The Securities and Exchange Commission this week asked for public comment as it begins to reconsider whether mortgage real estate investment trusts and other mortgage-related pools that acquire mortgages and mortgage-related instruments should remain exempt from the requirements of the Investment Company Act. The SEC said it is concerned that some mortgage-related pools, as pooled investment vehicles, may raise...

The American Securitization Forum this week announced a credit risk-retention model which, it claims, imposes requirements more powerful than those proposed by federal regulators. The “ASF Model Residential Mortgage-Backed Securities Principles” spell out steps for investigating, resolving and enforcing remedies in connection with representations and warranties in non-agency MBS transactions involving newly originated mortgages. Essentially, the ASF model requires...

The Obama administration is expected to roll out a more aggressive agency refinance program soon as part of a new economic stimulus package with Wall Street analysts predicting the plan will likely focus on pricing changes at Fannie Mae and Freddie Mac or an expansion of the Home Affordable Refinance Program.A recent report by Amherst Securities Group notes that a massive government refinance program “is unlikely, as it could not be implemented without subjecting the GSEs (and implicitly the taxpayer) to an increased level of risk.”

The Department of Justice is reportedly investigating Standard & Poor’s and Moody’s Investors Service regarding the ratings the firms placed on non-agency mortgage-backed securities. The increased attention on the rating services follows S&P’s recent downgrade of the credit rating for the U.S., revelations by a former Moody’s employee and numerous other investigations that found problems with the ratings on non-agency MBS. In a letter sent this month to the Securities and Exchange Commission, William Harrington, a former senior vice president at Moody’s, alleged that the rating service knowingly published “worthless opinions” on non-agency MBS. ...

Small FHA-approved lenders no longer have to submit audited financial statements to the Department of Housing and Urban Development in order to be approved or renewed for FHA programs, according to new guidelines issued July 28. Under Mortgagee Letter 2011-25, small supervised lenders regulated by the Federal Deposit Insurance Corp., National Credit Union Administration or the Office of the Comptroller of the Currency are exempt from current regulation requiring all FHA lenders to submit annual audited financial statements as a condition for their approval or continued participation in FHA programs. Currently, the regulation applies to...

Major MBS issuers are concerned about the potential harm evolving risk-retention regulations could have on securitization structures, regardless of which structure issuers decide to use. In response to the interagency proposed rule on credit risk retention, Citigroup said the public interest is not served by requiring securitizers to hold positions that are designed to take losses. “For example, all deal parties, the rating agencies and the investors are fully aware that the lowest tranche, sometimes referred to as a ‘first loss’ tranche, may take losses and no representation is made that such tranche is either investment grade or will receive...

Issuers of ABS backed by vehicle loans urged federal regulators to adopt a pool-level approach to determine new risk-retention requirements rather than the all-or-nothing standard proposed earlier this year that featured a narrowly drawn definition of “qualified auto loans. ”Like the more widely discussed provisions on non-agency MBS securitization, the interagency proposed rule carved out an exemption from the 5 percent risk-retention requirement for auto ABS that are backed exclusively by qualified auto loans. But issuer members of the American Securitization Forum said the proposed definition of qualified auto loans features...

The Office of the Comptroller of the Currency made significant changes to a controversial proposed regulation it issued back in May to implement revised federal preemption standards regarding state mortgage and other consumer protection laws. The OCC’s proposed rule to conform to Dodd-Frank Act preemption provisions was met with significant opposition from state regulators, consumer advocates, members of Congress and even the Department of Treasury, within which the agency functions as an independent bureau. One of the key disputes focused on the OCC’s proposal to use a ...

Office of the Comptroller of the CurrencyFederal Deposit Insurance Corp.Federal Reserve Top servicers submit remedial foreclosure plans. Top mortgage servicers Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, Ally Financial, U.S. Bank, Sun Trust, OneWest Bank, PNC Bank, MetLife Bank, HSBC Bank, Aurora Bank, EverBank and Sovereign submitted their foreclosure practices remedial plans to the OCC, the FDIC and the Fed last week. However, some of the servicers told Inside Regulatory Strategies their plans were confidential documents and would not disclose them. An OCC official said there are no plans for the agency to release the plans or to summarize their contents...

The Department of Housing and Urban Development is working on a proposed regulation that seeks to harmonize existing standards for determining when a housing practice with a discriminatory impact violates the Fair Housing Act. The proposed rule would cover the liability standards in instances in which a racially neutral housing practice has a discriminatory effect. The disparate impact theory has been used in fair housing cases to allege discriminatory activity when the terms of a business policy are neutral toward protected classes but the policy is shown to have greater impact on minorities or other protected groups. There has been debate over...