Private-label residential mortgage-backed securities issuance has staged a comeback in 2013 and looks on track to hit roughly $15 billion in issuance, according to Barclays (BCS).
Guarantee fees are expected to rise at the very least by 10 to 15 basis points — or () execution will have to () by that much — before the private-label market can start making further inroads into the enterprises' market share.
On the securitization option, the economics of nonagency securitization are much closer than Fannie Mae and Freddie Mac securitizations today than they were two years ago.
"In fact, for the cleanest collateral, nonagency execution could be slightly better than government-sponsored enterprises."
As a result, even for moderately high quality loans — forming the bulk of GSE issuance — private-label execution is likely to be within 10 to 15 basis points of GSE execution.