MIAC Perspectives - Winter 2009 - Agency Tightening Begins

All mortgage market participants can concur that the mortgage rate tightening triggered by the government purchase plan of agency bond issuance has created some much needed excitement. Mortgage rates have fallen dramatically since November and participants are intrigued by the headlines of a sizeable 2009 refinance wave. Although the reduction in rates has already shown promise for lending resuscitation, the breadth and depth of qualifying borrower base is questionable. Without programs comprehensive enough to accommodate today’s troubled borrowers, low rates alone will not support a bottom in housing values. In the last issue of MIAC Perspectives, we discussed a potential slowing of value decline in California homes. That trend has not materialized and it appears that regional trends are very driven by foreclosure backlog which unfortunately is tough to follow due to the various foreclosure moratoriums and servicer processing delays. With the new government officials taking the helm we are encouraged that at least the initiation of aid programs will not be withheld and that new programs can be enacted.

In a today’s rising unemployment environment, a loss modeler needs to understand the effects of job loss on housing values. I wrote the essay “Real Estate and Unemployment Trending” which provides useful insight towards understanding the unemployment related trends that are emerging in today’s MSA landscape.

Due to its high level of importance during the 2008 year end, Sachit R. Kumar, Managing Director of the Capital Markets Group discusses “OTTI” or “Other Than Temporary Impairment” in his article, “OTTI In The New FAS World”.

The tightening of agency rates has created a flurry of work for secondary mortgage market groups across the country. Doug Mayers, Vice President, Sales and Marketing has written the article, “Best Practices in Pipeline Risk Management” to provide insight as to the best way to handle secondary execution risk.

Although the Commercial Servicing product has taken a back seat to the headlines in the residential space throughout most of 2008, Dan Thomas, Managing Director of the Asset Sales Group has written the article, “Commercial Servicing Market – 2008 Year In Review” to inform market participants on the past year’s activity and looks ahead to 2009 opportunities.

In our software solutions focus, Vice President, Lisa Malie has written the article, “Software Integration for Today’s Mortgage Valuation Landscape”. Lisa discusses her work with several of MIAC’s partnering vendors to integrate new products for use by MIAC clients.

Senior Vice President, Capital Markets Group, Robert Lee, updates our readers on developments in the MSR market with “MIAC’s MSR Market Perspective”. Mr Lee discusses the impact of increased speeds driven by the agency product tightening.

At MIAC, our diverse clientele base of mortgage market participants invests in product ranging from distressed ABS bonds to jumbo MSR portfolios. In the current times of pricing uncertainty, as an independent provider of 3rd party valuation services, MIAC is immersed in a wide range of projects that result in price discovery and procedural refinement that would prove relevant to all mortgage credit market participants. Please do not hesitate to contact myself or any MIAC team member for guidance in today’s mortgage markets.

Perspectives Editor
Bryan S. Hughes