64
M A R K E T P U L S E / S A N D R A L A N E
Will the sale of residential mortgage-
backed securities ever rebound?
THE SLIPPERY
SLOPE OF
SECURITIZATIONS
During the last several years, the creation and sale of residential mortgage-
backed securities (RMBS) has almost gone the way of the passenger pigeon.
e tremendous impact of the foreclosure debacle caused losses in this
market and also diminished confidence in this type of investment. Now,
securitizations are making a comeback, although not at the breakneck speed
some analysts anticipated.
AN INDUSTRY VET EXPLAINS
Non-agency securitization, as it was once
known, is just a memory, according to Dave
Hurt, VP of global markets, data and analytics
at CoreLogic. Although there will continue
to be some new issuance of RMBS securities,
it will not represent more than 15 percent
of the secondary market, if that much. For
the foreseeable future, the majority of the
origination market will continue to focus on
agency bonds issued by Fannie Mae, Freddie
Mac, and Ginnie Mae.
"Prior to 2008, there was a lot of enthusiasm
among investors for purchasing RMBS offerings,"
Hurt said, "but now investors look at this type
of investment with much more caution." At that
time, Hurt explains, the sale of these securities
was fueled by both investor exuberance and a
sense that housing values would keep going up.
"Even if a lender made a bad mortgage and it went
to some sort of disposition, there was a perceived
sense of security, which proved to be false," he
continued. "What we know now is that housing
values don't always go up, and they can drop
drastically." Like a stack of dominoes, the disaster
in the housing market had an adverse impact on
