April 8, 2015 Newsletter
To ensure receipt of this newsletter, please add info@sfindustry.org to your address book. 
Problem viewing this email? Click here for our online version.
April 8, 2015
 

SFIG News

SFIG Calendar

Advocacy Outlook

Recent Developments

Upcoming Events in Washington

 
SFIG NEWS

SFIG's RMBS 3.0 TO HOLD ROUNDTABLE DISCUSSIONS IN NEW YORK

Next week, SFIG’s RMBS 3.0 initiative will hold two day-long roundtable sessions in New York, NY to continue working towards the development of industry-led solutions aimed at revitalizing the private label securities (“PLS”) market. 

The first day, Wednesday, April 15th, will focus on reviewing variations of representations and warranties in order to develop consensus around a more standardized set for use by PLS market participants. Members of the RMBS 3.0 Representations, Warranties and Repurchase Enforcement working group will discuss forty different representations and warranties in order to establish a workable framework for the industry.

On Thursday, April 16th, the Role of Transaction Parties and Bondholder Communication working group will convene to discuss the assignment of the various transaction functions and responsibilities to appropriate parties. Participants will seek to ensure clear definitions of all transaction responsibilities, and will further evaluate what party or parties are best suited to fulfill each role. The meeting will include a review of all roles and functions, including those in transaction models that may utilize a deal manager.

To join SFIG’s RMBS 3.0 initiative and participate in next week’s roundtables in New York, please contact Mary.Robinson@sfindustry.org.

 
 
SFIG CALENDAR
BIWEEKLY CREDIT CARD ISSUER COMMITTEE CALL
THURSDAY, April 9, 2015
10:00 a.m. – 11:00 a.m. (ET)
 
 
RESIDENTIAL MORTGAGE COMMITTEE CALL
THURSDAY, April 9, 2015
2:00 p.m. – 3:00 p.m. (ET)
 
 
WEEKLY INVESTOR COMMITTEE CALL
FRIDAY, April 10, 2015
1:30 p.m. – 2:30 p.m. (ET)
Please note: This is a closed meeting.
 
 
FOREIGN FINANCIAL INSTITUTIONS COMMITTEE CALL
MONDAY, April 13, 2015
11:00 a.m. – 12:00 p.m. (ET)
 
 
RISK RETENTION INDUSTRY GUIDE CALL
TUESDAY, April 14, 2015
11:00 a.m. – 12:00 p.m. (ET)
 
 
RMBS 3.0 REPRESENTATIONS, WARRANTIES AND REPURCHASE ENFORCEMENT WORKING GROUP IN-PERSON MEETING
WEDNESDAY, April 15, 2015
9:00 a.m. – 5:00 p.m. (ET)
Mayer Brown LLP
1221 Avenue of the Americas
New York, NY
 
 
BIWEEKLY REG AB II COMMENT LETTER CALL
WEDNESDAY, April 15, 2015
10:00 a.m. – 11:00 a.m. (ET)
 
 
BIWEEKLY AUTO ISSUER COMMITTEE CALL
WEDNESDAY, April 15, 2015
2:00 p.m. – 3:00 p.m. (ET)
 
 
RMBS 3.0 ROLE OF TRANSACTION PARTIES & BONDHOLDER COMMUNICATION WORKING GROUP IN-PERSON MEETING
THURSDAY, April 16, 2015
9:00 a.m. – 5:00 p.m. (ET)
Seward & Kissel LLP
One Battery Park Plaza
New York, NY
 
 
BIWEEKLY CREDIT CARD ISSUER COMMITTEE CALL
THURSDAY, April 16, 2015
10:00 a.m. – 11:00 a.m. (ET)
 
 
SFIG MEETING WITH THE CFTC AND PRUDENTIAL REGULATORS ON PROPOSED MARGIN RULES
TUESDAY, April 21, 2015
2:00 p.m. – 3:00 p.m. (ET)
Please note: This is a closed meeting.
 
 
2015 SFIG SPRING SYMPOSIUM
WEDNESDAY, May 20, 2015
5:00 p.m. – 8:00 p.m. (ET)
Wells Fargo
301 South College Street
Charlotte, NC 28202

The full agenda and details will be forthcoming.
To register, please click here. Please note, this event is closed to the press.
 
 
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.

The RMBS 3.0 Task Force released its Second Edition RMBS 3.0 Green Paper in November. Following the successful SFIG/IMN Private Label RMBS Symposium, the Task Force will continue 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; and (3) Role of Transaction Parties and Bondholder Communications. Presently, the Task Force is working on (1) developing a comprehensive compilation of representations and warranties for release in the spring of 2015 and (2) a grid summarizing roles of transaction parties. We encourage members to participate in any or all of the working groups to contribute towards the mission of RMBS 3.0. For additional information on RMBS 3.0, or to join the Task Force, please contact Mary.Robinson@sfindustry.org.

