SFA Research Corner: Call or Hold: Understanding RMBS Call Option Triggers
article by Amirah Jones
Residential Mortgage-Backed Securities (RMBS) deals often include call options, allowing issuers to terminate trusts early. However, with rising interest rates since 2022, financing new RMBS deals has become costlier, leaving many call options “deep out of the money.” Call options remain vital for managing RMBS trusts, providing flexibility amid market dynamics, including fluctuating interest rates. Read More.