February 10, 2016 Newsletter
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February 10, 2016

Industry Jobs

SFIG Calendar



Advocacy Outlook

Industry News Highlights


The SFIG Marketplace Lending Committee’s “Best Practices” initiative has established five work streams as part of its initial meeting and scope evaluation. Those work streams are:

  • Data & Reporting
  • Representations & Warranties
  • Regulatory
  • Operational Considerations
  • Enforcement

More work streams may be added later. Each work stream will be chaired/co-chaired by members representing a broad cross-section of the sector, with the project centralizing through a steering committee covering all work streams.

If you would like to participate in any one of these work streams or indeed have an interest in chairing any work stream, please contact Jennifer.Wolfe@sfindustry.org. To learn more about the initiative, click here


SFIG is pleased to announce an upgrade to our social media presence by adding Twitter and Facebook to better communicate with our members and broader audience. We believe that using these social media channels will allow us to more easily and quickly provide you with industry news and important updates on policies and regulations, and share with you our divergent member views. If you already have Twitter, Facebook and LinkedIn accounts, we encourage you to join the conversation by following @SFIndustryG on Twitter, liking us on Facebook, and keeping up with us on LinkedIn.



This morning, February 10th, Federal Reserve (“Fed”) Chair Janet Yellen, testified before the House Financial Services Committee and presented the Fed’s semiannual Monetary Policy Report. During her testimony, Congressman Andy Barr (R-KY) questioned Chair Yellen about the Fed’s plans to implement Basel’s recently finalized rule in the U.S. that sets capital standards for securitization exposures on bank trading books, called the Fundamental Review of the Trading Book. Specifically, Congressman Barr asked:

The Basel Committee recently finished a rule in January that increases the capital held against securitization exposures in a bank trading book by up to five times the amount already required under Basel III, as well as the final TLAC rules. One industry study suggests that that trading in U.S. asset-backed securities will become uneconomical if the rule is not tailored to fit the U.S. marketplace. If it is uneconomical to act as a “market-maker” for commercial mortgage-backed securities, residential mortgage-backed securities, auto loans, credit cards, CLO’s, then banks will pull out of the ABS market, which represents a $1.6 trillion dollar source of consumer lending, or 30% of all lending to U.S. consumers. So my question to you Chair Yellen is, how will the Fed ensure that the final rule will be tailored to fit the U.S. market, which is the most liquid ABS market in the entire world?

 “I will have a careful look at that. I am not familiar with all of the details in the Basel proposal, but anything we implement in the United States – there is nothing automatic that is implemented in the United States – and we will have a careful look at that rule,” responded Chair Yellen.

 “I appreciate you doing that, and I will continue to push you and other members of the FSOC to look at regulations for sources of economic instability,” stated Mr. Barr.

SFIG will continue to present its members’ views and insights to Congress on matters affecting ABS bond liquidity. To view a recording of the hearing, please click here (FRTB Question at 2:58:20). To view SFIG’s letter to the regulators on FRTB, please click here. To learn more about SFIG’s advocacy efforts, please contact Michael.Flood@sfindustry.org


Last Friday, February 5th, SFIG submitted comments, drafted by Hogan Lovells, in response to the Basel Committee on Banking Supervision (“BCBS”) consultative document entitled “capital treatment for ‘simple, transparent and comparable’ securitisations.”

This comment letter builds upon SFIG’s earlier comments to the BCBS in February of 2015, the European Banking Authority in January of 2015 and the European Central Bank and Bank of England in May of 2015.

If you would like to join SFIG’s High Quality Securitization Task Force or Regulatory Capital & Liquidity Committee, please contact Alyssa.Acevedo@sfindustry.org.


On Thursday, February 4th, SFIG staff and members met with the Consumer Financial Protection Bureau (“CFPB”) to discuss the implementation of the Know Before You Owe (“KBYO”) disclosure rules, also known as the Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Disclosure (“TRID”) rules, and their impact on the secondary mortgage market. SFIG communicated the concerns of members including mortgage issuers, due diligence providers, legal experts, and rating agencies regarding market participants’ ability to cure errors found on the disclosure forms and highlighted the divergent understandings of KBYO non-compliance issues that currently exist in the industry.

