The SEC’s Investor Advisory Committee wants increased regulatory disclosures in the sector. However, an SEC commissioner questioned the utility of the proposal.

Loans backing securitized products are holding up fairly well even though the use of forbearance has increased. A combination of investor protections and changes in underwriting practices is helping.

Rating services are requiring higher credit enhancement levels and taking negative actions on outstanding deals due to problems stemming from the coronavirus. Fitch finalized new criteria for residential MBS late last week.

An advisory panel has called for greater transparency around credit ratings. SEC officials say the reforms could be difficult to implement.

A non-QM MBS closed last week and deals from other issuers are in the works. A prime non-agency MBS with newly originated loans was also introduced.

The bulk of non-agency MBS currently being issued is backed by seasoned mortgages. Rating services are also adjusting criteria to account for the coronavirus.

When issuance of non-agency MBS and ABS resumes, issuers will face tougher standards from rating services due to the coronavirus.

The performance of MBS and ABS looks likely to suffer, with delinquencies projected to increase and rating downgrades a possibility.

The SEC’s Office of Credit Ratings is exploring how it can address conflicts of interest in ratings of MBS and ABS. An increase in performance-related disclosures and boosting unsolicited ratings are being considered.

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.