The Securities and Exchange Commission’s update to Regulation AB won’t prompt many issuers to change whether they issue deals in the public market or private market, according to industry participants. After the so-called Reg AB2 takes effect, issuers of SEC-registered MBS and ABS will have to disclose more information. The regulation includes an exemption for 144A private placements, which could provide a way for issuers to avoid the SEC’s disclosure requirements. At the recent ABS Vegas conference sponsored by the Structured Finance Industry Group and Information Management Network, many issuers indicated....

Disclosure of findings from third-party due diligence on MBS and ABS are set to go from a few paragraphs in a rating report to a detailed form with certification from the due diligence firm, thanks to standards established by the Securities and Exchange Commission. The standards take effect for deals that price June 15 or later. Within five days before the first sale in an offering that will receive a rating, the findings and conclusions of any third-party due diligence report obtained by the issuer or underwriter must be disclosed in Form ABS-15G or the rating report. The disclosure requirement applies to private placements along with SEC-registered deals. “Our biggest challenge now is educating...

Industry participants in the Treasury Market Practices Group raised questions about the tax consequences and other issues involved in the plan to develop a “single security” in a meeting with the Federal Housing Finance Agency last month. The recently released minutes of the meeting do not provide much detail. The FHFA representatives described in broad terms the project to create a fungible MBS that Fannie Mae and Freddie Mac would both issue in the to-be-announced market. In response, “Most TMPG members noted...

Cherry Hill Mortgage Investment Corp., which has 76 percent of its assets invested in MBS, plans to whittle that down a bit and make a major push into mortgage servicing rights. The question is: will other real estate investment trusts follow suit? One REIT executive, who spoke under the condition his name not be used, said...

In 2018, the GSE capital buffer falls to zero dollars. Zilch. Nada. Hopefully by then, President Bush or President Clinton will have worked out a GSE reform deal with Congress…

Lenders and investors are getting more comfortable with loans that don’t meet the qualified-mortgage standard, according to industry participants. A non-agency mortgage-backed security backed primarily by non-QMs could be issued as soon as this year. Chris Haspel, a partner and head of capital markets at Fenway Summer, whose Ethos Lending is originating non-QMs, said the “fear level” among rating services and warehouse lenders regarding non-QMs has ...

Separate efforts by the Treasury Department and the Structured Finance Industry Group aimed at attracting investors to new non-agency mortgage-backed securities continue to progress, according to industry analysts. The Treasury is working to facilitate a benchmark non-agency MBS while SFIG continues to develop standards as part of Project RMBS 3.0. Eric Kaplan, a managing director at Shellpoint Partners and leader of Project RMBS 3.0, said ...

The FHA has delayed the effective date of new guidance that will require reverse mortgage lenders to perform a financial assessment of applicants for a Home Equity Conversion Mortgage. The FHA indicated that the change was necessary to allow vendors and the Department of Housing and Urban Development to align their respective software before the new system can be operational. Those familiar with the technology said delivering the required system enhancements should not take long. The FHA said a new effective date should be expected within 30 to 60 days of the original March 2 effective date. It will be announced in a new mortgagee letter, the agency added. The new guidance requires lenders to evaluate HECM borrowers’ willingness and capacity to meet their obligations and to comply with program requirements. “Financial assessment” means doing a much more ...

FHA lenders should spend the next couple of months familiarizing their staff with the requirements in the FHA’s new Single Family Housing Policy Handbook to ensure proper implementation of the changes on June 15, 2015, according to compliance experts. The impending changes in the Single Family Handbook are complex and significant. Lenders will need proper legal guidance to navigate and understand hundreds of pages of consolidated housing policies and guidance, as well as substantive changes to FHA requirements, said K&L Gates experts in a recent analysis. The handbook is a consolidated, authoritative source of single-family housing policy and is meant as a one-stop resource for FHA lenders. It gathers and streamlines all FHA requirements, which are currently spread throughout various handbooks, mortgagee letters and other documents, making it easier for lenders to ...

The Consumer Financial Protection Bureau recently sued a reverse mortgage lender and issued consent decrees against two other mortgage companies for misleading consumers with false advertising about FHA-insured mortgage products. The CFPB filed suit against All Financial Services (AFS), a Maryland-based reverse mortgage lender, in the federal district court in Baltimore alleging that the lender disseminated misleading ads for Home Equity Conversion Mortgage loans between November 2011 and December 2012. In addition, AFS allegedly failed to maintain copies of the ads as required by the CFPB under its reverse mortgage regulations. According to court filings, the CFPB alleges that the lender/broker mailed out ads using materials and language that seemed to indicate that it was a federal entity or an affiliate of a government entity. All AFS ads appeared as if they were ...