By Tracy Alloway and Jody Shenn | BloombergBusiness
In the wake of an unprecedented U.S. housing bust that evolved into a global financial crisis, the business of bundling home loans that aren’t backed by the American government into bonds that can be sold to investors has all but disappeared.
It’s a point underscored on Friday by Laurie Goodman, Director of the Housing Finance Policy Center at the Urban Institute, in a paper titled: “The Rebirth of Securitization: Where Is the Private-Label Mortgage Market?”
The below table shows the percentage change in sales of various types of securitizations. Automobiles refers to bonds backed by auto loans, while high-yield CLOs are collateralized loan obligations comprised of loans made to junk-rated companies. CMBS are backed by commercial real estate loans, while private-label residential mortgage-backed securities, or RMBS, are bonds comprised of home loans that don’t carry backing from U.S. government housing agencies, Fannie Mae or Freddie Mac.