SFIG appreciates the CFPB’s willingness to meet and discuss the matter and hopes the industry will be given additional clarity soon to ensure compliance with the rules. For questions about the meeting, please contact Daniel.Goodwin@sfindustry.org. If you are a mortgage issuer and wish to register for the Residential Mortgage Issuer Committee, please contact Amanda.Bateman@sfindustry.org.


SFIG’s Women in Securitization (“WiS”) invites you to join female colleagues at the ABS Vegas 2016 WiS event, Winning Outside the Workplace. Registration is filling quickly as we get ready to welcome industry members to learn about leveling the playing field outside of the board room with educational insight on wine pairings, gaming, and social engagement.

Registration is open to all Vegas attendees. To register, please click here. Space is limited with few spots remaining, so reserve your place today!

To become a member of WiS and support this important initiative, please click here.

To support WiS and take advantage of all of the benefits available to our sponsors, please submit your WiS sponsorship form to sponsorship@sfindustry.org.


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.

  • Executive/Administrative Assistant: will be responsible for supporting the Executive Director and Directors of Policy and Advocacy while directing overall front office activities, including the reception area, mail, calendar coordination, meeting set-up, purchasing requests and overall office management. Additional information on the position, as well as a link to the application, is available here.

Some of the latest industry positions available include:

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

Structured Finance Analyst

Assured Guaranty 01-19-2016

Associate Director/Director, Asset Backed

Fitch Ratings 01-12-2016

Associate Director/Director, Residential
Mortgage Backed Securities

Fitch Ratings 01-07-2016
Associate Director, ABS Ratings Standard & Poor's 01-07-2016
Analyst Moody’s Investors Services

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.

  • THURSDAY, February 11, 2016
    10:00 a.m. – 11:00 a.m. (EST)
  • THURSDAY, February 18, 2016
    10:00 a.m. – 11:00 a.m. (EST)

WEDNESDAY, February 17, 2016
2:00 p.m. - 3:00 p.m. (EST)


SUNDAY, February 28, 2016 – WEDNESDAY, March 2, 2016
The Aria Resort & Casino
Las Vegas, NV
Registration is available here.


SUNDAY, February 28, 2016 
3:00 p.m. - 5:00 p.m. PT
The Aria Resort & Casino
Las Vegas, NV


WEDNESDAY, March 16, 2016
12:00 p.m. – 5:00 p.m. (ET)
Hogan Lovells LLP
New York, NY
Note: Closed Meeting


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


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 is currently working on establishing and documenting recommended market best practices. The committee previously commented on the Treasury Department's Request for Input on Online Marketplace Lending on September 30th.

Members interested in participating should contact Alyssa.Acevedo@sfindustry.org.

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 continues to hold discussions with a focus on SFIG’s partnership with the Chinese Securitization Forum, 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”). 

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.

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

According to a recent article by National Mortgage News, Fitch Ratings has found that more than half of all home loans originated today have errors that are non-compliant with the "Know Before You Owe" disclosure rule that went into effect in October. Fitch estimates that approximately 5 to 10 percent of loans have major compliance issues, while only 25 to 30 percent are fully compliant. As stated in the article, “Because there are hundreds of variables to account for on the forms, compliance has become a near-impossible task. As a result, many investors are refusing to purchase loans without further guidance from the Consumer Financial Protection Bureau (“CFPB”).”

In the aftermath of the crisis, market participants are particularly adverse to the accepting even the most technical KBYO violations and putting themselves at risk that the loans are repurchased or they are indemnified for losses that may have nothing to do with the default of the loan. The fear of backlash from non-compliance is the latest hurdle that could slow issuance in the PLS market, where lenders are concerned about potential buybacks.


Last Tuesday, February 2nd, Moody’s Investors Service released a report entitled, “Prime-Jumbo Market Gradually Recovers as Transaction Governance, Investment Strategies and Capital Requirements Evolve,” which details Moody's view on how this market will continue to grow.

"We are seeing ongoing improvements in RMBS transaction governance in the wake of the crisis," says Vice President - Senior Credit Officer, Madhur Duggar. "Originators and investors continue to work together to improve the RMBS framework, so future deals should benefit from better governance and stronger representation and warranty language."

