The illiquidity of the new-issue, private-label RMBS market is a significant reason for the difficult economic and housing situation confronting the U.S. today, according to CoreLogic Chief Economist Mark Fleming.
Fleming was scheduled to testify today in front of Congress regarding Congressman Scott Garrett's Private Mortgage Market Investment Act.
Fleming noted as part of his testimony that the importance of private capital to the RMBS market cannot be overstated. "We have witnessed the impact of disruption in mortgage credit available to the consumer and the continued pressure it brings to bear on the housing market," he said.
To move forward, Fleming believes that the private-label market would benefit from the uniformity of underwriting standards and securitized assets, the standardization of the securitization processes, and the granular, loan-level understanding of the credit risks associated with RMBS and whole loan portfolios. These are the same issues that the Garrett proposal identifies as crucial in getting the private-label market back up and running again.