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Inside MBS & ABS

June 3, 2011

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House Budget Committee’s Ryan Wants the GSEs’ Full Conservatorship Costs Included in the Budget

The chairman of the House Budget Committee said this week that a full and transparent accounting of the cost to taxpayers of the federal takeover of Fannie Mae and Freddie Mac is the first, best step to determine how to wind down the two government-sponsored enterprises.During a hearing on taxpayer exposure in the housing markets relating to Fannie, Freddie and the FHA, Rep. Paul Ryan, R-WI, took aim at the White House’s plan for a post-GSE mortgage market. “While the Treasury Department has put forward a ‘framework for reform,’ the Obama administration still... Read More

FINRA Fines Merrill Lynch, Credit Suisse for Misrepresenting Delinquency Rates on MBS

The Financial Industry Regulatory Authority last week fined Credit Suisse Securities and Merrill Lynch for alleged misrepresentation of delinquency data and inadequate supervision of subprime residential MBS that ended up misleading investors about the performance of pool assets. “FINRA found that in 2006, Credit Suisse misrepresented the historical delinquency rates for 21 subprime RMBS it underwrote and sold,” the independent regulator said in a statement. “Although Credit Suisse knew... Read More

Agency MBS Production Sinks to 2-Year Low in May as GSE Refi Business Slumps

New issuance in the agency MBS market declined again in May, falling to the lowest monthly production level since the depths of the global liquidity crisis over two years ago. According to a new Inside MBS & ABS analysis and ranking, Fannie Mae, Freddie Mac and Gin-nie Mae issued a combined total of $71.05 billion of new single-family MBS last month, a decline of 7.7 percent from April’s production. May marked the fifth consecutive decline in monthly agency MBS volume since last year’s refinance boom peaked in December. It was also the lowest monthly production level since... [Includes one data chart] Read More

Fannie Makes Rare Revisit to Non-Agency MBS Market With FHA Structured Deal

Fannie Mae this week nearly doubled the total output of the non-agency MBS market in 2011 with a new REMIC backed by FHA home-equity conversion mortgages. The government-sponsored enterprise provided a guaranty wrap on Mortgage Equity Conversion Asset Trust 2011-1, a $9.26 billion transaction backed by HECM loans originated and serviced by Bank of America. Through the first four months of the year, total non-agency MBS production came to just $9.98 billion – most of which were re-securitizations. Fannie said it intends to... Read More

Competing Government Objectives, Other Factors Slow Down Recovery of Non-Agency MBS Market

A revival in the non-agency MBS market may still be years away because of competing and seemingly contradictory government objectives for housing finance, according to a new analysis from Standard & Poor’s. The government is doing many things all at once to resuscitate the housing market and hasten economic recovery, but those efforts may actually place recovery on a slow track, said Erkan Erturk, an S&P research analyst and author of the report. Erturk concludes that the housing downturn drove the securitization market away from... Read More

Mortgage Investors Call for Greater Transparency, Best Practices to Enhance Securitization Markets

Mortgage investors are calling on federal policymakers to bring more transparency into the securitization process along with a host of other best practices in order to attract sorely needed private capital back into the mortgage marketplace. “Today, mortgage investors face enormous challenges in the capital markets due to opacity, an asymmetry of information, poor underwriting, conflicts-of-interests among key parties in the securitization process, as well as the inability to enforce... Read More

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