The GSE Reform Task Force recently met to discuss the Carney-Delaney-Himes GSE Reform bill and has updated its briefing book on the legislation 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 including theJohnson-Crapo bill and the PATH Act. SFIG staff previously summarized members’ recommendations on the former in a briefing book, and plan to produce a similar book on the latter in the upcoming months. Additionally, the task force has been actively engaging the Federal Housing Finance Agency (“FHFA”) on several fronts, with comments submitted on its single security proposal,guarantee fee pricing and Strategic Plan for 2015-2019. 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 of 2014. SFIG also continues to have weekly Mortgage Industry Standards Maintenance Organization calls to go through data elements that lenders should deliver in securitizations. We 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 Alyssa.Acevedo@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 Amanda.Bateman@sfindustry.org to participate on the Task Force.

The Risk Retention Industry Guide Work stream is 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 continues to hold regular calls focusing on a high-level description of SFIG’s partnership with the Chinese Securitization Forum, potential upcoming educational discussions and sharing recent market developments in China. An SFIG delegation, including one of the committee’s co-chairs, Catherine McCarihan, attended the recent Chinese Securitization Forum conference. If you would like more information on SFIG’s work with respect to Chinese securitization, please contact Alyssa.Acevedo@sfindustry.org

SFIG’s Shadow Banking Task Force has established the following agenda:

  • Leverage the predictive powers of the G20’s shadow banking initiative to determine future SFIG advocacy initiatives;
  • Assess the level of regulation to which our members are already subject;
  • Measure the full impact of those regulations on lending decisions and business models; and
  • Provide input into IOSCO, BCBS and IAIS on the revitalization of securitization markets.

The Task Force will have its first full meeting in the coming weeks, and members from across asset classes are encouraged to participate. To register your interest in SFIG’s Shadow Banking Initiative, please contact Amanda.Bateman@sfindustry.org.

The Regulation AB II Task Force will focus on the disclosure and offering process requirements within the final rule. Two work streams have been formed to develop a comment letter on the proposed rules that remain outstanding and to produce an industry guide for critical elements of the final rule. 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 is 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”). To become involved in SFIG’s advocacy on the Final LCR rule or NSFR, please contact Alyssa.Acevedo@sfindustry.org.

The Derivatives in Securitization Task Force recently 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 recently 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. SFIG also submitted a comment letter at the end of June 2014, advocating for asset-backed securities issuers to qualify for the “low-risk financial end user” designation proposed by prudential regulators in the original proposal. SFIG members who are interested in learning more about this initiative should email Amanda.Bateman@sfindustry.org.

The NRSRO Due Diligence Industry Guide Work stream is continuing to review the due diligence elements of the Final Rules on NRSROs. The working group meets biweekly on Thursdays at 3:00 p.m. (ET) and members interested in learning more should contact Amanda.Bateman@sfindustry.org.

The Money Market Fund Reform Working Group submitted a comment letter on October 13, 2014 regarding the Securities and Exchange Commission’s July 23, 2014 proposal which includes, among other things, possibly amending rule 2a-7’s issuer diversification provisions to eliminate an exclusion that is currently available for securities subject to a guarantee issued by a non-controlled person. SFIG also submitted a comment letter in September 2013 on Money Market Fund Reform. If you are interested in joining this working group, please contact Alyssa.Acevedo@sfindustry.org.

The High Quality Securitization Task Force submitted a response 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 14, 2015 (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. The HQS Task Force is currently developing a response to the European Commission’s related proposal, announced in conjunction with its plans for a capital markets union. Comments are due by May 13, 2015. To join the High Quality Securitization Task Force, please contact Amanda.Bateman@sfindustry.org.

 
 
INDUSTRY NEWS HIGHLIGHTS
CHINA EASES RULES FOR SELLING LOANS 

China has relaxed rules for the sale of asset-backed securities (“ABS”), making it easier for banks to transform some of the country’s 85 trillion yuan ($14 trillion) of outstanding loans into tradable notes, according to a Bloomberg article. Institutions no longer need to seek approval from regulators for each ABS sale, according to the People’s Bank of China. Those licensed by the China Banking Regulatory Commission (“CBRC”) to sell ABS will be able to determine the timing and location of the issuances after registering the amount of planned sales and their maturities with the CBRC, according to the new rules.

The rule change coincides with Premier Li Keqiang’s pledge last month to “make better use of existing funds” to support economic growth, which moderated last year to the slowest pace since 1990. Asset-backed securitization, in which lenders package loans into collateral for note sales, can help banks make room on their balance sheets for new lending.

“It will cause an explosive growth of China’s ABS market,” Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd. in Shanghai, said of the new rules. “It’s a very positive move for the banking system and the economy.”

