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Issuers are adding another layer of protection at a time when lawmakers are examining how to wind down Fannie Mae and Freddie Mac and bring private capital back into the mortgage market.
June 26
Efforts to revive the private-label mortgage-backed securities market were dealt a blow Tuesday when Shellpoint Partners, the firm backed by the mortgage-bond pioneer Lewis Ranieri, said it would withdraw a proposed securitization and instead sell its jumbo loans to the highest bidder.
Bob Magee, Shellpoint's chief investment officer, said pricing was the reason for pulling its offering.
"This is not a decision we're undertaking lightly," Magee said in a press release. "But at some point we can't ignore best execution. The current (residential mortgage-backed securities) bid is not competitive with the whole loan bid."
Last week, Shellpoint cut the size of its proposed jumbo deal that originally had been planned for September to $250.8 million, down from $308.6 million, according to Kroll Bond Rating Agency reports.
Ranieri has been a vocal proponent of reviving the private-label mortgage bond market, claiming it would help housing prices recover. Shellpoint was formed in 2010 to provide liquidity to borrowers who do not fit the existing criteria for government-backed mortgages.
Since the housing crisis, private-label mortgage deals have largely been limited to jumbo loans made to high-quality borrowers. The volume of private label securitizations has plummeted from a peak of $2.2 trillion in 2007 to a mere $12.5 billion in deals completed so far this year. Investors have generally cooled to mortgage bonds that do not come with a government guarantee.
Saul Sanders, Shellpoint's co-chief executive, said the New York finance company remains committed to building a robust private-label program.
"We intend to continue our efforts in the non-agency market and will, like other participants, monitor the secondary markets as they evolve," he said in a press release. "We will also continue to work with others in the industry and in Washington to help evaluate the issues that challenge the return of a healthy, sustainable (residential mortgage-backed securities) market."
