Structured Credit Investor


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).

  • Job swaps round-up - 18 August

    North America Redwood Trust has appointed Dashiell Robinson to the newly formed position of evp, o...

    Job Swaps    18 August 2017
  • Streamlined refi programmes near

    The US FHFA has extended HARP through to the end of 2018 and announced that the new GSE streamlined...

    News    18 August 2017
  • Self-cert extension risk eyed

    The self-certified mortgage loan ban included in a recent amendment to European legislation (SCI 27...

    News    16 August 2017
  • Chinese NPL collections surveyed

    Collections for most Chinese non-performing loan securitisations have outpaced originators' initial...

    News    15 August 2017
  • RMBS reaping RPL benefits

    Freddie Mac last week settled its largest SCRT deal to date. The RPL RMBS market is growing and inve...

    News Analysis    15 August 2017
  • Hedging changes a boon for MBS

    FASB recently announced plans to finalise new accounting rules for financial instruments used for he...

    News Analysis    15 August 2017
  • SCI Start the Week - 14 August

    A look at the major activity in structured finance over the past seven days.

    Pipeline Additions to the pipeline last week were balanced between ABS and CMBS. There were five of...

    News    14 August 2017
  • Registered, Rule 144A issuance compared

    The US SEC's division of economic and risk analysis (DERA) has published a report assessing how tren...

    News    9 August 2017
  • SCI Start the Week - 7 August

    A look at the major activity in structured finance over the past seven days.

    Pipeline ABS deals accounted for more than half of last week's pipeline additions. There were seven...

    News    7 August 2017
  • Peripheral ABS playing catch-up

    Structured finance issuance in the European core has held up well over the summer, with spreads cont...

    News Analysis    4 August 2017
  • Job swaps round-up - 4 August

    North America Hunton & Williams has promoted a pair of litigation lawyers with securitisat...

    Job Swaps    4 August 2017
  • Regulatory call exercised for Calico

    The Co-operative Bank last week announced a regulatory call of its Calico Finance Number One capital...

    News Analysis    1 August 2017
  • Reserving practices in the spotlight again

    An additional 10 legacy US non-agency RMBS were called in July, a month after Wells Fargo withheld o...

    News    1 August 2017
  • SCI Start the Week - 31 July

    A look at the major activity in structured finance over the past seven days.

    Pipeline The rate of pipeline additions stayed consistent last week. There were six new ABS, five R...

    News    31 July 2017
  • Job swaps round-up - 28 July

    North America Ashurst is cutting its CLO practice because it sees it as "less relevant" to its glo...

    Job Swaps    28 July 2017
  • Synthetic mortgage 'game changer' awaited

    The inclusion of mortgages in leverage ratio calculations and lower risk weights for the asset are a...

    News Analysis    28 July 2017
  • Self-cert 'drafting error' unlikely to stand

    A recent amendment to Article 17 of the new European securitisation regulations would ban self-certi...

    News Analysis    27 July 2017
  • Euro secondary staves off summer

    The European securitisation secondary market has not yet quite shutdown for summer with a pick-up in...

    SCIWire    27 July 2017
  • Flagstar preps prime RMBS

    Flagstar Bank is in the market with an RMBS which exhibits a unique servicing structure (see SCI's d...

    News    25 July 2017
  • Bond classification trends eyed

    Banks have favoured adding hold to maturity (HTM) bonds to their portfolios in recent years. However...

    News    24 July 2017
  • SCI Start the Week - 24 July

    A look at the major activity in structured finance over the past seven days.

    PipelineA mix of ABS, RMBS and CMBS hit the pipeline last week. There were US$1bn-plus deals announc...

    News    24 July 2017