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It's clear that the
"health of the securitization
markets is crucial to both
the U.S. economic recovery
and the financial system as
a whole," according to the
Association of Mortgage Investors (AMI), the
membership of that consists of institutional
investors and investment professionals on
the private-label side of the market. AMI
contends that "mortgage investors provide
the capital that makes homeownership an
affordable option for millions of Americans,
yet their interests have largely been neglected
throughout the recent market turmoil."
Vincent A. Fiorillo, global sales manager at
the investment firm DoubleLine Group LP and
president of AMI's board says the government
has burrowed itself deep into the market and
is not leaving anytime soon. Fiorillo contends
that the government has a large footprint in the
housing space in part because it wants to exert
some control over credit availability and partly
because officials think the government's presence
will help preserve "the good, solid TBA market."
As a result, the agency market—Fannie Mae,
Freddie Mac, and Ginnie Mae, all of which
enjoy government backing—is the predominant
source of funding for mortgage loans in the
residential mortgage-backed securities (RMBS)
space.
During the early part of the last decade,
Fannie Mae and Freddie Mac purchased
what the Urban Institute describes as "a stable
portion" of new mortgage originations, while
private-label securities (PLS) experienced steady
expansion, peaking at 41.9 percent of total
originations in 2006. With the housing crash,
however, private investors retreated from the
market in dramatic waves. e Urban Institute
reports that PLS claimed only 1 percent market
share at the end of 2013, while non-agency
single-family MBS issuance hovered at or below
2 percent of new issuances since early 2011.
"When you look at the market today
compared to three or four years ago, it's a little
M A R K E T P U L S E / C A R R I E B A Y
RESURRECTING
THE PRIVATE-LABEL
RMBS MARKET
