Tag Archives: collateralized loan obligations

The History of Housing Finance

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I was happy to present on the History of Housing Finance as part of the Structured Finance Association’s SF Academy series, hosted by Elen Callahan, the SFA’s Head of Research & Education. You need to sign up to access the SF Academy content (although I have covered similar content in many other venues) for those who do not want to bother). The SFA website states that the

The Structured Finance Association (SFA) has launched a new structured finance education program, the SF Academy. Every other week, new content will be added to our inaugural Bootcamp Series.

Our Level 1 Modules are designed to introduce the fundamentals of securitization and various securitized asset classes. Through accessible explanations and real-life examples to practitioners of all levels.

General topics to include:

    • History of Housing Finance
    • Utility of Indices
    • Legal Principles of Securitization
    • Lifecycle Of a Private Asset-Based Finance Deal

Specific asset classes to be explored include:

    • Asset-Backed Commercial Paper (ABCP)
    • Aircraft Asset-Backed Securities (ABS)
    • Commercial Property-Assessed Clean Energy (C-PACE)
    • Collateralized Loan Obligations (CLOs)
    • Fiber Asset-Backed Securities (ABS)
    • Home Equity Securitization (HES)
    • Leveraged Loans
    • Private Student Loan Asset-Backed Securities (ABS)
    • Triple Net Lease Asset-Backed Securities (ABS)

Enrollment in the SFAcademy is open to all. Once your enrollment is confirmed, you will have access to view our full curriculum; however, please note that access to SFAcademy courses is limited for non-members.

Level 1: Housing Finance

By the end of this session, you will understand:

    • How housing finance has changed since the 19th century.
    • The role of the federal government in housing finance.
    • Some of the challenges we face in building a housing finance system that serves the broad swath of households.

S&P: Future of Private-Label RMBS Uncertain

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S&P has posted an Executive Comment, Lifted By Improving Economic Conditions, The U.S. Leads The Global Securitization Rebound–But Headwinds Remain. It concludes,

After surviving its first severe test, the market for securitization is slowly emerging from a sharp downturn, demonstrating its viability to efficiently distribute risk and expand credit availability. In this light, with many regulatory and economic uncertainties still present, we’re forecasting continuing slow growth going into next year.

The question is if, and when, securitization will register large issuance numbers again, contribute to the funding diversity and liquidity positions of banks, and improve the efficient allocation of resources to foster global economic growth.

For the U.S.–far and away the largest and most mature securitization market in the world–it’s clear, given the interconnectivity of the economy, the securitization market, and housing finance, that a continued economic recovery is necessary before the securitization market can fully recover. Economic growth will also encourage regulators, policymakers, and investors to work on the eventual return of private housing finance. But we believe that mortgage financing remains a concern for general credit availability and a continuing housing market recovery. The future of non-agency RMBS will remain in question so long as the GSEs dominate housing finance while enjoying exemptions from the qualified mortgage and risk-retention rules. (7)

I do not think that there is anything particularly new in this analysis, but it does highlight an important issue, one that I have touched on before. The gridlock on housing finance reform in DC has many effects. The GSEs are not on solid footing. The private-label industry does not know what part of the mortgage market it can operate in, whether with Qualified Mortgage (QM) or Non-QM products. And most importantly, homeowners are  not getting credit at a price that a stable and mature market would offer.

The conventional wisdom is that housing finance reform is off the table until after the mid-term elections or even until after the next presidential election. That is bad news for American households, the housing industry and the financial markets. And without some strong leadership in DC, it looks like the conventional will be right.