MFA Mortgage: We're Deleveraging, to the Tune of $1 Billion
MFA Mortgage Investments Inc. is the latest secondary market participant to disclose a firesale of mortgage-backed securities, saying Monday evening that it had sold $1 billion in MBS since last Friday. $950 million of that amount represented agency MBS, and was sold at a loss of approximately $15 million, the company said in a press statement. The sales came as the REIT said it made a "balance sheet strategy adjustment," and said that to date the company had met all of its margin calls. "We have made this strategy adjustment because it is our view that credit conditions are tightening, rapidly and indiscriminately," MFA said. "After analyzing recent credit events impacting other leveraged public and private companies investing in high quality MBS, we believe that while these companies utilized substantially higher levels of leverage than MFA, our interpretation of their public disclosure and other information available to us increases the probability of increased margin requirements in the future for all repurchase agreement borrowers, including MFA." The company also said it was "concerned" about news of potential security liquidiations further roiling the secondary market. MFA wasn't the only company selling agency MBS in recent days, of course. New York Mortgage Trust, Inc., a mortgage REIT that sold off its retail and wholesale lending platforms last year, also said Wednesday that it had sold approximately $211 million of Fannie Mae mortgage-backed securities at a loss of $6 million. The RMBS market has been erratic and extremely volatile in the past week amid news that UBS AG, among others, sold its RMBS assets at a fire-sale in an effort to stay ahead of a potential decline in market value. The result has been a frenzy of selling activity, depressing prices even for agency-backed mortgage securities as investors deleverage to avoid being handcuffed by margin requirements. A source suggested to Housing Wire that while the Fed's move yesterday to provide access to $200 billion via a Term Securities Lending Facility has served to slow panicked selling, it hasn't changed the market's now-sour outlook on mortgage-backed investments. For more information, visit http://www.mfa-reit.com.