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Inside MBS & ABS

January 22, 2016

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Vehicle Sector Bucked Overall Decline in ABS Issuance in 2015 as Credit Card Market Tanked

New issuance of non-mortgage ABS fell 6.6 percent last year even though the market’s biggest segment pushed to a new post-crash high, according to a new Inside MBS & ABS analysis. A total of $173.05 billion of non-mortgage ABS were issued in 2015, the second-highest annual output since 2008. The direction, however, was less encouraging. New issuance tumbled 17.1 percent from the third to the fourth quarter, sinking to $30.69 billion – the lowest three-month total in over three years. But with record sales in the U.S. auto industry, securitization of vehicle-finance contracts increased...[Includes two data tables] Read More

MBS Trading Desks Restructured as Liquidity Declines, Changes Afoot at Barclays, SocGen and Wunderlich

The average daily trading volume for agency MBS fell to a yearly low of $149.2 billion in December, as trading desks from coast to coast continued to assess how to make money in what’s become a business of tight profit margins. Late this week, Barclays Bank unveiled a massive restructuring of its MBS and whole-loan trading business, cutting the number of employees in the division – including traders – down to 50 from roughly 100. As a structural matter, the bank is moving... Read More

Non-Agency MBS Issuers Working to Deal with Risk- Retention Requirements, Seasoned Loans a Focus

About a month after risk-retention requirements took effect for newly issued non-agency MBS, industry participants continue to work on complying with the standards set by the Dodd-Frank Act. Non-agency MBS issued on Dec. 24, 2015, and beyond are subject to risk-retention standards. The standards will apply to other MBS and ABS asset types for deals issued on and after Dec. 24 of this year. The first jumbo MBS subject to risk-retention requirements is scheduled... Read More

MBS and ABS Issuers Face Reg AB2 Compliance Issues, Urge SEC to Continue to Delay Further Action on Disclosures

Issuers of MBS and ABS continue to address compliance issues with the Securities and Exchange Commission’s so-called Regulation AB2. Meanwhile, the Structured Finance Industry Group has urged the SEC to continue to delay further action on disclosure proposals that remain outstanding. In August 2014, the SEC published a final rule setting a variety of disclosure requirements for the structured finance market. Issuers of publicly registered MBS and ABS were required to comply with rules, forms and disclosures established by Reg AB2 by Nov. 23, 2015. Asset-level disclosure requirements will take effect Nov. 23 of this year. During a webinar hosted by the law firm of Mayer Brown late last week, Stuart Litwin, a partner at the law firm, said... Read More

Goldman Sachs Agrees to a Record Settlement, Claims Against BNYM Given the Green Light

Goldman Sachs last week announced it has agreed to a $5.1 billion settlement, the largest regulatory penalty in the firm’s history, concluding an investigation brought by the Residential MBS Working Group of the U.S. Financial Fraud Enforcement Task Force. The agreement in principle is poised to resolve actual and potential civil claims by the U.S. Department of Justice, the New York and Illinois attorneys general, the National Credit Union Administration (as conservator for several failed credit unions) and the Federal Home Loan Banks of Chicago and Seattle. At issue are... Read More

FINRA Drops Multifamily MBS from Proposed Margining Rules in Response to MBA Concerns

MBS backed by multifamily mortgage loans would be exempt from a proposed rule that would establish margining requirements for multifamily agency finance. Had it been implemented as originally proposed, the rule would have amended the Financial Industry Regulatory Authority’s Rule 4210 to establish margin requirements in the single-family “to-be-announced” (TBA) market. At the same time, it would have also scoped in the multifamily housing programs of Fannie Mae and FHA/Ginnie Mae, according to the Mortgage Bankers Association. FINRA filed... Read More

Rating Services Differ on Risks Posed by Rent-to- Own Securitization as First Deal Comes to Market

The first security backed by proceeds from properties that have “rent-to-own” agreements has caused some divergence among rating services. Home Partners of America is preparing to issue a $508.88 million deal, which received preliminary AAA ratings from two firms. Moody’s Investors Service and Morningstar Credit Ratings issued presale reports on Home Partners of America 2016-1 last week. Kroll Bond Rating Agency followed with a warning that rent-to-own deals present more risks than single-family rental securitizations. The collateral for the security is... Read More

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