April 13, 2016 Newsletter
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April 13, 2016
 
 
SFIG News

Industry Jobs

SFIG Calendar

Meetings

Events

Advocacy Outlook

Industry News Highlights

 
 
SFIG NEWS
SFIG PRESENTS WHITE PAPER AND MEETS WITH LOCAL REGULATORS AT ANNUAL CSF CONFERENCE IN BEIJING

Last week, a delegation consisting of several SFIG members and staff attended the 2016 Annual Conference of the China Securitization Forum (“CSF”) in Beijing. The delegation played a significant role at the conference, with SFIG represented on a wide variety of panels.

SFIG also presented A Comprehensive Guide to U.S. Securitization White Paper to the CSF and to local regulators at the conference. SFIG’s Chinese Market Committee members spent over a year collaborating on the White Paper, kindly coordinated and edited by Mayer Brown, giving an overview of the U.S. securitization landscape. Over 500 copies of the White Paper were also distributed to Chinese industry participants at the conference.

In addition, SFIG held meetings with a number of local regulators including the China Banking Regulatory Commission, the China Banking Asset Trading Registration Center and the Information Research Department of the State Council of China.

If you would like to join SFIG’s Chinese Market Committee and learn more about our partnership with the CSF, please contact Alyssa.Acevedo@sfindustry.org.

 
 
REMINDER TO SUBMIT NOMINATIONS FOR THE 2016 SFIG BOARD OF DIRECTORS!

SFIG is still accepting nominations for its Board of Directors in anticipation of the June 2016 Board rotations. Eligibility for a position on the SFIG Board of Directors is limited to individuals employed by SFIG’s primary members. Members may nominate themselves or qualified industry participants.

SFIG’s Nominating Committee will review nomination submissions, consult with members and make recommendations to the current Board of Directors. The Nominating Committee is dedicated to selecting a balanced Board of Directors that is reflective of the membership and the industry at large, and is committed to working hard and advancing the principles of SFIG.

Board of Director terms are for two years. Nominations for the Board of Directors will be accepted until April 30, 2016.

If you have any questions or require any clarification around the nominating process, please email Committees@sfindustry.org

Click here to submit your nominations. Please note that the nomination form is open to registered members only. Members that have not yet registered can do so here.

 
 
INDUSTRY JOBS

SFIG currently has open positions for:

  • Advocacy Manager: will be an integral member of SFIG staff, being second-in-command of the association’s Advocacy department. The successful candidate will design and execute advocacy strategies for SFIG’s policy priorities and support the association’s advocacy efforts through development and growth of its political action committee. Additional information on the position, as well as a link to the application, is available here.

  • Data/Policy Analyst: will help support group-wide strategy efforts and initiatives as they relate to the association’s database and various policy requirements. The Analyst will also support SFIG’s advocacy efforts through development of a political action committee database. Additional information on the position, as well as a link to the application, is available here.

Some of the latest industry positions available include:

JOB TITLE COMPANY POSTING DATE
Enterprise Sales T-REX 03-04-2016
Associate Director/Director - Structured Finance - Model Management Fitch Ratings 02-29-2016
Research Analyst PeerIQ 02-25-2016
Credit Quant PeerIQ 02-22-2016
Mid-Level Corporate Trust Associate K&L Gates LLP 02-22-2016
Senior Analyst, Consumer ABS Kroll Bond Rating Agency 02-04-2016
Analyst, Financial Institutions Kroll Bond Rating Agency 02-03-2016
Associate Director, Structured Finance - Toronto Standard & Poor's 01-29-2016

Attorney- Project Finance/Corporates

Kroll Bond Rating Agency 01-28-2016

Analyst – CMBS Analytics

Kroll Bond Rating Agency 01-28-2016

Please visit our Jobs page for a full listing of available positions.

For questions about positions at SFIG, please contact Jobs@sfindustry.org. For questions about the website jobs portal, please contact Website@sfindustry.org.

