5 Top Takeaways from SFVegas 2025
SFVegas is a premier event geared at structured finance professionals, which this year drew nearly 10,000 attendees from across the industry. The conference provided valuable insight into pivotal market trends, regulatory updates, and the innovations that are shaping the future of structured finance. The Numerix team was pleased to attend this dynamic gathering and are excited to share key insights highlighting where the industry is heading.
From the evolving role of privatization to the increasing demand for non-agency securitizations, here are five of our top takeaways from SFVegas 2025.
1. The Shift Toward Privatization in Structured Finance
One of the key themes of SFVegas this year was the debate around privatization and the role it could play as government-backed issuances and agencies potentially diminish. For example, the status of Fannie Mae and Freddie Mac remains uncertain, following stock downgradings and questions over whether both firms will soon be released from government conservatorship.
Amid ongoing discussions about deregulation in capital markets, there is an opportunity for issuers to create new structures and market sectors that accommodate investors’ changing needs. This would enable private issuers to take advantage of the expanding market of new asset-backed securities, which grew to over $335 billion by the close of 2024, representing an increase of approximately 22% from the previous year.
A couple of highlighted opportunities that may exist in a deregulated market include:
Private Student Loans: Potential deregulation of federal student loans has created opportunities for private lenders to step in, especially for-profit educational institutions. These lenders are increasingly designing repayment structures aligned with graduates’ projected incomes and career trajectories.
Investor Confidence in the Private Market: Private issuers are being viewed as more flexible and innovative compared to government-backed services, creating avenues for new asset-backed structures and market sectors.
While private issuance is gaining traction, investors and issuers must carefully manage the related risks. Discussions at SFVegas centered around mitigating challenges such as fluctuating credit quality and maintaining transparency in non-agency securitizations.
2. Trends in Mortgage-Backed Securities (MBS)
The mortgage-backed securities (MBS) space remains a critical focus within structured finance, with investor demand and regulatory clarity driving consistent innovation. SFVegas showcased trends impacting both agency and non-agency issuances alike.
Rising Interest in Prime and Non-QM Loans: Investor demand for prime loans and non-qualified mortgages (non-QM) is on the rise. This trend is especially notable among insurance companies searching for fixed-income assets with attractive risk-adjusted returns. However, a growing appetite for high-credit quality loans purchased whole may lead to downstream credit challenges within certain securitized pools.
Steady Agency CRT Issuance: Credit Risk Transfer (CRT) deals from government-sponsored enterprises (GSEs) are maintaining steady issuance levels despite market uncertainties. Their strong credit performance has broadened the base of investors, now attracting more asset managers and fewer hedge funds.
3. Housing Affordability and the Rise of Single-Family Rentals
A hotter-than-ever real estate market has caused continued surges in housing affordability challenges. Supply constraints, homeowner migration patterns, and increasing costs exacerbate this crisis, influencing the direction of structured finance opportunities. There are a few key issues impacting housing affordability.
Supply Shortages: Restricted housing supply continues to drive prices upward, with homeownership becoming unattainable for many.
Migration to the Sun Belt: The migration trend from major metropolitan hubs to Sun Belt states like Texas and Florida has compounded regional affordability issues, fueled further by increasing insurance premiums in these areas.
Single-Family Rental Securitizations: Rising housing costs have driven demand for single-family rentals (SFRs), leading to increased securitization activity in this space. These securitizations share similarities with traditional CMBS structures, offering stable cash flows on 3–10-year loans alongside prepayment penalties and balloon payoffs. Investors have shown particular enthusiasm for these innovative structures.
4. Mortgage Servicing Rights (MSR): Opportunities and Challenges
Mortgage servicing rights (MSRs) emerged as a major focus at SFVegas. MSR valuations are quite complex, impacted by volatile interest rates, prepayment speeds, and borrower behavior. According to key stakeholders at SFVegas, there are several MSR market challenges that must be addressed.
Valuation Accuracy & Prepayment Modeling: Valuation accuracy is a key challenge in the MSR landscape, given fluctuating interest rates, shifting prepayment speeds, and unpredictable borrower behavior. As a result, firms are increasingly relying on advanced analytics to refine pricing models and manage risks. For example, tools like Numerix’s PolyPaths Trading & Risk Management suite help accurately model the complex interplay between mortgage prepayment and servicing fees and income model prepayment behaviors for better informed decisions. Learn more in our recent MSR blog.
Risk and Liquidity Optimization: Rising MSR turnover and tighter financing terms mean that firms need to stress test their portfolios against a variety of interest rate and liquidity scenarios to ensure resilience in an unpredictable market environment. Enhanced hedging strategies are also emerging to combat prepayment and duration risks.
Competitive Pressure: Competitive pressure in the mortgage servicing rights (MSR) market has intensified as more firms vie for advantages in pricing and operational efficiency. This growing competition is driving organizations to innovate and adopt advanced analytics to improve performance and profitability. For instance, many clients rely on Numerix’s PolyPaths for benchmarking against market trends, ensuring competitive pricing and favorable loan terms.
Capitalizing on Opportunities: Firms must move quickly to capitalize on potential opportunities such as market dislocations, pricing disparities, and distressed assets. It’s worth noting that PolyPaths addresses this challenge by integrating real-time market data with advanced modeling to identify mispriced MSRs. Its yield optimization tools help firms pinpoint the most attractive opportunities across MSR pools, while its data-driven approach enables faster trade execution.
Compliance in a Changing Landscape: Compliance has become increasingly complex as organizations adapt to a rapidly evolving landscape marked by strict regulations and heightened scrutiny. Companies are now prioritizing robust compliance frameworks to mitigate risks and ensure adherence to industry standards. By leveraging advanced technologies, firms can address regulatory requirements proactively while fostering transparency.
5. Need for Adaptability in an Evolving Market
Structured finance remains highly dynamic, blending challenges with opportunities that require flexible and innovative responses. The SFVegas conference underscored one central theme—adaptability is the key to staying competitive in an evolving market. Firms must double down on cutting-edge tools, proactive strategies, and cross-industry insights to turn market challenges into opportunities within the structured finance space.
At Numerix, we are committed to delivering advanced products, analytics, and expertise that empower organizations to succeed in the complex landscape of structured finance. Learn more about our PolyPaths offering, including how it can help your firm mitigate risk, make informed decisions and optimize structured finance portfolios.
For further insights on this topic, please see our recent blog: Mortgage Servicing Rights (MSRs): A Promising Opportunity Area for Investors?
