NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) has released a new Structured Finance research report titled “Mortgage Rates Creating Ripples in RMBS 2.0; Waves to Follow?” The report makes the following key points:
- Although rising rates will continue to cause headwinds for mortgage origination volumes next year; the agency expects RMBS 2.0 issuance to rise, driven by increases in private label securitization activity.
- Credit standards will likely weaken, but as a measured pace, as less refinancing activity will give loan officers’ a greater incentive to spend time on more “involved” loans. Meanwhile, there will likely be upward pressure on mortgage delinquency and default rates across sectors as the average life of a loan extends and allows more opportunity for life events to occur and affect performance.
- KBRA expects potential changes to RMBS deal structures to account for the effects of extending mortgage and bond lives, which has already started to occur in some of the more recent GSE CRT deals via Minimum Credit Enhancement Thresholds.
Related Publications: (available at www.kbra.com)
- Deconstructing the Myth of Early 2000s Credit Benchmarking
- Hurricane Irma Potentially KBRA’s Largest RMBS Storm Exposure; Harvey Update
- RMBS 2.0 Exposure to Hurricane Harvey Affected Counties
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About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
