Allison Bisbey

An industry working group might seek legislation to eliminate the need for investor consent in the shift to a new benchmark interest rate. But any legislative fix is almost certain to be challenged because choosing an alternative to Libor will inevitably favor one party in a transaction over another.

The residential mortgages being reinsured are less risky, by several measures, than its previous deal; none of the borrowers have ever missed a payment.

This time, investors required Radian to hold on to the first 2.5% of losses it covers on the pool; by comparison, the insurer’s previous deal, Eagle Re 2018-1, had a lower “attachment” point of 2.25%.

The Structured Finance Industry Group wants Treasury and the IRS to issue a notice that a change from Libor to an alternative index would not be treated as a taxable exchange.

While reinsurers are becoming more comfortable with the risk it is offloading, the GSE wants to maintain control of the workout process for loans that go bad.

Depending on market conditions and demand from whole loan buyers, it could fund 25% to 35% of fix-and-flip loans through deals like the $219 million one it just completed.

At $230 million, GSMBST 2019-PJ1 is notably smaller than recent transactions from JPMorgan and Redwood Trust; borrowers also have less equity in their homes.

Hines Interests used the $755 million loan from Goldman and JPMorgan to take out a $505 million mortgage from two insurance companies, MetLife and New York LIfe.

Arch Capital’s next offering of credit risk transfer notes features heavy exposure to residential mortgages that have been modified by Fannie Mae or Freddie Mac.

Credit risk transfer does more than just reduce exposure to a downturn in the housing market. It also provides them with information about how others view mortgage credit risk.