Insurers investing in nonagency mortgage securitizations could face new rules requiring them to hold more capital against such investments, according to a Barclays report last week.
According to the report, figures from documents used in a National Association of Insurance Commissioners meeting earlier this summer show the new risk-basked capital requirement would have caused RBC for yearend 2011 securities of this type to rise to 3.5% from 2.6%.
Applying the proposed rules to commercial mortgage-backed securities would have increased their yearend 2011 RBC to 1.3% from 0.9%, Barclays added.
“In nonagencies, most of the effect would have occurred on ‘lower-quality securities’ classified under NAIC levels five or six, while the effect on CMBS would have occurred across all NAIC levels,” researchers at the firm wrote.
“However, other changes likely to be applied to the 2012 NAIC model—including a more optimistic view by the NAIC of future FHA as well as an update to PIMCO’s credit model—may mitigate the increase in capital charges.”
It looks—at least initially—like the changes will affect securities below the top level, with legacy securities expected to see more change than recently purchased ones, according to Barclays.
In other capital markets news:
• Interactive Data last week found in a preliminary analysis of the recently completed
The company found that “transparency has been increasingly obscured, after last year’s initial [Maiden Lane II] auctions; the Fed chose to have a smaller set of bidders, and then all-or-none on entire lists (in contrast to single-bond bids). The complexity and scarcity of analytical tools for CDOs also kept much of ML3 execution in the dark.”
• An online mortgage company, loanDepot.com, said last week it has become a national lender with licenses in all 50 states.
The move is somewhat unusual in a market where most expanding mortgage lenders have been regional players with regional targets and the largest players tend to have been scaling back, at least in certain loan channels.
Also worth noting is that the company’s chief executive officer and founder, Anthony Hsieh, was involved previously with two startup, online lending efforts that were merged into public companies Lending Tree and E*Trade. He founded Home Loan Center in July 2002 and by December 2004 had merged it into the former company. Hsieh also founded LoansDirect.com in 1989 and by 2001 had merged it with E*Trade.
In addition to achieving nationwide licensing, Foothill Ranch, Calif.-based loanDepot.com said last week it has been retaining servicing and selling loans into both Freddie Mac and Ginnie Mae securitizations. It said it also expects to be selling loans into a Fannie Mae securitization in the third quarter.
