Secondary markets

Deterioration in credit quality should put strain on collateral originated in late 2021 and early 2022, affecting performance, Barclays Credit Research said.

These types of transactions largely disappeared from the market for years after the Great Recession.

Prime mortgage activity fell notably while nonprime deals and government-sponsored enterprise credit risk transfers increased in 2022, according to Kroll Bond Rating Agency.

However, a tiered pricing system will limit an inflation-driven increase to under 10% for a small group of originators.

Nonbanks will probably see the least change, while securitization lenders, depositories and REITs are likely to experience the most, an Urban Land Institute survey suggests.

Scores will be assigned to all loan pools created since 2010, including future securitizations, and are expected to help investors determine the share of mortgages meeting specific characteristics.

The government mortgage-bond insurer's requirements that restrict investor involvement are likely the greatest challenge to finding more purchasers of MSRs, experts said at a servicing conference Monday.

The company was profitable on a net basis but took a comprehensive loss linked to market volatility's effect on mortgage bonds.

The company is floating the possibility of selling a portion of its loan portfolio to free up liquidity in coming months, leaders said.

The government-sponsored enterprise put more money aside as mortgage interest rates rise and home prices start to decline.