 
 
CMBS SINGLE-BORROWER ISSUANCE CONTINUES TO RISE

U.S. single-borrower commercial mortgage-backed securities (“CMBS”) issuance volumes have been rising over the past few years and will likely continue in 2015, according to a report by Standard & Poor’s (“S&P”). During the first quarter of 2015, issuance volume was $12 billion, and is expected to exceed full-year single-borrower issuance of $26 billion. S&P sees a number of factors behind the increase in single-borrower CMBS. A primary reason is that originators, especially large banks, have competed well against balance-sheet lenders on some of the larger lending assignments as they can team up with other firms to share the risk.

At the same time, the report suggested that underwriting metrics have become “more aggressive” in single-borrower deals. The average LTV ratio has increased sharply in recent years—from 66% in 2012, to 74% in 2013, to 83% in 2014—and is up slightly to 86% in first-quarter 2015,” stated the report. However, credit enhancement levels have also risen. “Average 'AAA' credit enhancement levels in 2014 and first-quarter 2015 Standard & Poor's-rated deals are in the mid-50%s, up from 22% in 2009, the low-to-mid 30%s in 2010-2012, and the high-40%s in 2013,” stated S&P.

 
 
ECB's ABS PURCHASE PROGRAM DRIVES INVESTORS TO U.K. ABS MARKET

The European Central Bank’s (“ECB”) asset-backed securities (“ABS”) purchase program, aimed at reviving the euro-area ABS market, is having an unintended effect within the U.K’s market. As reported by SFIG at the beginning of the year, the ECB’s ABS purchase program continues to underwhelm European investors. However, a recent Bloomberg article states that this program is inadvertently fueling investor demand for U.K. securities by suppressing yields in the euro area. 

Sales of notes secured by U.K. collateral from mortgages and credit card debt totaled $12.3 billion in the first three months of the year. Euro-area issuers placed $8.3 billion of securities in the same period, the least since the first three months of last year.

The U.K.’s ABS market is Europe’s largest at $212 billion and is excluded from the ECB’s ABS purchase program, which is focused exclusively on notes denominated in euros and backed by euro-area collateral. The ECB has acquired roughly $5 billion of ABS debt since November. This has resulted in a distorted market and has suppressed some eligible bonds’ yield premiums to their lowest since before the financial crisis, thus pushing investors into assets outside the scope of the ECB’s program.

 
 
FANNIE MAE TO BEGIN AUCTIONING DEFAULTED MORTGAGES TO INVESTORS

Fannie Mae will begin bulk auctions of mortgages in an effort to minimize the number of non-performing loans on its books, according to a recent Bloomberg article.

SFIG reported in early March that the Federal Housing Finance Agency (“FHFA”) released a set of enhanced requirements for non-performing loans by Freddie Mac and Fannie Mae that are aimed at reducing risk to taxpayers by transferring it to the private sector. Freddie Mac has since auctioned about $2 billion in defaulted debt in three separate sales since last year. Now, Fannie Mae will begin to auction defaulted mortgages, including some sales targets for non-profit groups and small investors.

The FHFA is requiring investors to prove that they have retained a loan servicer with previous delinquent debt handling experience. Servicers are also required to offer aid in order to avoid foreclosures as a condition of a sale and must provide reporting on borrower outcomes after the transactions close.

 
 
CFPB DEPUTY DIRECTOR ANTONAKES DISCUSSES SUBPRIME AUTO LENDING

Last week, the Consumer Financial Protection Bureau’s (“CFPB”) Deputy Director Steven Antonakes addressed subprime auto lending at an industry conference. “From our standpoint, it is not inherently troubling that more consumers are getting auto loans; under the right conditions, increased access to credit is good for the economy and individual upward mobility,” stated Mr. Antonakes. However, Mr. Antonakes said that the agency is concerned that credit losses for recent loan vintages over the past two years has risen from historically low levels. “Given the potential for harm to consumers, we will be keeping a close eye on these trends to address, as necessary, potentially unfair, deceptive, and abusive practices in this space,” stated Antonakes.

 
 
UPCOMING EVENTS IN WASHINGTON
SEC INVESTOR ADVISORY QUARTERLY MEETING

THURSDAY, April 9, 2015
9:00 a.m. – 3:30 p.m. (ET)
SEC Headquarters, Multipurpose Room
100 F Street, NE, Washington, DC 20549

Agenda available here.

 
 
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 Director of ABS Policy

Michael Flood Director of Advocacy

Mary Robinson Policy Manager

Alyssa Acevedo Policy Analyst

Amanda Bateman Policy Analyst

Daniel Tees Policy Analyst

Jennifer Serpas Office Manager

Allison Creswell Executive Administration

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

Structured Finance Industry Group
WebsiteEmail Us | Web Archive

linkedin
To unsubscribe from this email listing, please click here.

Informz
wagers
Terms and Conditions | Privacy Policy