The mortgage finance market must first appreciate the extent of losses borne by credit investors in mortgage-backed securities and collateral debt obligations in order to regain trust and get private money working again.

Eknath Belbase, senior mortgage strategist for Andrew Davidson & Co., said the credit ratings agencies (CRAs) lack of adequate credit risk measurement caused remarkable losses, especially on CDOs. He said credit risk investors in particular were "burned" in the collapse of subprime. Belbase made these assertions while speaking on a panel at the Mortgage Bankers Association 100th Annual Convention & Expo in Washington, D.C. on Monday.

And now, the CRAs are moving in the other direction and overcorrecting, he said, citing the overly conservative ratings of a tranche of the Fannie Mae risk-sharing deal, Connecticut Avenue.

At any rate, before the housing bust, Belbase said, it was critical that non-American investors accept domestic mortgages as viable, risk-remote structured finance investments. That interest waned in the collapse, but is coming back and needs to be supported, said Manoj Singh, associate director of the Federal Housing Finance Agency, moderator of the panel titled, "Rebuilding Global Acceptance of U.S. Mortgage Assets."

"We don't need to attract lots of global investors," Belbase added, "but we need to stay attractive to some overseas investors." Earlier in the day, both the CEOs of Fannie Mae and Freddie Mac showed differing views on the extent of investor interest in revitalizing mortgage finance.

Adam Quinones, head of mortgages and MBS at Thomson Reuters, majority owner of hedging platform Tradeweb, said investors are already confident in the To-Be-Announced market, which includes trading in Fannie Mae, Freddie Mac and Ginnie Mae. Their focus is to build tools that offer investors a view into borrower behavior, as that is where mortgage risk is considered highest.

Both Quinones and Belbase seem to agree that secondary investors do not have any desire to review stacks of mortgage files before investors. "If they did," Belbase said, "they would be mortgage lenders."

Progress in policy making is helping to create a benchmark under this volatility, Quinones said. For example, regulations under the Consumer Financial Protection Bureau are a net positive for investors since the rules strengthen the underwriting of mortgages that collateralize these bonds.

"Maybe I'm the only person at this conference who has a positive thing to say about the Qualified Mortgage," he said.