Wunderlich Securities Update On Housing Finance And Mortgage REITs

In its update on housing finance and mortgage REITs, Wunderlich Securities said that you should consider the effects of restored liquidity to the housing finance market. “Though it may be somewhat premature, we are thinking about how a redesigned, stabilized housing finance market will change the playing field for RMBS investors,” Wunderlich Securities writes. “After three years of austerity and limited access to credit, there is likely to be a cohort of credit-worthy borrowers looking to refinance their homes. This is more likely, in our opinion, to affect non-agency bonds and could allow some companies to recoup discounts, since voluntary prepayments occur at par.” Wunderlich Securities said that it expects the biggest beneficiaries to be Redwood Trust, Inc. RWT, MFA Financial, Inc. MFA, and Chimera Investment Corporation CIM. Redwood Trust currently trades at $15.18; Chimera Investment Corporation trades at $4.15; MFA Financial, Inc. trades at $7.99.