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SFIG CALENDAR
MEETINGS
RMBS 3.0 DUE DILIGENCE, DATA AND DISCLOSURE WORKING GROUP MONTHLY CALL

THURSDAY, April 14, 2016
2:00 p.m. — 3:00 p.m. (ET)

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MARKETPLACE LENDING COMMITTEE CALL

THURSDAY, April 14, 2016
3:00 p.m. — 4:00 p.m. (ET)

 
 
RMBS 3.0 BONDHOLDER COMMUNICATIONS WORKING GROUP MONTHLY CALL

TUESDAY, April 19 2016
2:00 p.m. — 3:00 p.m. (ET)

 
 
WEEKLY CREDIT CARD ISSUER COMMITTEE CALL

THURSDAY, April 21, 2016
10:00 a.m. — 11:00 a.m. (ET)

 
 
RMBS 3.0 REPRESENTATIONS AND WARRANTIES WORKING GROUP CALL

THURSDAY, April 21, 2016
3:00 p.m. — 4:00 p.m. (ET)

 
 
MASTER SERVICER AND SERVICER SUBCOMMITTEE BIWEEKLY CALL

TUESDAY, April 26, 2016
1:00 p.m. — 2:00 p.m. (ET)

 
 
EVENTS
IMN’s SUNSHINE BACKED BONDS CONFERENCE

THURSDAY, April 21, 2016
Marriott New York Downtown
New York, NY
Registration available here.

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IMN’s INVESTORS CONFERENCE ON CLOs AND LEVERAGED LOANS

MONDAY, May 16, 2016 – TUESDAY, May 17, 2016
Grand Hyatt New York
New York, NY
Registration available here.

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SFIG & IMN's STRUCTURED FINANCE CANADA 2016

TUESDAY, May 31, 2016 – WEDNESDAY, June 1, 2016
Hyatt Regency Toronto
Toronto, Ontario
Registration is available here.

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IMN’s GLOBAL ABS 2016 CONFERENCE

TUESDAY, June 14, 2015 – THURSDAY, June 16, 2016
The Barcelona International Convention Centre
Barcelona, Spain
Registration is available here.

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ADVOCACY OUTLOOK

If you would like to participate in the work SFIG is undertaking through our committees as highlighted below, please e-mail Committees@sfindustry.org. For specific inquiries on any of SFIG’s advocacy efforts, please contact the staff member listed for the related project.

SFIG’s Marketplace Lending Committee was established in August 2015, as an SFIG participant committee and is open to all SFIG members who have a legitimate interest in marketplace lending. The committee was formed with two primary intentions: 1) to work with members involved in marketplace lending to educate the industry as a whole, with a particular focus on the securitization of assets generated through that lending channel; and 2) to determine appropriate securitization-specific policy and engage in related advocacy, leveraging SFIG’s prominence and experience across all asset classes to support the continued responsible growth of securitization in marketplace lending.

The committee recently launched its “Best Practices” initiative to establish industry consensus and provide recommendations around one or multiple accepted approaches. The five established Best Practices work streams are 1) Data & Reporting 2) Representations & Warranties 3) Regulatory 4) Operational Considerations and 5) Enforcement.

The committee previously commented on the Treasury Department's Request for Input on Online Marketplace Lending on September 30th.

SFIG’s Student Loan Committee recently responded to Fitch’s proposed amendments to FFELP student loan ABS rating methodology. The committee also submitted a response to the Proposed Changes to Moody’s Approach to Rating Securities Backed by FFELP Student Loans this past October.

To join SFIG’s Student Loan Committee and learn more, please contact Alyssa.Acevedo@sfindustry.org.

The RMBS 3.0 Task Force released its Third Edition RMBS 3.0 Green Papers in November 2015. The task force has continued its efforts to address key issues specific to private label mortgage securities through work-streams relating to (1) Representations, Warranties, and Repurchase Enforcement; (2) Due Diligence, Data, and Loan-Level Disclosure; (3) Role of Transaction Parties; and (4) Bondholder Communications. We encourage members to participate in any or all of the working groups to contribute towards the mission of RMBS 3.0. For its 2016 agenda, the task force will address topics including the inclusion of an independent Deal Agent in transactions, Bondholder Communications, Data and Loan-Level Disclosure, Repurchase Enforcement, and Settlements, as well as undertake a review of the previously published Green Papers.

