Under the CFPB proposal, which aims to establish a level playing field between the GSEs and the non-agency market, most loans will still be QMs, but there might be fewer incentives to sell the loans to the GSEs.

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

The industry wants the SEC to align disclosure norms for publicly registered non-agency MBS with those followed in private placements.

Semper Capital has agreed to pay $375,000 to settle charges that it inflated the value of certain investments in its non-agency MBS fund.

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.