Is Mortgage securitization coming back? RMBS hitting The Street…

February 2, 2010

by Scott Sambucci

3 comments

In last week’s “2010 Housing Market Leading Indictors” webinar, we discussed the need for the private banking sector to pick up the slack in mortgage origination when the federal government bows out this Spring.  A requirement for a successful transition is the recovery of mortgage securitization (RMBS issuance) that will enable private banks to offload the risk accompanying mortgage lending in an uncertain housing market environment.

Jacob Gaffney’s report from the ASF 2010 – “Mortgage Modifications Drive Lack of Private Investor Demand” – is an excellent review of a session hosted yesterday where managers from Citigroup, Deutsche Bank, and General Electric Investment Corporation discussed RMBS issuance and other securitization options to spur private sector lending in 2010.

This session is on the heels of a previous article – “New Private-Label RMBS May Thaw Jumbo Market: Report” – published last month.  From the article:

The mortgage finance industry is abuzz with word of new residential mortgage-backed securities (RMBS) issued by private investment firms — the first such planned issuance in more than a year, and some say a sign that the credit freeze may be thawing out for private-label RMBS.

On StructuredFinanceNews.com, there’s additional coverage about ABS from the ASF today – Govt. Programs Have Had Positive Impact on ABS, ASF Panelists Say.

These structured products served as the foundation for many of the derivative products scorned during the 2008 banking meltdown (CDO, CLOs, etc.) but ironically, might be the elixir that enables the government’s exit from the mortgage market.

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