Although Congress and the White House are betting that in time the private sector will fill the void created by a diminished Fannie Mae and Freddie Mac, a new report from Standard & Poor's predicts that any recovery in the private label market is still years away.

"The housing market downturn was one of the leading contributors to the securitization market's departure from housing finance, and housing's continuing weakness is largely why a revival in private-label RMBS is still several years away," S&P said.

Erkan Erturk, a senior director in S&P's structured finance department, said that a potential drop in conforming loan limits and passage of covered bond legislation could spur issuance in private-label RMBS over the short run. "However," he added, "any material recovery will be borne out of a strengthened housing market and implementation of housing finance reform."

At its peak, private label MBS issuance topped out at about $1 trillion a year, a figure that includes subprime, alt-A and jumbo. But since the housing crash of 2008 just a handful of mortgage-related PLS deals have come to market, some of them through private transactions.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.