RMBS Making a Comeback in 2017

An article in HousingWire cites a recent report from Standard & Poors (S&P) showing RMBS-related issuance has doubled at $14 billion in the first quarter of 2017 compared to $7 billion in the first quarter last year. The S&P report defines RMBS-related issuance as prime, RPL/NPL, rental bonds, MSR advances, and Fannie Mae and Freddie Mac Credit Risk Transfer (CRT) issuance. As a result of the strong first quarter, S&P said that it is increasing its 2017 forecast for RMBS issuance from $35 billion to $50 billion.

"Given this RMBS issuance surge, we are adjusting our 2017 forecast up to $50 billion and will have to continue monitoring the various components," S&P stated. "The $5 billion of (risk-sharing) issuance suggests it reaching an issuance pace that has allowed it to be an ongoing investment program for many market participants." The HousingWire article notes that as a result of rising interest rates, refinances would decrease and securitization would be "a more financially appealing option."

SFIG is encouraged by the demonstrated increase of available private capital in the RMBS market. Noting that two of the categories of private capital listed in the S&P report—rental bonds and GSE CRT issuance—did not exist prior to the financial crisis, SFIG is expanding its advocacy to ensure that it addresses all areas where private capital plays a role in the housing finance market but will continue to give particular focus to the PLS market. Project RMBS 3.0 is an initiative of SFIG, established with the primary goal of re-invigorating the PLS market. If you would like to join the RMBS 3.0 Task Force, email Dallin.Merrill@sfindustry.org.

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