RBSGC recommends select agency and nonagency hybrid ARMs. In particular, RBSGC favors 7/1 agency hybrid ARM bonds over 5/1 hybrid ARMs. Both hybrids have 5/2/5 cap structures, however 7/1s offer the benefit of the curve as well as 10bp-20bp additional spread. RBSGC also suggests using nonagency hybrid ARMs as a vehicle for mortgage index investors to outperform. Nonagency hybrids do not qualify for index inclusion, and as a result, trade cheap relative to conforming mortgage product. Nonagency hybrids are prime quality collateral, and are issued in size from large, well-capitalized mortgage and banking institutions. They are fixed-rate, senior/sub structures, priced off swaps.
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Notes A, B and C benefit from credit enhancement amounting to 33.3%, 16.2% and 7.0%, and the deal's capital structure will repay investors on a combined pro-rata and sequential basis.
May 7 -
Originators increased program offerings for the fifth consecutive month, but overall credit availability remains tight, the Mortgage Bankers Association said.
May 7 -
The top five issuers in the pool represent 4.73% of the pool, which is noticeably more diversified compared with the 12.50% concentration, according to Fitch's stressed portfolio at initial expected matrix point.
May 7 -
Rep. Andy Barr, R-Ky., is introducing a bill to establish an Office of Supervisory Appeals at each of the banking regulators that would give banks more power over the appeals process.
May 7 -
Price growth is decelerating but still driving historic home equity gains for owners and widening the gap between the haves and have-nots in housing, ICE finds.
May 6 -
Under the capital structure the senior notes will be repaid on a pro rata basis. Otherwise, the notes in the structure will benefit from excess spread and a senior-subordinate structure.
May 6