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Inside MBS & ABS

June 10, 2011

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MBS Analysts Question Whether Risk-Retention Rule Will Align Interests Among Parties to Securitization

Although federal regulators this week gave the industry more time to comment on their controversial proposal on risk retention in non-agency MBS and ABS transactions, some industry experts have already suggested that the concept fails to address its fundamental purpose of strengthening deal quality by aligning the interests of securitizers and investors. Risk retention is an intellectually appealing idea, but it’s not clear that it provides... Read More

Gyrating Origination Volume Produces Record Mortgage Securitization Rate in Early 2011

The mortgage securitization rate hit a record 94.6 percent during the first quarter of 2011 due to huge fluctuations in primary market production trends over the past six months, according to a new analysis by Inside MBS & ABS. The first-quarter securitization rate was up sharply from 84.9 percent for all of 2010, and the rate topped 100.0 percent in the agency mortgage markets. The huge securitization rate numbers stemmed...[Includes one data chart] Read More

Goldman to Sell Litton Servicing to Ocwen, Deal Complements Ocwen’s Expansion Plan

Ocwen Financial Corp. is poised to significantly expand its mortgage servicing business with the acquisition of Litton Loan Servicing from Goldman Sachs Group for approximately $264 million. The sale price does not reflect certain assets that Goldman will retain, the investment bank said in a June 6 statement announcing the deal. The bank did not specify which assets would be excluded from the transaction. The planned sale will end... Read More

Treasury Recoups 59 Percent of Its MBS Investment So Far, Hopes to Turn a Profit for U.S. Taxpayers

The federal government will likely turn a profit on the Fannie Mae and Freddie Mac MBS purchased by the Treasury Department in the wake of the collapse of the two government-sponsored enterprises in September 2008. Treasury said it received an additional $12.9 billion during the month of May in proceeds from its agency MBS investment, through sales with a market value of $10.5 billion ($10.0 billion principal value) and principal and interest payments of $2.4 billion. Through the end of May 2011, taxpayers have received... Read More

Tax Implications of Dodd-Frank Risk-Retention Rules Have Bankers Scrambling to Comprehend, Comply

Bank executives expect it will be a tall order for their firms to address the various tax implications of the Dodd-Frank Act, as well as the Basel III liquidity standards, particularly with regard to securitizations, according to a recent survey by audit, tax and advisory firm KPMG. KPMG reported that 48 percent of respondents said their firms were still trying to figure out the tax implications of Dodd-Frank and Basel III, while 49 percent said... Read More

Should Be Clear Sailing Ahead for Agency MBS REITs as GSE Conservatorships Remove Risk

The increasing return of private capital to the mortgage market that is expected to materialize post Dodd-Frank will provide plenty of opportunity for mortgage real estate investment trusts, with those investing in agency MBS likely to face a particularly low-risk environment, some leading financial services analysts suggest. gWe believe that the increased privatization of the mortgage market combined with the risk retention requirements of the equalified residential mortgagef will create... Read More

DBRS Explains Provisions in Exposure Draft on Third-Party Due Diligence Standards for RMBS

Rating agency DBRS has clarified its position on several key provisions following a review of market comments on its exposure draft on third-party due diligence criteria for U.S. residential MBS. Not all firms can produce 36 months of payment history on seasoned home loans, particularly with respect to recently purchased home loans. Hence, verification of the pay histories of loans seasoned more than 18 months up to less than 36 months will be allowed... Read More

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