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).

  • Split-mortgages securitised

    PTSB completes second NPL transaction

    Permanent TSB last week completed its second major transaction to reduce its non-performing loan rat...

    News    5 December 2018
  • Enforcement uncertainty

    Set-back for STS-eligible issuance

    The recent statement issued by the Joint Committee of the ESAs (SCI 4 December) is unlikely to be su...

    News    5 December 2018
  • Proportional approach

    ESAs tackle delay in transparency requirements

    The joint European Supervisory Authorities (ESAs) - which consist of the EBA, ESMA and the European...

    News    4 December 2018
  • SCI Start the Week - 3 December

    A review of securitisation activity over the past seven days

    Market commentary European ABS activity remained subdued last week, with spreads drifting wider, du...

    News    3 December 2018
  • Funding boost for online lender

    Sector developments and company hires

    Alesco CDOs transferred The collateral management agreements for the Alesco Preferred Funding X to...

    Market moves    29 November 2018
  • Term leveraging

    European ABS market update

    The European primary ABS market is still drifting wider, due to concentration of supply. &ldqu...

    Market Reports    29 November 2018
  • Green wave

    International RMBS market update

    A pair of RMBS bid-lists comprising mostly senior non-conforming and prime collateral are set to hit...

    Market Reports    27 November 2018
  • Italian RMBS sell-off 'unlikely'

    Uncertainty ahead may see pan-European issuance drop

    A widespread sell-off of Italian RMBS is ‘unlikely’, despite a recent comment fr...

    News Analysis    26 November 2018
  • UK SLABS slated

    Sector developments and company hires

    EMEA Eurocastle Investment has appointed Hammad Khan to its board as a non-executive director, inc...

    Market moves    23 November 2018
  • Bloodbath blues

    European ABS market update

    The European ABS market has repriced, after taking a hit yesterday when the S&P 500 index pl...

    Market Reports    21 November 2018
  • Long goodbye

    First non-Libor linked ABS anticipated

    Lloyds became the first bank to issue a benchmark covered bond tied to the sterling overnight index...

    News Analysis    20 November 2018
  • Credit clutch

    European ABS market update

    The European ABS slow-down continues, with prices drifting wider and subdued credit growth across th...

    Market Reports    20 November 2018
  • SCI Start the Week - 19 November

    A review of securitisation activity over the past seven days

    Market commentary Pepper Group is prepping an Australian RMBS that is expected to include a short U...

    News    19 November 2018
  • Double Dutch

    Dutch RMBS market sees surge of activity

    The Dutch RMBS market has seen a surge of activity with two new Dutch RMBS transactions marketing, b...

    News    16 November 2018
  • Selling stagnation

    European ABS market update

    Activity in the European ABS primary and secondary markets has slowed this week, with volumes genera...

    Market Reports    16 November 2018
  • Dry powder

    International ABS market update

    Pepper Group is prepping an Australian RMBS that is expected to be sized at A$500m-equivalent and in...

    Market Reports    15 November 2018
  • Diverging dynamics

    Aussie non-banks driving change

    Around A$30bn of Australian RMBS issuance is expected for full-year 2018, over 50% of which will be...

    News Analysis    15 November 2018
  • Tranche tinkering

    US RMBS market update

    Freddie Mac has restructured some of the mezzanine tranches in its most recent credit risk transfer...

    Market Reports    14 November 2018
  • NPL transaction markets

    Sector developments and company hires in structured finance

    NPL deal markets Banco Santander Totta is in the market with Hefesto STC (Guincho), a €98...

    Market moves    13 November 2018
  • Paper prioritised

    European RMBS market update

    Spreads have widened in the European RMBS sector, with secondary market activity remaining slow amid...

    Market Reports    13 November 2018
  • SCI Start the Week - 12 November

    A review of securitisation activity over the past seven days

    Market commentary The Dilosk No. 2 Irish legacy RMBS was in focus in the European primary market la...

    News    12 November 2018