Federal regulators should make changes to capital requirements that would allow banks to complete credit-risk transfer transactions similar to the deals issued by the GSEs, according to industry participants.
Alternative data, machine learning, blockchain and document digitalization in securitization deals have the potential to improve credit quality, but they are untested and come with risks, says Moody’s.
A noticeable increase in warehouse credit to non-QM originators is bolstering both lending volumes and MBS creation. Another positive: better terms for nonbank borrowers.
The SEC is facing pressure to address “ratings shopping” in the MBS and ABS markets. Big rating services are not keen to switch from the issuer-pays model.