Moody’s also highlighted how RMBS 3.0 transactions, if implemented, will address investor concerns with better transaction governance and stronger representation and warranty language.

If you would like to join SFIG’s RMBS 3.0 Task Force, please contact Amanda.Bateman@sfindustry.org.


In the last few months, the People’s Bank of China and the Green Finance Committee of the China Society of Finance and Banking released new standards on how to use “green bonds.” The Green Financial Bond Directive is China’s first guideline on green bonds and outlines how funds may be exclusively applied to finance new and existing green infrastructure projects.

According to a recent Environmental Leader article, these government-backed documents set out important requirements on disclosure and the use of proceeds to ensure a transparent and robust green bond market. The six major themes for green bond financing in China set forth by the directive include: energy saving, pollution prevention and control, resource conservation and recycling, clean transportation, clean energy and ecological protection and climate change adaptation.

On Monday, February 8th, Fitch Ratings announced several proposed changes to its U.S. RMBS Loan Loss Model Criteria for which it is seeking comments. The enhancements come after an annual review of its loan loss model which incorporated newly available data into the model analysis and updated backtesting of model projections. According to Fitch, the key proposed enhancements include:

  • A revision to the distressed sale adjustment reflecting new agency historical data;
  • A cure-rate adjustment for borrowers who default but have enough equity to resolve the default without a loss;
  • A simplification of the liquidation timeline projections and stresses;
  • Modest changes to originator quality adjustments; and
  • A reduction in the geographic concentration penalty.

Fitch expects the changes to have a modest impact on loss projections and ratings. For borrowers with strong equity positions, Fitch expects to see a lower default assumption due to a cure-rate adjustment. However, for prime conforming balance loans, the rating agency expects higher loss severities due to an increase in the distressed sale adjustment.

Comments on its Exposure Draft are due to Fitch on March 8th.


In an interview published by National Mortgage News on February 2nd, Freddie Mac Senior Vice President of Credit Risk Transfer Kevin Palmer says the housing finance system would function a lot better if all lenders retained a portion of the risk on loans they service and originate. The comments come as two industry associations are working on proposals for a pilot program that would use private insurance to take mortgage loan-to-value ratios down to 50 percent. Currently, 30 percent of risk transferred on new business is done primarily via mortgage insurance, often providing deeper coverage than what is required by the government sponsored enterprises’ charters.

While Palmer tells National Mortgage News that keeping skin in the game is preferable to mortgage insurance, he notes that doing so is expensive due to Basel rules. According to the Freddie Mac executive, “banks are not interested in taking this risk due to Basel capital rules. That leaves nonbanks. We have done a couple of these transactions, and are looking for ways to expand this to more. Fortunately if we don't come to an agreement with a lender, most all of the risk will flow into one of our other CRT offerings.”


According to researchers at the Federal Reserve Bank of New York ("FRBNY"), the market for agency MBS remains deeply liquid eight years after the financial crisis. As noted in a report published on February 8th, transaction costs have been relatively stable since 2011 when the Financial Industry Regulatory Authority began tracking that data minus one spike in the bid-ask spread in 2013. However, though the number of trades is stable, trading volume has declined partly owing to a decrease in the average trade size. While these measures of agency MBS trading activity suggest a decline in market liquidity, FRBNY argues that the measures of transaction costs and price impact suggest that liquidity conditions have been relatively stable since 2011. The report concludes, “It will be interesting to monitor liquidity conditions in this market as monetary policy is normalized, especially given the planned introduction of a single security designed to improve liquidity.”


Yesterday, February 9th, the SEC’s Division of Corporation Finance published a guide for ABS issuers addressing changes in EDGAR filing procedures to support new and updated filing requirements under Regulation AB II and Rule 15Ga-2. The guide provides, among other things, technical instructions for filing Form ABS-15G pursuant to Rule 15Ga-2 and preliminary prospectuses under Securities Act Rule 424(h).  


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 Policy Analyst

Jennifer Serpas Office Manager

Sarah Clarke Events Coordinator

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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