January 20, 2016 Newsletter
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January 20, 2016
 
SFIG News

Industry Jobs

SFIG Calendar

Meetings

Events

Advocacy Outlook

Industry News Highlights

 
SFIG NEWS
PRIORITY REGISTRATION FOR WiS AT ABS VEGAS NOW OPEN!

As SFIG prepares to welcome hundreds of industry women to Winning Outside the Workplace at ABS Vegas 2016, priority registration is now open for all registered members of Women in Securitization (“WiS”).

Winning Outside the Workplace will give the women of structured finance the opportunity to level the playing field outside of the board room with educational insight on wine pairings, gaming, and social engagement. We welcome all registered WiS members to join their colleagues for an afternoon of engaging activities and enlightening conversation at the Aria Resort and Casino.

SUNDAY, February 28, 2016
3:00 p.m. – 5:00 p.m. PT

Registration is currently open exclusively to WiS members, and space is limited. If you are not a member of WiS and are interested in joining this important initiative, sign-up today. Registration may be opened to other members of the SFIG community depending on availability. 

Sponsorship opportunities are also available to help support WiS activities at ABS Vegas and throughout 2016. To take advantage of all of the benefits available to our sponsors and be included in ABS Vegas materials, submit your WiS sponsorship form by February 5, 2016.

 
 
SFIG SUBMITS RESPONSE TO FITCH RATINGS ON PROPOSED CHANGES TO FFELP STUDENT LOAN ABS CRITERIA

Last week, SFIG’s Student Loan Committee submitted a response to Fitch Ratings’ request for comment on proposed changes to its U.S. Federal Family Education Loan Program (“FFELP”) Student Loan ABS Criteria.

If you would like to join SFIG’s Student Loan Committee, please contact Alyssa.Acevedo@sfindustry.org.

 
 

SFIG DISCUSSES HIGH QUALITY SECURITIZATIONS AND REG AB II WITH SEC COMMISSIONER STEIN

Last Wednesday, January 13th, SFIG staff met with Securities and Exchange Commission Commissioner Kara Stein. The key discussion item was the European Union’s simple, transparent and standardized initiative and its potential market implications. The recent comment letters submitted by the Regulation AB II Task Force were also briefly discussed.

Please contact Sairah.Burki@sfindustry.org with any questions. If you are interested in joining SFIG’s High Quality Securitization Task Force please contact Alyssa.Acevedo@sfindustry.org.

 
 
SFIG FILES REPLY IN SUPPORT OF MOTION FOR LEAVE TO FILE AMICUS BRIEF IN LEHMAN BROTHERS V. BANK OF AMERICA ET AL.

Last week, Lehman Brothers objected to SFIG’s motion for leave to file an amicus brief regarding the adversary proceeding Lehman Brothers Special Financing Inc. v. Bank of America National Association et al.

Lehman’s chief argument is that policy arguments along the lines of those made by SFIG, as well as other trade organizations, should not be permitted and that amici briefs are not appropriate at the trial court level. 

SFIG has filed a reply, drafted by Freshfields Bruckhaus Deringer US LLP, in response to Lehman’s objection.

If you are interested in joining SFIG’s Legal Counsel Committee, please contact Alyssa.Acevedo@sfindustry.org.

 
 
INDUSTRY JOBS

SFIG currently has two open positions for:

  • 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.

  • 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

Structured Finance Analyst

 Assured Guaranty 01-19-2016

Associate Director/Director, Asset Backed
Securities

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 Corporation 12-15-2015
Associate Analyst Moody’s Corporation 12-15-2015
AVP - Analyst Moody’s Corporation 12-15-2015
VP – Senior Analyst Moody’s Corporation 11-02-2015
High Yield - Legal Analyst Babson Capital Management 10-22-2015
Finance Associate Hogan Lovells US LLP 10-09-2015

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.

 
 
SFIG CALENDAR
MEETINGS
WEEKLY CREDIT CARD ISSUER COMMITTEE CALLS
  • THURSDAY, January 21, 2016
    10:00 a.m. - 11:00 a.m. (EST)
  • THURSDAY, January 28, 2016
    10:00 a.m. - 11:00 a.m. (EST)
 
 
CHINESE MARKET COMMITTEE CALL 

FRIDAY, January 22, 2016
11:30 a.m. - 12:30 p.m. (EST)

 
 
BIWEEKLY RISK RETENTION INDUSTRY GUIDE WORKING GROUP CALL

TUESDAY, January 26, 2016
11:00 a.m. - 12:00 p.m. (EST)

 
 
MONTHLY TRUSTEE COMMITTEE CALL

TUESDAY, February 2, 2016
11:00 a.m. - 12:00 p.m. (EST)

 
 
MONTHLY RESIDENTIAL MORTGAGE ISSUER SUBCOMMITTEE CALL

MONDAY, February 8, 2016
2:00 p.m. - 3:00 p.m. (EST)

 
 
EVENTS
SFIG & IMN's ABS VEGAS 2016 CONFERENCE

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

 
 
WiS ABS VEGAS - WINNING OUTSIDE THE WORKPLACE

SUNDAY, February 28, 2016 
3:00 p.m. - 5:00 p.m. PT
The Aria Resort & Casino
Las Vegas, NV
Registration now open for WiS members.

