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).

  • Credit policy tightening welcomed

    Investors in future Australian RMBS are expected to benefit from the tighter credit policies set out...

    News Round-up    29 February 2016
  • SCI Start the Week - 29 February

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

    Pipeline The number of ABS deals joining the pipeline slowed last week. The distribution across sec...

    News    29 February 2016
  • MBS trading team formed

    Mitsubishi UFJ Financial Group is building a US MBS trading team and hire...

    Job Swaps    29 February 2016
  • Euro secondary flurry

    The European securitisation secondary market saw a flurry of activity on Friday. After declining v...

    SCIWire    29 February 2016
  • Mortgage movers

    Non-bank lenders reshaping UK RMBS

    Tough capital constraints are weighing on the incentive of large incumbent lenders to maintain a str...

    News Analysis    26 February 2016
  • Euro secondary slips

    Activity and pricing levels have slipped further in the European securitisation secondary market. ...

    SCIWire    26 February 2016
  • Brexit implications weighed

    The UK will hold a referendum on 23 June to decide whether to stay within the EU. Uncertainty about...

    News    25 February 2016
  • Dispute framework benefits outlined

    The new independent dispute resolution (IDR) process recently adopted by Fannie Mae and Freddie Mac...

    News Round-up    25 February 2016
  • Euro ABS/MBS softens

    Weaker wider markets have softened the tone across the European ABS/MBS secondary market. Broader...

    SCIWire    25 February 2016
  • Drifting out

    High-beta spread dislocation continues

    As markets sell off and become increasingly volatile, European high-beta securitised paper has widen...

    News Analysis    24 February 2016
  • Euro secondary mixed

    The European securitisation secondary market continues to experience mixed fortunes. "Liquidity re...

    SCIWire    24 February 2016
  • Resi oil exposure eyed

    The credit performance of oil and gas-focused metropolitan areas has worsened on a relative basis wi...

    News Round-up    23 February 2016
  • Mortgage portfolio sale agreed

    OneSavings Bank subsidiary Rochester Mortgages has entered into a mortgage sale agreement to acquire...

    News Round-up    23 February 2016
  • Negative Euribor risks highlighted

    A continued decline of Euribor rates poses a number of risks to euro-denominated Australian RMBS and...

    News Round-up    23 February 2016
  • Euro secondary starts slowly

    It was a slow start to the week for the European securitisation secondary market, but today looks li...

    SCIWire    23 February 2016
  • UK risk over-represented

    Some €6.5bn of European ABS paper has traded off BWICs in the last nine months, according...

    News    22 February 2016
  • Loan-level model introduced

    JPMorgan has developed a new loan-level transition model for GSE residential mortgage loans, which a...

    News Round-up    22 February 2016
  • SCI Start the Week - 22 February

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

    PipelinePipeline entrants were dominated by ABS issuers last week. A handful of CDOs/CLOs and CMBS d...

    News    22 February 2016
  • Euro secondary solid

    The European securitisation secondary market remained solid on Friday despite broader market weaknes...

    SCIWire    22 February 2016
  • Russian bankruptcy law gauged

    A new Russian bankruptcy law that came into effect in October 2015 will only impact a limit...

    News Round-up    19 February 2016
  • Euro secondary fades

    Levels and activity are fading in the European securitisation secondary market as the broader market...

    SCIWire    19 February 2016