RMBS

Residential mortgage-backed securities, or RMBS, are bonds or notes created by securitisation that are backed by residential mortgages or residential real estate loans. RMBS originators are typically financial institutions that originate residential real estate or residential mortgage loans, including banks, building societies/savings & loans and mortgage finance companies. However, issuers could also include government-guaranteed securities issued following bank bailouts, such as TARP or TALF, and the Government Sponsored Enterprises Fannie Mae and Freddie Mac. To create residential mortgage-backed securities, or RMBS, institutions sell pools of their loans to a special-purpose vehicle, or SPV, which then sells the loans to a trust. The trust then repackages the loans as interest-bearing securities and issues them. This true sale of the loans to the SPV ensures that the RMBS is treated as bankruptcy-remote from the originator. Many different types of assets back RMBS, including prime, non-conforming, sub-prime, Alt-A (or Alternative-A), buy-to-let and single-family rental (SFR) mortgages. The financial crisis caused residential mortgage valuations to plummet, leading to severe losses/defaults in many RMBS transactions (and ABS CDOs), as well as efforts to begin modifying loan documentation and indeed the creation of many credit/dislocation/distressed opportunity/recovery funds to take advantage of opportunities in the RMBS sector. Post-crisis, the Government Sponsored Enterprises Fannie Mae and Freddie Mac have developed a credit risk transfer market, comprising synthetic RMBS structures (whereby the risk is transferred via CDS tranches).

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  Market moves    20 April 2021

• CRT seminar line-up finalised

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  News    20 April 2021

• SCI Start the Week - 19 April

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  Last week's stories Income opportunities Angel Oak Capital Advisors, answers SCI's questions ...

  News    19 April 2021

• Federal preemption challenges continue

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  Market moves    15 April 2021

• Shifting trends

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  News    15 April 2021

• Income opportunities

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  The Structured Credit Interview    14 April 2021

• Robust sentiment

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  News Analysis    13 April 2021

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  Market moves    13 April 2021

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• SCI Start the Week - 12 April

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  News    12 April 2021

• Non-resident Aussie RMBS debuts

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  Market moves    8 April 2021

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  News Analysis    30 March 2021

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  Market moves    29 March 2021

• SCI Start the Week - 29 March

  A review of securitisation activity over the past seven days

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  News    29 March 2021

• Show me the money

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  News Analysis    29 March 2021

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• Securitisation tax consultation underway

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  Market moves    24 March 2021