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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).


  • 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
  • Inventory ABS prepped

    Sector developments and company hires

    Inventory ABS prepped Fintech platform Supply@ME Capital (SYME) has entered into an agreement with...

    Market moves    24 April 2020
  • Non-agency CMBS goes it alone

    The non-agency CMBS market is an orphan of the storm

    While a raft of measures to aid liquidity and forestall insolvency have been introduced by the US au...

    News Analysis    24 April 2020
  • Grandfathering for Dutch CLO issuers

    Sector developments and company hires

    Grandfathering for Dutch CLO issuers The Dutch tax authorities have provided written confirmation t...

    Market moves    23 April 2020
  • GSE advancing obligations aligned

    Sector developments and company hires

    GSE advancing obligations aligned The US FHFA has aligned Fannie Mae's and Freddie Mac&...

    Market moves    22 April 2020
  • Extension risk

    Willingness and ability to call weighed

    The Covid-19 fall-out appears to have impacted both the willingness and the ability of some UK issue...

    News    22 April 2020
  • Pressured profitability

    Building societies sensitive to lockdown

    UK residential mortgage originations have decreased significantly due to the current social distanci...

    News    21 April 2020
  • SCI Start the Week - 20 April

    A review of securitisation activity over the past seven days

    Last week's stories Bilateral activity Opportunistic capital redeployment underway Coverage...

    News    20 April 2020
  • Interest rate mismatches eyed

    Sector developments and company hires

    Interest rate mismatches eyed Moody’s suggests that loan repricing will increase interest...

    Market moves    17 April 2020
  • Forbearance risks

    Pre-2015 GSE deals could suffer losses

    As the coronavirus spreads and servicers offer mortgage forbearance plans to struggling obligors, ce...

    News    17 April 2020
  • CMBS secured, unsecured sub debt weighed

    Sector developments and company hires

    CMBS secured, unsecured sub debt weighed Senior US CMBS loans with unsecured subordinate debt (s...

    Market moves    16 April 2020
  • Price volatility

    Liquidity constraints hit credit risk transfer

    Acute losses have been suffered in the US credit risk transfer market over the last few weeks, as pr...

    News Analysis    15 April 2020
  • Auto ABS rating withdrawn

    Sector developments and company hires

    Auto ABS rating withdrawn Fitch has withdrawn the expected ratings of Swiss Car ABS 2020-1 (SCI 9 A...

    Market moves    15 April 2020