DNY59
By Eric Leininger
At a Glance
- Risk remains in the mortgage production process, but tools like TBA futures are available today to strengthen the mortgage backed securities market.
- The agency mortgage market in 2022 was worth nearly $11 trillion, slightly less than double 2008’s $6.3 trillion.
In the 15 years since the Financial Crisis, risk management has changed drastically across the marketplace. Global systemically important banks (GSIBs) increased capital. Derivative valuation and collateral process were standardized and moved onto centrally cleared exchanges. Trade-based SOFR replaced opinion-based LIBOR.
However, the mortgage market, one of the largest bond markets in the world, continues to transition even today. According to SIFMA data, the agency mortgage market in 2022 was worth nearly $11 trillion, slightly less than double 2008’s $6.3 trillion. However, half of mortgages are now originated outside of the banking system, according to S&P Global.
Risk remains in the mortgage production process. Each day, billions of dollars of mortgage pools move though banks and nonbanks as they migrate to agencies like Freddie Mac and Fannie Mae, who package them into agency MBS….
