With the recent flattening of the curve and drop in fixed mortgage rates, the firm looks for a major pickup in ARM prepayment speeds.They believe that investors looking to reinvest paydowns should consider moving into short PACs off the lowest possible collateral (30-year 5.0s, 15-year 4.5s). They argue that short PACs offer improved call protection and better returns in the current fast prepayment environment, as well as some protection from extension risk if rates back up sharply.They especially like short PACs off Ginnie 5.0s; the relatively slow turnover in Ginnie Maes should help the bonds retain their structural integrity.
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Both pools have exposures to large dealers, so losses could be more pronounced if one dealer goes bankrupt, while both series have revolving periods, when noteholders will not receive any principal.
4h ago -
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency issued a 30-page guidebook on managing affiliate risks. The report builds on formal guidance issued last year.
6h ago -
In talks with OCC officials, "it became obvious that we would not gain near-term approval given their recent experience with multifamily and CRE positions," FirstSun CEO Neal Arnold says. The companies announced other revisions to their deal, too.
9h ago -
Subordination provides credit enhancement to the notes, as well as deposits in the reserve and redemption accounts.
11h ago -
The capital structure features initial exchangeable notes among the class A, mezzanine and B1 notes. The super senior and senior support tranches will repay noteholders on a pro-rata basis.
May 2 -
The company's branches and loan officers will transition to ML Mortgage but operations staff are not part of the deal.
May 2