Positive Housing News Could Help A U.S. Private-Label RMBS Revival Mar 12
Standard & Poors, March 2012
Abstract
The future of private mortgage finance is still cloudy. Since the downturn began in late 2007, the government-sponsored entities (GSEs) Freddie Mac and Fannie Mae have absorbed roughly 95% of total mortgage loan originations and generated nearly 100% of residential mortgage-backed securities (RMBS) new issuance (see chart 1) and now hold 55% of the total $10.3 trillion in U.S. residential mortgage debt outstanding (see chart 2). Along the way, the GSEs suffered considerable losses on pre-downturn vintages and entered conservatorship under the Federal Housing Finance Agency (FHFA). Reintroducing private capital to the mortgage sector will take time. A weak housing market does not help, since the shift could hurt home prices and delay the housing market recovery. A private-label RMBS...
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