LOGIN
 

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).


  • Corporate actions slow down

    Sector developments and company hires

    Corporate actions slow down Negative rating actions on corporate loan issuers continue to accumulat...

    Market moves    14 May 2020
  • Liquidity support

    Amendments mitigate forbearance impact

    A number of UK securitisation issuers are enhancing their deals to mitigate the negative impact on r...

    News Analysis    14 May 2020
  • Portfolio resilience

    Technology-driven investment gaining traction

    Pagaya has expanded to the US West Coast, beefing up its origination group. At the same time, the fi...

    News    14 May 2020
  • TALF CLO rules clarified

    Sector developments and company hires

    TALF CLO rules clarified The US Federal Reserve has clarified its CLO eligibility rules for TALF. I...

    Market moves    13 May 2020
  • SFSF investments disclosed

    Sector developments and company hires

    SFSF investments disclosed The AOFM has disclosed the recent investments it has made under the Stru...

    Market moves    12 May 2020
  • SCI Start the Week - 11 May

    A review of securitisation activity over the past seven days

    Last week's stories CRM tool CBILS guarantees eligible for CRR recognition EC decision awaite...

    News    11 May 2020
  • On the rack

    Recent limitations on liability leave unanswered questions for mortgage servicers

    The 21 April FHFA announcement that agency mortgage servicers will have to fund no more than four mo...

    News Analysis    7 May 2020
  • STS synthetics proposals published

    Sector developments and company hires

    STS synthetics proposals published The EBA has published its proposals for developing an STS framew...

    Market moves    6 May 2020
  • Ladder locks in financing

    Sector developments and company hires

    Ladder locks in financing Ladder Capital has entered into a strategic financing arrangement with ...

    Market moves    5 May 2020
  • WAM guidelines finalised

    Sector developments and company hires

    WAM guidelines finalised The EBA has published its final guidelines on the determination of the wei...

    Market moves    4 May 2020
  • SCI Start the Week - 4 May

    A review of securitisation activity over the past seven days

    Last week's stories Cautiousness prevails European CLO market update CRT vol aims for the sta...

    News    4 May 2020
  • CRT vol aims for the stars

    No longer staid and dependable, the CRT market is at record-breaking volatility

    Despite a levelling out in April, volatility in the credit risk transfer market remains extremely el...

    News Analysis    2 May 2020
  • MBS overvaluation case settled

    Sector developments and company hires

    Overvaluation case settled The US SEC has accepted an offer of settlement from Semper Capital Manag...

    Market moves    1 May 2020
  • Targeted action

    Wholesale ratings downgrades questioned

    The raft of negative rating actions currently hitting the securitisation market is perceived to be d...

    News Analysis    1 May 2020
  • Performance pressures

    Irish mortgage loan restructurings anticipated

    Deteriorating collateral values and higher defaults are expected to impair the performance of Irish...

    News    30 April 2020
  • Home sales plunge

    Over 20% drop in March homes sales bodes ill for MBS

    The US March pending home sales report plunged 20.8% compared to February and 16.3% lower than a yea...

    News    30 April 2020
  • Prudential flexibility reiterated

    Sector developments and company hires

    Prudential flexibility reiterated The European Commission has adopted a package to help facilitate...

    Market moves    29 April 2020
  • PEFF funds allocated

    Sector developments and company hires

    PEFF funds allocated The steering body of the World Bank’s Pandemic Emergency Financing F...

    Market moves    28 April 2020
  • Securitisation support

    AOFM initiatives to boost volumes

    The Australian Office of Financial Management has acted quickly to support the Australian securitisa...

    News Analysis    28 April 2020
  • European SME ABS struggling

    Sector developments and company hires

    European SME ABS struggling Coronavirus-driven disruption is creating financial difficulties for...

    Market moves    27 April 2020
  • SCI Start the Week - 27 April

    A review of securitisation activity over the past seven days

    Last week's stories Accessing liquidity The role technology plays in securitising trade finance...

    News    27 April 2020