Tag Archives: RMBS

Fannie Mae's book of business shrank at a compound annualized rate of 1.5 percent in March, closing the quarter with a negative average monthly rate of 1.7 percent. The book totaled $3.177 trillion as of the end of the first quarter. New business acquisitions totaled $71.4 billion, meanwhile, down from $80.2 billion the previous month and $95.3 billion the year before. The last time new business was this low was in June 2012, when acquisitions totaled $70.6 billion.

With a swipe at both the President and the Congress and concerns about downside risks to the economy, the Federal Open Market Committee voted 11-1 Wednesday to leave interest rates unchanged and to continue its program of purchasing agency mortgage backed securities and longer term Treasury securities to maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. Kansas City Fed President Esther George cast the lone negative vote.

Attorneys for Standard & Poor's (S&P) filed Monday a motion to dismiss a civil lawsuit from the federal government accusing the ratings agency of inflating ratings and misrepresenting the creditworthiness of certain securities. In their filing, S&P's attorneys argue that the government cannot prove S&P knowingly issued rating opinions it did not believe, dismissing exchanges between employees offered by the plaintiffs as proof of intent to defraud investors.

According to Fitch Ratings, prime RMBS mortgage pools issued since 2010 had an average conditional prepayment rate (CPR) of about 42 percent, more than twice as fast as the rates of outstanding prime loans securitized in earlier vintages. Generally speaking, Fitch explained high refinance activity tends lead to more "performance volatility" since loans remaining in mortgage pools are usually of poorer quality. However, Fitch is seeing a different trend this time around.

Some recent RMBS transactions reviewed by Fitch have strayed away from guidelines designed to create sound assurances about origination and underwriting quality.

The Justice Department (DoJ) and Standard & Poor's (S&P) are at odds with other over civil fraud charges stemming from an alleged scheme to defraud investors in the lead-up to 2008's financial meltdown. The DoJ filed a civil lawsuit against S&P and its parent company, McGraw-Hill, Monday, alleging that S&P "knowingly [issued] inflated credit ratings" for collateralized debt obligations in the years before the crash, misrepresenting their creditworthiness and understating their risks.

Now that the industry has its long-awaited QM definition, Fitch Ratings believes jumbo prime securities are poised to see a jump start.

According to commentary from Daniel Dektar, chief investment officer at Smith Breeden Associates, all the fundamentals are in place for a housing upturn - if pent-up demand can actually translate into buyer interest.

Fitch Ratings anticipates the CFPB's QM announcement will finally allow banks to assess the costs of re-entering the securitization market.

It's been months since New York Attorney General Eric Schneiderman filed suit against JPMorgan Chase over faulty mortgage-backed securities (MBS), but the bank is now coming out of its own corner swinging. Attorneys for the bank filed a motion to dismiss in early January, arguing that because Schneiderman brought his claims under the Martin Act (an article granting the attorney general increased power to combat financial fraud), they are subject to a three-year statute of limitations that has already elapsed.