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Volume 2014 - Number 19

May 16, 2014

S&P Considers Greater Emphasis on Operational Risks Posed to MBS and ABS from Key Transaction Parties

Standard & Poor’s is seeking comments on a proposal for assessing operational risk posed by key transaction parties such as servicers in structured finance transactions. The request for comments follows a similar request from S&P in 2011. “We made a number of changes to the previous request for comment in view of the responses we received and our desire to enhance the risk considerations under the proposed operational risk framework,” said Joseph Sheridan, S&P’s criteria officer. “We also expanded the proposal’s scope. Where we believe operational risk could lead to credit instability and a ratings impact, the proposal would call for rating caps that limit the securitization’s maximum potential rating.” The rating service is proposing...

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HUD has announced a 25 basis point cut in FHA premiums, which is slated to take effect in late January. Is your lending shop for or against a cut in FHA premiums?

For. It should help lending volumes.
Against. The private MI sector should take on this risk, not the government.
Too early to say.
I believe the new White House may scuttle the idea so it doesn’t matter.

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