Wells Expands RMBS Services as Clayton Boss Sees Securitization Hunger
Well Fargo Securities recently expanded its Residential Mortgage-Backed Securities (RMBS) platform to provide a wider range of services in anticipation of a growing securitization market. The expanded service is specifically aimed at the bank's residential origination and investing clients as well as the largest national residential mortgage originator, Wells Fargo Home Mortgage (WFHM). The announcement comes at a time when the CEO of due diligence and bond surveillance firm Clayton Holdings, Paul Bossidy, believes the market for a private label RMBS market is set to come back in force, as the appetite for risk increases in the search for yield. "There's a real hunger for private-label RMBS as government bonds have low yields, European sovereigns are also very scary," Bossidy tells HousingWire. "Municipal bonds are deteriorating with rising chance of defaults and collapsing monolines backstopping the deals." "Talking to hedge funds and other investors, as well as originators, we see that there are private market players willing to invest," he adds. The recent jumbo RMBS from Redwood Trust that priced amid high investor interest -- and a similar deal expected within the next six months -- supports Bossidy's view. However, there is still trepidation in regards to ongoing regulatory reform in the space. For instance, according to attorneys at Mayer Brown, the SEC will begin requiring loan-level data for all asset-backed securities offerings, except those collateralized by credit card receivables. Sources in the secondary space make the argument that such data is, and has been for quite some time, readily available. "The call for loan level information strikes me as exceptionally misleading," writes Linda Lowell in her latest commentary. "It makes the regulators look like activists, when in fact they are either ignorant of the market they would regulate or they are cynically making an empty display of regulatory zeal." Lowell, a 20-year-plus veteran of MBS and ABS research at a handful of Wall Street firms and currently principal of OffStreet Research argues that in the quest for greater transparency, new regulations may do the opposite and muddle the market. At any rate, Bossidy said the investors he deals with are keen to see any new framework laid down. "Proposed new standards need to be finalized, and that seems 6 to 9 months away," Bossidy said, adding that "We [at Clayton] are hoping there will be an established, single body for oversight," as a result. For its part, in the announcement on the RMBS platform expansion, Tim Mullins, the head of fixed income trading at Well Fargo said a sense of opportunity sparked the decision. "Wells Fargo’s dominance in mortgage origination combined with strong investor demand for all types of residential product made this an obvious area to expand within Wells Fargo Securities,” said Mullins. “We are excited to have the in-house capabilities in place to offer these services to our mortgage company in addition to our external originating and investing clients.” The former manager of the hedging activities of servicing rights at WFHM and pipeline/warehouse assets, Mike Buttner, will head the expanded RMBS service. Write to Jacob Gaffney.