Securitization

Over the past year, there has been considerable discussion around the 'refinancing cliff' and the looming gap between the supply and demand for leveraged loans.

Will the Securities and Exchange Commission (SEC) ever bridge the Grand Canyon-sized gap between issuers of asset-backed securities and their investors when it comes to waterfalls and the Python language?

The urge to unwrap is pretty strong these days. On both the originating and investing sides of the bench, players are itching to ditch the monoline guarantees that no longer add value.

With a recent 4.32% print for the Freddie Mac survey rate, primary mortgage rates have hit all-time lows. However, mortgage rates remain stubbornly high compared to rates in the capital markets. The spread between the survey rate and the Fannie Mae current coupon rate has widened to around 100 basis points, well above its five-year average of +58. While this measure is an imperfect proxy for the relationship between consumer rates and market yields, it nonetheless implies that mortgage rates remain "sticky." This relationship is dictated in large part by industry economics, driven by the level of lending activity relative to the mortgage industry's capacity.

With the government nearly monopolizing mortgage origination, players are asking themselves: How do private companies create "affordability" products for non-prime borrowers and do so by funding themselves through a viable ABS market?

Elizabeth Warren, the top Obama administration official in charge of setting up the Consumer Financial Protection Bureau, made it clear late Wednesday that she intends to target financial disclosures as one of her top priorities.

The latest September remittance data showed delinquencies of more than 60 days on CMBS have continued to climb, Barclays Capital said in a report.

The House of Representatives approved a continuing funding resolution (CR) early Thursday morning that extends the $729,750 maximum loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) single-family loans until Sept. 30, 2011.

The 30-year fixed mortgage rates declined five basis points to an average of 4.32% with an average 0.8 point in the week ending Sept. 30, according to Freddie Mac's weekly survey.

Judge Marsha Pechman of the U.S. District Court for the Western District of Washington has issued an order partly denying WaMu's motions to dismiss Boilermakers National Annuity Trust Fund's securities act claims.

More U.S. servicers are likely to take JPMorgan Chase's and GMAC's lead to halt foreclosure proceeding in the face of increased scrutiny over their foreclosure process.

JPMorgan Chase said Wednesday that it is halting 56,000 foreclosures in process, pending a review of whether employees properly signed and verified information in foreclosure documents.

An early draft of a stop-gap funding resolution shows that Congress is headed toward passing a nine-month extension of the maximum $729,750 loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) loans in high-cost areas.

BTIG, a broker-dealer partly owned by Goldman Sachs, is pushing into new markets by helping fixed-income investors buy and sell securities in developing countries, which some observers say have matured and now more closely resemble their trading partners in the Group of 7.

While Federal Reserve officials are not ruling out future MBS purchases, there are some good reasons why they decided in August to reinvest principal payments into Treasurys instead, and that may play into any quantitative easing plans going forward.

Mortgage bankers are making money hand-over-fist on their new originations these days, and profit margins continue to be fat thanks to a low cost of funds and the ability to heap on all sorts of fees.

The foreclosure process implemented by U.S. mortgage servicers might stall foreclosures in some states and lead to increased RMBS loss severities, according to Fitch Ratings.

Despite mortgage rates setting new record lows, refinancing activity declined in the week ending Sept. 24 by 1.6% to ~4287 — its fourth dip in as many weeks, according to the Mortgage Bankers Association.

Commercial lender CIT Group named Vincent Faino as senior vice president of business development for its vendor finance division.

Approximately $39 billion of CMBS conduit loans out of a projected $66 billion of CMBS are set to mature in 2011, according to Bank of America Merrill Lynch analysts said in a research note today.