The top two bank ABS investors — TD Bank and Charles Schwab — pared back their holdings in 1Q, but sizable increases at Bank of America and oth-ers boosted the industry’s total position in the market. (Includes two data charts.)
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Investors in the ABS market are mostly staying on the sidelines waiting for the coronavirus volatility to play itself out. Meanwhile, some investors are focusing solely on AAA-rated assets.
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Nonbank Ginnie Mae issuers increased their borrowings under the PTAP program in May but not significantly. Next up: FHA’s forbearance policy on loans in progress.
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Taking a close look at the much more stringent capital norms for the GSEs, Matthew Howlett, an equities analyst at Nomura, reiterated his buy rating for Fannie Mae. The hitch? He assumes a ROE of 11.4% by 2024.
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If the new rule had been in effect at 3Q19, CRT would have reduced the GSEs’ capital requirement by $22.1 billion. On the other hand, CRT provisions under the 2018 version would have provided $41.3 billion.
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