In this Issue
Our goal at MIAC has always been to keep you up-to-date on the state of the market on anything that might impact the value of your mortgage assets and your balance sheet. To that end, this issue provides: an up-to-date view into the housing and MSR markets; thoughts on maintaining flexibility in the secondary mortgage market; a detailed explanation for providing a classic haircut analysis; and a review of the key regulatory components of bank stress testing and why it’s important to you.
Our first article by Roy Park, Vice President, Capital Markets, provides a brief, recent the history of the housing market, examines current pricing, and provides an outlook for what’s to come, including the impact of the government sponsored modification program (“HAMP”) and how it will impact the housing market in his: Housing Market Outlook.
Anyone managing a residential portfolio today knows the challenges inherent in this responsibility. Doug Mayers, Vice President, Client Solutions Group, provides a helpful guide to Diversifying Your Execution Choices in Today’s Secondary Market.
As residential and commercial real estate markets continue to roil from decreasing values, Dean Hurley, Senior Vice President, Capital Markets, provides a detailed explanation of a classic haircut analysis. Determining how much collateral value to advance for any loan is fundamental to lending. The resulting “haircut” each lender imposes on the value in relation to the credit extended has many names, such as “subordination”, “loan to value”, “capital adequacy”, or “skin in the game”. Regardless of what it’s called, getting it right is critical to long term success. Dean explains the key elements of this process and how to get them right in his classic Haircut Analysis article.
As an expert in valuing Mortgage Servicing Rights (MSRs) Mike Carnes, Vice President, Capital Markets, provides an Update On Mortgage Servicing Rights (MSR), an insightful context for current market behavior and why it’s now a buyers’ market.
Finally, Dean Hurley takes a look at the environment that spawned Bank Stress Testing in an article providing both a look back and our prognosis for what lies ahead. In this article, MIAC takes you through what we believe really went wrong with the market, the existing capital adequacy framework (Basel II), systemic reviews done or being done, and what this means to all of us going forward.
We trust you’ll find our latest issue of Perspectives helpful, and we welcome your feedback and suggestions for future issues.
David McCraw, Perspectives Editor
www.MIACAnalytics.com
80 Maiden Lane, Suite 1401,
New York, NY 10038
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