For additional information on RMBS 3.0, please contact Amanda.Bateman@sfindustry.org.

SFIG, through its GSE Reform Task Force, along with several other trade associations, submitted a letter to the FDIC, Fed and OCC regarding the effect of homeowner’s association ‘super-liens’ on private-label RMBS and whole loan transactions. The task force also submitted comments on FHFA’s update to the single security initiative on October 7, 2015. The task force is expecting to receive an update from the SFIG participants on the Industry Advisory Group for the Common Securitization Platform and Single-Security following its second meeting on December 7th. The task force has also formed policy positions on the Carney-Delaney-Himes GSE Reform bill and updated its briefing book to support its advocacy efforts. With the release of the bill, SFIG staff also updated its GSE Reform Legislative Comparison, which analyzes key provisions in the five most recent housing finance reform bills.

To join SFIG’s GSE Reform Task Force and learn more, please contact Amanda.Bateman@sfindustry.org.

The Mortgage Loan-Level Disclosure Task Force is studying the recent Regulation AB II release of Schedule AL and comparing it to SFIG’s Schedule L submission to the Securities and Exchange Commission in February 2014. SFIG also continues to have weekly Mortgage Industry Standards Maintenance Organization calls to go through data elements that lenders should deliver in securitizations. The task force will also be conducting an analysis of the data elements included in SFIG’s Schedule L submission in order to determine any privacy concerns.

Please contact Amanda.Bateman@sfindustry.org for additional information on SFIG’s work on this topic.

The Volcker Task Force has been working with SFIG’s various asset class and legal counsel committees to identify areas within the Volcker Rule in need of clarification, particularly questions regarding covered funds and the loan securitization exemption.

Please contact Alyssa.Acevedo@sfindustry.org to participate on the Task Force.

The Risk Retention Industry Guide Working Group recently launched its interim Industry Guide, ahead of the RMBS compliance date, focused on issues either relevant to all asset classes or specific to RMBS. The Working Group continues to work on a final guide focused on creating best practices and developing consensus positions around several areas within the Credit Risk Retention final rule.

Please contact Alyssa.Acevedo@sfindustry.org with any questions.

SFIG’s Chinese Market Committee recently completed their White Paper, A Comprehensive Guide to U.S. Securitization, for Chinese regulators and the Chinese Securitization Forum to educate them on the U.S. securitization landscape. The committee also continues to hold discussions with a focus on SFIG’s partnership with the CSF, potential upcoming educational discussions and the sharing of recent market developments in China.

If you would like more information on SFIG’s work with respect to Chinese securitization, please contact Alyssa.Acevedo@sfindustry.org.

The Regulation AB II Task Force has been focused on the disclosure and offering process requirements within the final rule. Asset specific work streams have been formed to develop comment letters on the outstanding proposals within the final rule and the Task Force submitted the first part of its comment letter this past June. SFIG submitted a supplemental comment letter covering credit card and equipment floorplan asset classes on January 12, 2016.  Future discussions across asset class committees and the Regulation AB II Task Force will focus on the remaining outstanding proposed rules, including potentially requiring issuers to provide the same disclosure for Rule 144A offerings as required for registered offerings.

SFIG members who are interested in joining this task force or asset specific committees should contact Alyssa.Acevedo@sfindustry.org

The Regulatory Capital and Liquidity Committee recently submitted a response to Basel’s Consultative Document regarding Capital Treatment for STC Securitisations. The committee is also addressing industry concerns related to the Federal Reserve Board’s Final Rule on the Liquidity Coverage Ratio (“LCR”). This committee will also develop a comment letter when U.S. regulators release their proposed Net Stable Funding Ratio (“NSFR”). SFIG recently testified before Congress, focusing on global regulatory issues, including LCR, that affect lending across all asset classes.

To become involved in SFIG’s advocacy on the final LCR or NSFR rules, please contact Alyssa.Acevedo@sfindustry.org.

