors have long depended on credit rating agencies to help evaluate investment opportunities, but the influence of the services may be waning, according to a new report by Aite Group, a business and advisory firm. “While [nationally recognized statistical rating organization] ratings will remain a part of the global debt markets, NRSRO hegemony may wane... Read More

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