Risk-retention requirements included in the Dodd-Frank Act that met strong opposition from industry participants may turn out to be a profit source for some real estate investment trusts. Non-agency MBS have been subject to risk-retention requirements since the end of 2015, while the rules go into effect at the end of this year for commercial MBS and other asset classes. “I believe...
After nearly five years of legal entanglements, investors will soon receive their share of the $8.5 billion Bank of America agreed to pay in June 2011 to resolve legacy mortgage-repurchase and servicing claims associated with Countrywide Financial Corp. The payouts were delayed by legal wrangling over whether trustee Bank of New York Mellon had the authority to settle. Last year, the New York Supreme Court ruled in the trustee’s favor, and a state court judge recently approved the severance order and partial final judgment, which cleared the way for BNYM to begin distributing the settlement proceeds from 512 of the 530 trusts in the case. Twenty-two investors that suffered significant losses for their failed investment in MBS sold by Countrywide prior to the collapse of the housing market are...
The Securities and Exchange Commission is allowing MBS and ABS issuers to test asset-level disclosures and receive feedback in advance of requirements that take effect Nov. 23. Through July 15, issuers can request that SEC staff provide feedback on a test filing for compliance with the asset-level disclosure requirements set by the so-called Regulation AB2. The filings will be submitted via the new Form ABS-EE. Under Reg AB2, an ABS issuer that makes an initial bona fide offer on or after Nov. 23, 2016, must provide...
The Consumer Financial Protection Bureau’s proposed rule that aims to effectively end the use of arbitration clauses in U.S financial product contracts will create new risks for ABS tied to consumer loans as well as related financial services companies, according to Moody’s Investors Service. “The fact that the proposed rule would not affect contracts outstanding before it is finalized would lessen its effects initially, as well as over the longer term for contracts on products that typically have long lives, such as credit cards,” analysts from Moody’s said. “Nevertheless, if adopted, the rule would expand legal risks for banks and other financial companies, and could adversely affect some securitizations.” That being said, “Some of the negative effects, however, would be offset...
Over the past two weeks, MBS prices have been on a downward trajectory, leading some market watchers to ponder whether the long-awaited correction in values is finally upon the industry. But no one is quite ready to wave the white flag. Moreover, there’s a school of thought that says any rise in the yield on the 10-year Treasury bond could be short lived and, at some time over the next six to 12 months, rates might head south again, igniting yet another small refi rally. Some also believe the chance of a recession is in the cards. Barry Habib, who runs MBS Highway, a rate-locking advisory service, thinks...
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