The Derivatives in Securitization Task Force obtained no-action relief from the CFTC giving swap dealers comfort that the CFTC would not take enforcement action against swap dealers that did not comply with certain CFTC Regulations when taking actions in response to the credit ratings downgrade of a counterparty to a legacy swap. The relief applies to swaps with SPVs that were in existence prior to October 10, 2013. The task force also commented on the CFTC’s proposal on margin requirements for uncleared swaps, as well as the prudential regulators’ proposal regarding margin and capital requirements for covered swap entities. In October 2015, the prudential regulators approved a Joint Final Rule on Swap Margin Requirements. In November 2015, the CFTC issued their final rule regarding margin requirements for uncleared swaps for swap dealers and major swap participants.

The High Quality Securitization ("HQS”) Task Force recently submitted a response to Basel’s Consultative Document regarding Capital Treatment for STC Securitisations. The task force previously responded to the European Commission’s consultation on an EU framework for simple, transparent and standardized securitization on May 12, 2015. The task force also previously responded to the BCBS-IOSCO consultation on its criteria for identifying simple, transparent and comparable securitizations. SFIG’s comments were built off of those sent to the European Banking Authority on January 14th (available here) regarding its proposed criteria and to the European Central Bank and Bank of England last summer (available here) regarding the development of a sustainable securitization market in Europe. SFIG recently testified before Congress, focusing on global regulatory issues, including HQS, that affect lending across all asset classes.

To join the HQS Task Force, please contact Alyssa.Acevedo@sfindustry.

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INDUSTRY NEWS HIGHLIGHTS
 
 
 
 
MOODY’S REPORT HIGHLIGHTS IMPORTANCE OF PRIVATE LABEL SECURITIZATION

According to a report recently published by Moody’s Investors Service, securitization is an essential source of core funding for the real economy, particularly in the private label mortgage market. Moody’s states, “The correlation between the overall level of debt in the US economy and the percentage of that debt financed by private-label securitization suggest that when the country’s borrowing needs rise, securitization provides the required incremental funding.” Moody’s notes, however, that this correlation also suggests that when borrowing needs decline, this market is among the first to contract.

According to Moody’s, “Data dating back to the birth of the US securitization industry shows that private-label securitization’s contribution to the funding of the US economy rises and falls along with the level of debt outstanding.” PLS is becoming significant again in some asset classes as US outstanding debt is now growing again. While the PLS market has grown at a rate similar to that of outstanding debt in sectors including credit cards, mortgage and leveraged loans, Moody’s highlights the auto loan and commercial mortgage sectors, where PLS has increased more quickly than debt outstanding.

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NON-FINANCIAL ISSUERS KEY TO EXPANSION OF CHINA SECURITIZATION MARKET

China’s securitization market is expected to expand in 2016 with non-financial institution issuers taking the lead, according to Fitch Ratings executives who spoke with China Daily. In a recent article, Senior Director of Fitch Ratings’ Structured Finance Tracy Wan, stated that the slowdown of China’s economy could have an impact on corporate borrowing, but non- financial institution issuers do not have that problem. Last year, non-financial issuers sold 180 billion yuan ($16.7 billion) of ABS, a five-fold increase within one year.

Wan explained that it will be crucial for China to educate investors about the products in order to develop the market. "Hopefully the increasing example of defaults in bond market would alert them on individual risk," Wan said.

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MORTGAGE CREDIT REMAINS TIGHT IN AGENCY MARKET

According to Michael Stegman, Counselor to the Secretary for Housing Policy at the White House, the housing market has been improving but credit remains tight on loans bought by government sponsored enterprises (“GSEs”) Fannie Mae and Freddie Mac. Speaking at an industry event last Wednesday, April 6th, Dr. Stegman told audiences that “we are still seeing an average 750 FICO score on GSE loans,” National Mortgage News reports.

Other changes the industry has been grappling with include servicing rules that have raised the cost of dealing with defaults and failed mortgages. According to Keith Bickel, Senior Vice President at Bank of America, lenders are still adjusting to recent and forthcoming regulatory changes, the pace and scope of which have contributed to “what we see as a tightening of credit.”

