The Division of Swap Dealer and Intermediary Oversight of the Commodity Futures Trading Commission has issued an interpretation clarifying commodity pool treatment for certain securitizations and a no-action letter providing additional relief for certain legacy securitization entities. Specifically, the letter explains when exclusion from commodity pool regulation for certain securitization vehicles that do not meet any of the criteria set forth in an October 2012 no-action letter is appropriate. It also provides relief for certain securitization vehicles formed before Oct. 12, 2012. In the October no-action letter, the CFTC spelled out...
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act will carry two key unintended consequences for the structured finance industry should it be implemented in its current form, a trade group representative warned lawmakers this week. Testifying before the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, American Securitization Forum Executive Director Tom Deutsch said that Title VIIs treatment of commodity pools and margin requirements triggers two potential compliance challenges for some parties in securitization transactions that may hurt all of the beneficiaries of the deal. We would not have expected...
Two separate white papers from industry trade groups on reform of the government-sponsored enterprises call for a strong government role to provide stability and liquidity in multifamily mortgage finance. The Mortgage Bankers Association called for a system of private capital finance for multifamily housing, with a focus primarily on securitization and the federal government serving as a catastrophic insurer. The program would be funded through risk-based premiums paid by the entities that securitize the loans, according to Brian Stoffers, president of CBRE Debt and Equity Finance. We recognize...
Analysts expect the U.S. economic recovery to continue on a slow, weak path into 2013 with the potential for a new recession that could weaken the residential MBS market. At Standard & Poors, analysts predict a slow and uneven economic recovery with a 15 percent to 20 percent chance of another recession that would be less severe than the 2008-2009 financial crisis but potent enough to sap the MBS market. S&P assumes a reversal in home prices and unemployment rising to near 9 percent in 2013, which could hamper borrower capacity to make their mortgage payments. Overall, S&Ps outlook for the single-family MBS market is...
Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the third quarter of 2012, with a slight decrease from the previous quarter, according to a new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. Meanwhile, Ginnie Mae securities posted a modest increase within the FHLBank system during the period ending Sept. 30, 2012.
Industry groups are lukewarm but supportive overall of the Federal Housing Finance Agencys efforts to modernize Fannie Maes and Freddie Macs securitization process but they remain concerned about changing servicing models, according to comment letters submitted to the agency. In September, the FHFA in a white paper proposed a framework for both a common securitization platform and a model pooling and servicing agreement with a request for public comment. The proposed infrastructure has two complementary goals to replace the outmoded proprietary infrastructures of the GSEs with a common, more efficient model and to establish a framework thats consistent with multiple states of housing finance reform, including greater participation of private capital in assuming credit risk.
The Mortgage Bankers Association said it largely supports accounting changes that would impact holdings of mortgage-backed securities. Under a proposal by the Financial Accounting Standards Board, there would be no change in measurement for reporting entities that carry certain assets and liabilities at amortized cost. The MBA said the update proposed by FASB in October would require certain changes to the measurement of assets and liabilities of securitizations that a reporting entity is required ...
As part of negotiations regarding the fiscal cliff, the Obama administration and Democrats in the House are seeking principal reduction loan modifications for borrowers with negative equity. The Treasury Department has reportedly proposed a program targeting borrowers with mortgages in non-agency mortgage-backed securities while the debate about principal forgiveness for loans held by the government-sponsored enterprises has also been rekindled. The Obama administration would neither confirm nor deny the non-agency proposal, but details regarding the Market Rate Modification program have prompted talk among industry participants and a detailed analysis. In order to assist...
Fannie Mae and Freddie Mac this month completed implementation of the latest round of guaranty fee hikes, this one mandated by their regulator as a move to reduce the footprint of the government-sponsored enterprises and draw more private capital into the mortgage market. Experts say the 10 basis point fee hike will have a slight positive impact in the near term, but future moves in the same direction could help close the gap between agency and non-agency mortgage-backed securities. The Federal Housing Finance Agency ordered the GSEs to raise g-fees by 10 bps for cash deliveries starting in November, and for MBS transactions beginning in December. At the time, the FHFA said...
MBS industry groups generally support the Federal Housing Finance Agencys plan to develop a single securitization platform and model pooling and servicing agreements for Fannie Mae and Freddie Mac. But they question whether a standardized system will for the non-agency MBS market or risk-sharing arrangements envisioned for the government-sponsored enterprises. The FHFA has been pushing the two GSEs to standardize their securitization operations in recent years, including uniform data delivery requirements, consistent servicing rules and, most recently, a new framework for seller representations and warranties that will go into effect in January. The agency wants...