RMBS

Residential delinquencies have stabilized and charge-offs have eased, and the second dip in home prices has not been remotely as severe as its older twin. Nonetheless, enormous pools of home equity loans that in fact have little or no home equity standing behind them continue to sow doubts about the health of the nation's largest banking companies.

The Mortgage Bankers Association (MBA) appointed Marcia Davies as Chief of Staff, effective immediately.

Clayton Holdings partnered with MBSData, which provides accurate and timely deal and loan-level information on public non-agency MBS, to offer new loan-level data risk identification analytics as well as enhanced reporting solutions to fixed-income mortgage sector investors.

One of the gross oversimplifications of the mortgage boom and bust is that banks were more inclined to make risky loans because they were able to get them off their books through securitization. In fact, one of the most troublesome categories of bubble-era lending has been sitting on banks' balance sheets all along.

For years esoteric ABS kept its little brother status in a securitization market that was largely dominated by more conventional asset classes.

CoreLogic and Asset Securitization Report sponsored a Web seminar called Today's Best Practices in RMBS Due Diligence. The event was moderated by Michael Stanton, executive vice president for SourceMedia's capital markets division.

As part of a joint initiative, the FHFA and HUD recently released a presentation outlining potential revisions to the current system of servicer compensation. The initiative's stated goals are 1) improving customer service for borrowers, 2) reducing financial risks for servicers, and 3) helping servicers better manage their pipeline of nonperforming loans (NPLs). In light of the asset's unusual economics, an examination of servicing compensation is long overdue. However, the initiative's proposed changes to the compensation structure for NPL servicing runs counter to the notion of reducing the mortgage market's dependence on the government.

ABS investors' search for yield has taken them to an interesting place, where products that were once marginal are now the main attraction. In vogue are decidedly esoteric deals, ranging from whole business securitizations to structured settlement transactions.

The government's proposals for mortgage risk retention, aimed at getting sponsors of securitizations to retain some skin in the game, could potentially change the commercial real estate (CRE) financing landscape, while creating opportunity for some.

Prepayment responsiveness has been significantly reduced because of the housing/financial crisis that has resulted in very tight credit conditions and significant home value declines. Analysts expect this phenomenon to remain for some years, especially as home values continue to weaken and underwriting standards tighten.