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).

  • BWIC workgroup formed

    Sector developments and company hires

    Mortgage Industry Standards Maintenance Organization (MISMO) has formed a BWIC data development work...

    Market moves    30 November 2021
  • SCI Start the Week - 29 November

    A review of SCI's latest content

    Last week's news and analysis Advanzia advances German credit card ABS debuts Partial...

    News    29 November 2021
  • Slowly widening

    European ABS/MBS market update

    With investors already looking ahead to 2022, the European ABS/MBS primary market is slowly thinning...

    News    26 November 2021
  • SCI forum: What are the benefits of forward flow structures for the securitisation market?

    Our panel of market practitioners respond to readers' questions

    Conor Houlihan, partner at DLA Piper, Ireland Current dynamics in the banking sector are such that...

    Talking Point    26 November 2021
  • Syon upgraded on stable performance

    Sector developments and company hires

    KBRA has completed a surveillance review of Lloyds’ synthetic RMBS Syon Securities 2020-2....

    Market moves    25 November 2021
  • Scores on the doors

    Significant shift in scorecard augurs increased CAS/STACR

    The new 2022 GSE scorecard, released at the end of last week, is likely to mean greater issuance in...

    News Analysis    23 November 2021
  • Rare RMBS with a twist

    Sector developments and company hires

    A rarely seen public Swedish RMBS is in the market with an unusual structural twist – Hypo...

    Market moves    23 November 2021
  • Upgrades anticipated after CMBS updates

    Sector developments and company hires

    Moody’s has updated three commercial real estate sector methodologies, following requests...

    Market moves    22 November 2021
  • Robust fundamentals

    Positive outlook for GSE CRT market

    GSE credit risk transfer gross new issuance has already hit record annual volumes, driven by high mo...

    News Analysis    22 November 2021
  • GSE scorecard released

    Sector developments and company hires

    GSE scorecard released The FHFA has released the 2022 Scorecard for Fannie Mae, Freddie Mac and Co...

    Market moves    18 November 2021
  • Dutch mortgage alliance expanded

    Sector developments and company hires

    Dutch mortgage alliance expanded Achmea Bank is set to acquire a €500m mortgage portfolio...

    Market moves    16 November 2021
  • Some softening

    European ABS/MBS market update

    With the end of the year in sight, issuers are competing for investor demand in the European ABS/MBS...

    News    12 November 2021
  • Sri Lanka eyes remittance securitisation

    Sector developments and company hires

    Sri Lanka eyes remittance securitisation The government of Sri Lanka (GOSL) is requesting competit...

    Market moves    12 November 2021
  • Indian securitisation market presents challenges

    The Indian structured finance market has been around for over two decades but remains quite restrict...

    The market revolves around Indian banks' targets for lending to priority sectors. Banks have...

    Talking Point    11 November 2021
  • Too slow

    Disappointing timeline for call for evidence on STS reform

    The European Commission’s latest call for evidence on its securitisation prudential framew...

    News    11 November 2021
  • First LBR PCC investor signed

    Sector developments and company hires

    First LBR PCC investor signed Lloyds has announced that Ontario Teachers’ Pension Plan B...

    Market moves    10 November 2021
  • Market movers

    Leading agency MBS buyer talks taper, inflation and origination

    While the encroach of inflationary pressures and the Fed taper will be important factors to consider...

    The Structured Credit Interview    9 November 2021
  • Multi-currency CLO closed

    Sector developments and company hires

    Multi-currency CLO closed Barclays has closed a multi-currency managed cashflow balance sheet CLO....

    Market moves    9 November 2021
  • Hurdles ahead?

    Dutch RMBS market continues to face challenges

    The Dutch prime RMBS market received a boost last week with the announcement of Lloyds Bank&rsqu...

    News Analysis    9 November 2021
  • Evolving landscape

    Consolidation, fintech driving banking evolution in Ireland and the UK

    Consolidation among lenders and the proliferation of fintechs is driving change in the Irish and UK...

    News Analysis    9 November 2021
  • Irish rebound

    Second NPL securitisation marketing

    Another Irish non-performing loan securitisation has hit the market less than a month after the Rath...

    News    8 November 2021