Securitization

The industry's biggest opportunities involve the evolving cost of capital, which will shift funding sources from the private, local lending markets to institutional sources.

The transaction is the first in what is planned to be a continued series of purchases by the new fund as it continues to raise capital from investors.

The deal is secured by a portfolio dominated by mortgage loans considered non-qualified or exempt from ability to repay rules.

The volatility pushed whole loan spreads wider and brought single-asset single-borrower commercial mortgage-backed securitization to a halt as lenders waited for clarity.

The company wants some holders of bonds due next year to allow a higher debt-to-equity ratio so it can pursue strong returns while managing certain risks.

Besides the investment, Citi was also the sole bookrunner on Vontive's first-ever securitization, made up of $150 million of residential transition loans.

Most of the contracts in Point Securitization Trust, 1,750 (81.64%), are second-lien as of the cut-off date.

The companies have been under government conservatorship since the 2008 financial crisis. Fannie and Freddie have both returned to steady profitability.

The funding round will help Button Finance, which leverages AI to underwrite home equity financing, expand its range of products to more borrowers.

Mortgage bonds supported by government-backed companies like Fannie Mae and Freddie Mac were trading slightly wider Monday morning after Moody's Ratings downgraded the US late last week.