A longer statute of limitation and increased disclosure requirements could help attract long-term investors in the MBS and ABS market, industry experts recommend.
If the non-agency MBS market wants to avoid harsh regulations, it should seriously consider self-governance as an option, the Structured Finance Association believes.
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.
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.
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.
Banks will no longer have to meet extensive disclosure requirements for their MBS deals to receive investor-friendly protections. The change was met with criticism from an Obama appointee to the FDIC’s board.
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.
Late last month, a Manhattan district court judge denied a plaintiff investor's motion to hire experts to perform statistical sampling analysis in a case involving legacy MBS.
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