Secondary

Measures related to how interchangeable their mortgage-backed securities are have drawn more focus since July when the Federal Housing Finance Agency added a fee that some fear could upset the balance.

The deal creates a secondary market and securitization outlet for the Ohio-based lender, which reportedly is the buyer of Angel Oak Home Loans.

Allowing Fannie Mae and Freddie Mac to buy these loans encourages consumers to purchase more expensive homes, the group said.

Prime mortgage activity fell notably while nonprime deals and government-sponsored enterprise credit risk transfers increased in 2022, according to Kroll Bond Rating Agency.

The increased limit on the size of the mortgages the government-sponsored enterprises will be able to buy reflects the year-over-year change in home prices.

The increases set to go into effect in February help some offset breaks for first-time buyers but also limit options for existing borrowers.

However, a tiered pricing system will limit an inflation-driven increase to under 10% for a small group of originators.

While Bids Wanted in Competition have been used by MBS sellers in the past, a lack of standardization of data points has reduced competition and price, the organization said.

The uptick in cash balances might indicate the challenges issuers are facing originating new loans for reinvestment in commercial real estate CLOs.

Nonbanks will probably see the least change, while securitization lenders, depositories and REITs are likely to experience the most, an Urban Land Institute survey suggests.