US private label mortgage-backed securities return

Author: John Crabb | Published: 27 Apr 2017

Private-label mortgage-backed securities (PLS) are making a comeback in the US. And their resurgence is believed to be critical to the reinvigoration of the US housing market and expansion of consumer credit.

Angel Oak Capital Advisors, a mutual fund specialising in mortgage-backed securities, completed a $146.4 million securitisation late last month, which was fully backed by non-qualified mortgages (non-QMs) - and was notably rated by Fitch and DBRS. This was the fund’s third securitisation since 2015, all non-QM, and the first to be rated.

The deal signals a return for the asset class, after almost a decade of low volumes following its role in the financial crisis. Some are concerned that the borrowers in the PLS securities pose a credit risk to investors. Angel Oak does not feel that newly emerging non-agency credit profile is high-risk however, and suggests that the post-crisis PLS market has taken sufficient measures to...



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