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.
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.
Radian has pulled the plug on its experiment in the due diligence arena by selling Clayton Services. The unit’s new owner, Covius, is bullish on its prospects.
Its collateral has been performing well, but questions have been raised about Sterling Bank’s non-QM effort. For now, the program has been suspended but the depository is vowing a return.
New York’s six-year statute of limitation for breach of rep-and-warranty claims in RMBS does not raise investor risk significantly if the deal comes with full, upfront third-party due diligence.
The Structured Finance Association issued new guidelines for testing loans in non-agency MBS for compliance with TRID. Requirements were reduced, with industry participants growing more comfortable with TRID liability.
An SEC committee hosted a panel discussion in November regarding the compensation model for rating services. The regulator hasn't made a decision on whether reforms are needed to the issuer-pays model.
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