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 market buffeted

    'Unsustainable' hedges called out

    MBS spreads to Treasuries widened again yesterday (1 April), giving those hedging margin calls on TB...

    News Analysis    2 April 2020
  • CRR compliance for NHG guarantee

    Sector developments and company hires

    EMEA Addleshaw Goddard has hired structured finance partner Rachel Kelly from McDermott Will &...

    Market moves    1 April 2020
  • Advancing assistance programme prepped

    Sector developments and company hires

    Advancing assistance mooted Ginnie Mae is tailoring the existing disaster pass-through assistance...

    Market moves    31 March 2020
  • CECL delayed

    EU banks await IFRS 9 relief

    The US Fed, the FDIC and the OCC last week approved an extension of the new credit loss accounting s...

    News    31 March 2020
  • Basel 3 implementation deferred

    Sector developments and company hires

    APAC fund launch Pierfront Capital Fund Management has been awarded its capital market services l...

    Market moves    30 March 2020
  • Capacity constraints

    Covid-19 not yet posing solvency issues

    Government and central bank actions have kept both the financial system and the real economy afloat...

    News Analysis    30 March 2020
  • Systemic risk?

    Servicing capacity concerns for non-bank lenders

    Fitch has revised its US RMBS servicer ratings outlooks to negative, due to evolving economic stress...

    News Analysis    30 March 2020
  • SCI Start the Week - 30 March

    A review of securitisation activity over the past seven days

    Transaction of the week Northern Arc Capital and fintech platform CredAble have closed a trade fina...

    News    30 March 2020
  • PPIP call

    CRT and non-agency MBS still in need of purchasing power

    Non-agency MBS and CRT deals in particular are still in need of government support, according to sec...

    News    27 March 2020
  • UK WBS hit expected

    Sector developments and company hires

    APAC Frontier Advisors has appointed Joe Clark as senior consultant in its alternatives and deriv...

    Market moves    26 March 2020
  • Forced selling

    REITs struggling to meet margin calls

    US MBS rallied yesterday (25 March) in the wake of the announcement that Congress has agreed the ter...

    News Analysis    26 March 2020
  • Cloudy outlook

    RMBS perseveres amid market volatility

    LendInvest last week closed Mortimer BTL 2020-1, a £285m UK buy-to-let RMBS, in the face o...

    News Analysis    26 March 2020
  • Fed revives the TALF programme

    Sector developments and company hires

    Return of the TALF The US Fed announced a slew of new measures to support the credit markets this m...

    Market moves    23 March 2020
  • CRT deals disclosed

    Intesa publishes capital management strategy

    Intesa Sanpaolo has released details of its capital management strategy, following the release of it...

    News    23 March 2020
  • SCI Start the Week - 23 March

    A review of securitisation activity over the past seven days

    SCI NPL Securitisation Awards 2020 - new deadline SCI NPL Securitisation Awards 2020 - new de...

    News    23 March 2020
  • NPL supervisory flexibility introduced

    Sector developments and company hires

    Canadian purchase programme The Canadian government has launched a revised Insured Mortgage Purchas...

    Market moves    20 March 2020
  • Economically efficient

    Study supports reduction of PD estimates

    A new study undertaken by Open Source Investor Services (OSIS) suggests that capital relief trades a...

    News Analysis    20 March 2020
  • Further central bank support unveiled

    Sector developments and company hires

    Bridging loan deal inked UK challenger lender Glenhawk has closed a private revolving securitisatio...

    Market moves    19 March 2020
  • Risk off

    Securitisation markets seize up

    Amid a global sell-off, securitised asset classes where liquidity is scarce and asymmetry of positio...

    News    19 March 2020
  • Even playing field?

    Reg AB relaxation set to release RMBS

    The relaxation of FDIC rules regarding bank compliance with SEC Regulation AB when issuing RMBS (SCI...

    News Analysis    18 March 2020
  • Fed rolls out CPFF

    Sector developments and company hires

    CMB purchase programme The Bank of Canada has announced that it stands ready, as a proactive measur...

    Market moves    17 March 2020