MBS and ABS investors would have an easier time organizing to press deal sponsors to address potential problems under a revised proposed rule on shelf registration that was approved by the Securities and Exchange Commission this week. The agency made several major changes to its proposed overhaul of shelf eligibility requirements that was aired back in 2010 and put the revised package out for public comment. Most of the changes reflect public comment on the original proposal as well as the passage of the Dodd-Frank Act. Under the latest proposal, MBS and ABS issuers would be required to ...

The Federal Housing Finance Agency this week filed suit against UBS Securities and various related entities as well as former top officials of the firm over alleged misrepresentations on subprime and Alt A MBS sold to Fannie Mae and Freddie Mac. The two government-sponsored enterprises bought some $4.5 billion of non-agency MBS issued on two UBS shelf registrations between September 2005 and August 2007. The deals included single-seller and conduit transactions with mortgages originated by ...

Significant increases in all major collateral categories pushed non-mortgage ABS issuance up 44.3 percent from the first to the second quarter of 2011, according to a new Inside MBS & ABS ranking and analysis. ABS production revved up to $43.2 billion in the second quarter, the highest level since the third quarter of 2009. That brought year-to-date issuance to $73.2 billion, some 28.2 percent ahead of the pace during the first six months of 2010. Deals backed by loans to purchase or lease cars and other vehicles continued to account for the biggest slice of the market. Vehicle ABS issuance rose ... [contains two data charts]

Trustees of residential MBS should consider themselves “on notice” that they need to be much more attentive and aggressive in meeting their obligations under the pooling and servicing agreements governing MBS trusts, according to a trade group representing investors. Last week, the Association of Mortgage Investors sent letters to several major MBS trustees – including JPMorgan Chase, Deutsche Bank, US Bank, Wells Fargo and Bank of New York – remind-ing them of their legal obligations to RMBS certificate holders. The AMI letter also informed trustees that ...

The Federal Reserve’s proposed rulemaking that would establish the “qualified mortgage” as a standard for complying with the ability-to-repay requirement under the Dodd-Frank Act would create a number of significant legal liabilities that will threaten buyers of MBS, Wall Street groups said. The American Securitization Forum emphasized that questions about the lack of objective criteria in the proposal for determining whether a loan is a QM, and how little legal certainty the final rulemaking would actually provide, become of “critical importance when ...

Credit rating agencies and government regulators are making wholesale changes to the way they come up with and use credit ratings in order to prevent a repeat of the financial meltdown, witnesses at a hearing of the House Committee on Financial Services said. “While much has changed with regard to credit ratings and credit rating agencies over the course of the past several years, our fundamental mission remains the same: to provide the market with independent benchmarks about the creditworthiness of ...

The government program that came out of the Troubled Asset Relief Plan to provide liquidity for the non-agency MBS market by partnering with private investors was less profitable during the second quarter, according to a Treasury Department report released last week. The Public-Private Investment Program was created to invest in non-agency MBS that other banks couldn’t hold after the economic collapse. Non-agency MBS account for 79 percent of the assets acquired by the eight public-private investment funds, with commercial MBS making up the rest. Almost half of the MBS are ...

The Securities and Exchange Commission last week released a report on its many proposed rules relating to credit ratings, several of which pertain to asset-backed securities, as an update regarding its heavily-laden plate of rule changes that must eventually be adopted and implemented. When the Dodd-Frank Act became law, a new provision came with it in the Exchange Act, which required the SEC to collaborate with other regulators to “jointly prescribe” rules regarding mandatory credit risk retention in ABS offerings. These hotly-debated rules were proposed in ...

The Consumer Financial Protection Bureau issued an interim final rule last week that the new federal regulator said prevented significant disruption of the origination and modification of alternative mortgages – including ARMs. However, the interim final rule also narrowed the definition of “alternative mortgage transactions” that are eligible for preemption from state laws. The interim final rule temporarily updated the Alternative Mortgage Transaction Parity Act as required by the Dodd-Frank Act. “Without this interim rule implementing the AMTPA amendments, state lenders would lose ...

Analysts and legislative history suggest that Congress could still act to keep the “temporary” high-cost conforming loan limit at elevated levels. Advocates of the non-agency market have long-anticipated the drop in the loan limit, currently set to occur in October without further action from Congress. An extension of the $729,750 loan limit this year seems unlikely with the Obama administration supporting a decline to at least $625,500. Many Republicans also support a decrease in the role ...