Furthermore, Federal Housing Administration (“FHA”) lenders are concerned about liability for minor loan defects or errors. While the FHA has attempted to reassure lenders they won’t be penalized for minor defects on loans, the industry does not appear to be reassured by these efforts. According to Brian Chappelle, a co-founder of Potomac Partners, by raising the issue of loan certifications and the Department of Justice's enforcement actions against FHA lenders, "it probably has put more fear into smaller lenders… While FHA was trying to allay industry fears, I think it was a net negative based on the questions I get from lenders who are more worried about the certifications. Any changes in this environment worry lenders."

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SOFTER INVESTOR DEMAND DIALING BACK FINTECH LENDERS' MARKETING

According to a recent Wall Street Journal article, pressures from quality control and regulation have forced online lenders to scale back their efforts to attract new borrowers.

This is a big shift for these rapidly growing financial technology companies, the Wall Street Journal stated, some of which do not lend themselves but instead match borrowers with investors who effectively fund loans by buying them. Investors are growing more concerned that loans will sour more quickly than expected and that regulation could hamper the industry. Amid the growing skepticism, lenders have started redoubling efforts to find new buyers while others are slowing down their business.

According to the article, the volume of securitizations backed by online loans slowed sharply since the start of the year. In the first quarter, $1.5 billion worth of online loan pools were sold, down 21 percent from the $1.9 billion sold in the fourth quarter of 2015, according to PeerIQ data.

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OCC CHIEF CURRY HIGHLIGHTS IMPORTANCE OF INNOVATION IN RECENT SPEECH

During a recent speech, the Office of the Comptroller of the Currency (“OCC”) Chief Thomas Curry stated that it is up to banks to keep up with and out-innovate nonbank rivals. “Technology...will determine the success or failure of banks going forward,” Curry said.

As SFIG reported last week, the OCC recently released a white paper, embracing innovation and technology in the banking space so as not to put the financial system at risk. "Regulated banks aren't the only show in town when it comes to financial services and your competitors are taking advantage of every opportunity to get a leg up on you," Curry stated during his remarks.

The OCC Chief also said that regulators should be receptive to new ideas. "It's important that regulators are open to the changes that are underway in both technology and business practices, and that we are able to evaluate both the risks and the opportunities that innovation presents."

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CFPB’S CORDRAY: FINTECH FIRMS SHOULDN’T BE ALLOWED REGULATORY ARBITRAGE

In a hearing last week before the Senate Banking Committee, Richard Cordray of the Consumer Financial Protection Bureau (“CFPB”) answered questions about the regulatory standards that fintech companies should be held to, given that they are not deposit institutions. As reported in American Banker, Cordray stated that at the CFPB, “[w]e believe it would not be appropriate for new fintech startups to be getting an advantage in the marketplace because they are arbitraging the regulatory system, they are not complying, they're not taking seriously what the banks and regulated institutions have to do".

At the hearing, Director Cordray said that regulators are focused on keeping up with changes in the marketplace. He stated: “We're trying to stay on top of this because if we fall behind it, this could dramatically affect markets over time." The article also reported that the CFPB is "on the verge" of issuing a proposal on payday loans, “which many expect will be released by the end of June.”

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SFIG COMMITTEES AND TASK FORCES

SFIG has a number of Committees and Task Forces meeting and working on many topics of interest to the securitization industry. Please email us for more information, including how to join.

SFIG is pleased to share this edition of its newsletter with our members, as well as our supporters in the structured finance community. To ensure that you receive future editions of the newsletter, please visit our website or email us to learn more about membership opportunities.

Contact Information

Richard Johns Executive Director

Kristi Leo Investor Relations

Sairah Burki Senior Director, ABS Policy

Michael Flood Director, Advocacy

Dan Goodwin Director, Mortgage Policy

Jennifer Wolfe ABS Policy Manager

Hua Liu Communications & Social Media Manager

Alyssa Acevedo Senior Analyst, ABS Policy

Amanda Bateman Senior Analyst, MBS Policy

Jennifer Serpas Office Manager

Sarah Clarke Events Coordinator

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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