Annual private label RMBS issuance reaches $864.2 billion, S&P says
By MortgageDaily.com staff
1/24/2005

Subprime and second mortgage securitizations enabled residential mortgage-backed securities transactions to reach record-breaking levels for the third consecutive year, according to Standard & Poor's.

The issuance of private-label RMBS in 2004 climbed to $864.2 billion, surging 47% over 2003 issuance volume, the ratings agency reported. The new milestone includes newly issued securities backed by subprime and second mortgage loans of about $411.7 billion -- more than 91% above the record in 2003.

The RMBS milestones were achieved despite that estimated originations of residential mortgages in 2004 dropped to $2.87 trillion from a record $3.7 trillion in 2003, S&P said.

Credit ratings on RMBS transactions also smashed all records from previous years, according to the New York-based agency. Of the 12,235 outstanding credit classes at the beginning of 2004, 99.4% were at the same rating level or higher by year-end. RMBS surveillance activity for the year resulted in 1,496 rating changes, which consisted of an unprecedented 1,425 performance-related upgrades, 69 performance-related downgrades, and two LOC-related upgrades, S&P reported. Prime mortgages accounted for 82% of the upgrades.

But, S&P said the record activity may not last long. While strong performance is anticipated in the RMBS market, issuance volume of private label residential mortgage-backed securities is expected to drop approximately 20% to $695 billion in 2005.

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