Secondary markets

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.

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.

Mortgage bonds are close to the cheapest they've been since the financial crisis by some measures, and money managers like Pacific Investment Management Co. are betting that prices have fallen far enough to make the securities a great buy now. 

Two vendors have added non-agency mortgage and co-issue servicing sales respectively, and a government agency has confirmed that it's working on overcoming a hurdle to more scalable eNote use.

However, the downturn will be brief and housing will lead the way out, the government-sponsored enterprise concluded.

Scores will be assigned to all loan pools created since 2010, including future securitizations, and are expected to help investors determine the share of mortgages meeting specific characteristics.