Wall Street’s ability to hide and disguise significant risk through the abuse of derivatives and other “novel financial products” would be greatly reduced under a proposed modernization of tax rules issued last week by the Republican head of a top House committee. The “discussion draft” released by House Ways and Means Committee Chairman Rep. Dave Camp, R-MI, would revamp, among other things, the tax treatment of bonds traded at a discount or premium on the secondary market, increase the accuracy of determining gains and losses on securities sales and prevent harvesting of tax losses on securities. “Updating these tax rules to reflect modern developments in financial products will make...
Federal regulators faced with finalizing controversial rules on risk retention in non-agency MBS, ABS and commercial MBS transactions of the future are considering a “fair-value” approach instead of the controversial premium capture cash reserve account. Although no details on the proposal are available, the American Securitization Forum recently provided general views on how fair value calculations of an issuer’s risk-retention requirement could replace the PCCRA. The group said the change could be “a significant improvement” over the PCCRA, which could have wreaked havoc on the securitization market. The PCCRA, which would have required issuers to hold in reserve any premium they earned in selling assets to a securitization trust, was...
Secondary market investors interested in branching out beyond plain vanilla mortgage products are not going to have much to get excited about once the Consumer Financial Protection Bureau’s new ability-to-repay rule kicks in next year, top legal experts suggested this week. “Will lenders make rebuttable presumption qualified mortgages? Remember, [lenders] are free to make loans that generally satisfy the ATR standard. We don’t think those are going to be very common. We don’t think they are going to be saleable in the secondary market at this point in time from what we know today,” Donald Lampe, leader of the financial services regulatory and compliance practice with the Dykema law firm, told participants in a webinar hosted by Inside Mortgage Finance, an affiliated newsletter. As he sees it, the real issue boils down...
An Obama administration official stressed that the White House is working to craft a comprehensive plan for housing finance reform but wants input from industry participants.tasked with crafting a plan to reform the government-sponsored enterprises provided a strong response yesterday to criticism of the White House’s lack of progress on GSE reform.
Although Fannie Mae has set purchase limits on how much production newly approved seller/servicers can sell to the GSE, Freddie Mac has shied away from such caps.
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