Securitization

Considerable uncertainty surrounds the recently postponed issuance of the mortgage securitization regulations required by the Dodd-Frank Act (DFA). In particular, two critical decisions involve the required risk retention contained in the DFA. The forthcoming directives will clearly have a major impact on the competitive and economic structure of the mortgage industry in the future.

While Mexico's nonbank originators known as Sofoles are still grappling with the effects of the economic crisis, state-owned agency Infonavit continues to turn out mortgages and securitize them in steady if not growing volumes.

Shopping the B-piece is an integral part of structuring a CMBS transaction. However, with more than a few of the more traditional B-piece investors exiting the market in the last down cycle, B-piece buying became more opportunistic. As CMBS market fundamentals improve, the sector is bound to see the return of the more traditional mezzanine investors, sources said.

All the rating agencies have recently issued warnings about or downgraded re-securitizations, known as re-REMICs, and while those deals issued over the last few years appear hardy enough to withstand another housing downturn, their resemblance to infamous CDOs raises concerns.

The U.S. Treasury isn't rushing the issue on GSE reform. For the securitization industry, the government's slow pace has turned out to be ideal.

The Obama administration in January postponed announcing its GSE reform proposals. Experts said that the root cause of the delay is the fear of further disrupting the already fragile housing market, as Nora Colomer points out in this month's cover story.

There has been discussion that since many of the credit-eligible borrowers are out of the refinancing window, mortgage bankers will use the freed-up capacity to concentrate on the harder-to-refinance, credit-impaired borrowers.

After the near collapse of the Canadian securitization market in August 2007, 2010 saw a strong resurgence in term ABS issuance in Canada. Among other things, there were 16 public deals with combined total issuance of more than CAD$11 billion. There were also signs of renewed activity in the ABCP market with conduits taking on new deals with originators who had been largely frozen out of this market over the last few years. Overall, there is a general sense of optimism about the market and, as a result of both market forces and government action, it's fair to say that the Canadian securitization market is, if not perfectly well, at least comfortably on the road to recovery.

U.S. auto loan ABS collateral performance has turned the corner over the past two years, despite ongoing economic stress and persistent pressure on U.S. consumers overall. Losses among 2009 deals have reverted to pre-recession levels, with losses in the 2010 vintage likely to follow suit.

The percentage of outstanding balances that credit cardholders pay off each month surged last year - a favorable sign for loan performance that mirrored plummeting chargeoffs but that now stands as an obstacle to portfolio growth.

Kroll Bond Ratings is set to publish its initial rating criteria and research for structured finance at the end of February, according to James Nadler, president and chief operating officer at the company.

In the aftermath of wholesale downgrades of RMBS by the ratings agencies, following the housing market downturn, the National Association of Insurance Commissioners (NAIC) decided to try a different approach.

In late December, the European Bank of Reconstruction and Development (EBRD) launched the Mid-size Sustainable Energy Financing Facility (MidSEFF), designed to support renewable energy and industrial energy efficiency investments.

Sallie Mae appointed Paul Thome as president of the Sallie Mae Bank. He has 37 years experience in banking and financial services leadership. He was most recently Sallie Mae’s senior vice president of business finance and procurement.

Fannie Mae purchased $87.6 billion of mortgages from its seller/servicers in December, its best purchase month of the year and yet another sign that loan production remained strong in the fourth quarter.

The 'Great Recession' and housing bubble have taken their toll on U.S. home owners. According to government figures released Monday morning, the nation's overall home ownership rate fell to 66.5% in the fourth quarter, the lowest reading since 1998.

The Treasury Department has revamped its short sale program by easing income restrictions and documentation requirements for homeowners facing foreclosure. The changes are effective Tuesday, Feb. 1.

Michael Callen, executive chairman of bankrupt bond insurance holding company Ambac Financial Group, announced his resignation Friday afternoon.

BNP Paribas said on Monday its corporate and investment banking group unveiled an official institutions coverage team for the Americas that will be headed by Timothy Bitsberger, a former U.S. Treasury Department official and treasurer of housing giant Freddie Mac.

The White House's removal of Joseph Smith as a nominee to be the director of the Federal Housing Finance Agency (FHFA) does not bode well for an administration facing so many regulatory jobs to fill, observers said Friday.