In a blow to the mortgage-lending community, last week saw the finalization of changes in the Alternative Mortgage Transaction Parity Act (AMTPA) by the Office of Thrift Supervision (OTS). The move is seen limiting the geographic diversity of loan pools for home equity and nonprime mortgage product as well as reducing liquidity in the ABS market, which in turn may be passed along to consumers.
The impact of the ruling will likely be reduced demand for portfolios in the red hot whole-loan market, due to a reduction in the available cash flows to structure net-interest margin (NIM) offerings. "The less that can be squeezed out of a NIM, the less of a premium someone would pay for a portfolio," a trader said. "But as for lenders, they would have to adapt."