Manatt Financial Services Partner Discusses Housing Commission White Paper
"Fannie, Freddie Should Take on a PL MBS Insurance Role"
National Mortgage News
June 4, 2013 - Manatt's Ellen Marshall, a partner in the firm's Banking & Financial Services Practice, spoke to National Mortgage News about key themes in a white paper issued by the Bipartisan Policy Center's Housing Commission, titled "Housing Future: New Directions in National Policy."
As reported by National Mortgage News, the two key themes of the paper - the future of the insurance role in the private-label mortgage-backed securities market and how that might be tied to Fannie Mae and Freddie Mac - are gaining momentum. The paper envisions a "public guarantor" that would provide a catastrophic insurance, which would stand behind other credit enhancement as well as a tranche of private capital.
Since the paper came out, there has been "additional talk" about the two key themes, said Marshall. She told the publication that she finds the future of the insurance role an interesting one, noting that it can help the market get the most out of securities design.
"A lot of the pieces that are needed for the return to a more private sector MBS market seems be falling into place. The one piece that seems to be lagging from what I see is the availability of insurance…to the extent it was ever involved in MBS creation process," said Marshall, who noted that a more liquid, securitized jumbo market can offer some advantages relative to the whole loan market. In some cases, for example, holding securities can be better for liquidity or accounting reasons. Also a securitized market can provide more balance sheet management options.