 
 
SFIG & IMN's STRUCTURED FINANCE CANADA 2016

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

 
 
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. For its first initiative, the committee commented on the Treasury Department's Request for Input on Online Marketplace Lending. The comments were submitted on September 30th and drafted by counsel at Chapman and Cutler LLP.

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 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 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 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.org.

 
 
INDUSTRY NEWS HIGHLIGHTS
BASEL COMMITTEE FINALIZES FRTB RULE

Last Thursday, January 14th, the Basel Committee on Banking Supervision (“BCBS”) published the final rule relating to its fundamental review of the trading book (“FRTB”). The revised market risk framework comes into effect on January 1, 2019.

The key features of the revised framework include:

  • A revised boundary between the trading book and banking book
  • A revised internal models approach for market risk
  • A revised standardised approach for market risk
  • A shift from value-at-risk to an expected shortfall measure of risk under stress
  • Incorporation of the risk of market illiquidity

An explanatory note on the minimum capital requirements for market risk has also been published to provide a description of the rationale and main features of these new revisions.

The explanatory note specifically touches on securitization exposures on pg. 11, stating “On a weighted average, the capital charge for securitisation exposures (excluding the correlation trading portfolio) under the revised market risk framework is 22% higher than under the current market risk capital standard. The capital charge for correlation trading portfolio securitisation exposures under the revised framework is 70% higher compared with the current market risk framework.”

According to a recent Risk article, “[e]ven for banks using the simpler, standardised approach, the overall picture is mixed. While risk weights for credit exposures have been scaled down, certain risk weights for interest rate and foreign exchange risk factors have increased.”

SFIG will analyze the proposal through its Financial Intermediaries Committee, then work with its coalition partners to inform policymakers of the industry’s view of the potential consequences of the rules. As a reminder, the prudential regulators, led by the Federal Reserve, will likely run a rulemaking process here in the U.S. to tailor the standard to fit our jurisdiction. However, as you are well aware, U.S. regulators have been conservative in implementing Basel capital rules.

SFIG will set up meetings in the near future to examine the rule and discuss advocacy strategy. Please contact Michael.Flood@sfindustry.org with any questions regarding SFIG’s advocacy efforts.

 
 
NATIONAL MORTGAGE NEWS HIGHLIGHTS CHANGES TO MORTGAGE INVESTMENT IN 2016

National Mortgage News recently featured eight key changes to mortgage investment the industry needs to know about going into 2016. These include:

  1. Implementation of Risk Retention: As of December 24th, PLS issuers will have to retain at least 5 percent credit risk on those transactions unless the loans meet criteria for qualified residential mortgages, per the newly implemented risk retention final rules for RMBS.
  2. Higher loan limits in some areas: The Federal Housing Finance Agency is raising conforming loan limits in 39 high-cost counties around the US. For Federal Housing Administration loans collateralized as Ginnie Mae securities, limits will increase in 188 counties.
  3. New hedging instruments: The CME Group’s Ultra 10-Year Treasury-Note futures and options will become available on January 11th. The product is meant to help originators manage mortgage-related risks.
  4. Greater leeway for GSE modifications: Starting March 1st, servicers must calculate a borrower’s full obligation to determine eligibility for a Fannie Mae or Freddie Mac (“GSEs”) standard or streamlined modification in lieu of the outstanding principal balance that was previously used.
  5. More credit data to be collected by Fannie Mae: In mid-2016, Fannie will begin requiring lenders to use more detailed credit data such as utilization rates over time. Freddie Mac is allegedly considering changing its requirements as well.
  6. New electronic filing required by the GSEs: Under their Uniform Mortgage Data Program, the GSEs will begin asking mortgage sellers to submit closing disclosure data electronically by the fourth quarter of 2016. The program will potentially become mandatory by mid-2017 according to the article.
  7. More options for small investors: According to National Mortgage News, “Options for accredited investors continue to grow. Income&, for instance, plans to buy prime-credit non-QM loans made to non-agency-eligible borrowers such as the self-employed, while also offering notes that reference mortgages' pass-through cash-flows…"
  8. Pressure on rates due to Fed hike: Higher rates could mean mortgages are less affordable, possibly constraining supply or leading to looser underwriting.
 
 
REG AB II MAY IMPACT RISK ANALYSIS OF NON-BANK CMBS LENDERS

As the presence of smaller non-bank lenders in the CMBS space has more than tripled from 9 to 28 since 2011, large investment banks are increasingly focused on the potential impacts of Regulation AB II (“Reg AB II”). The closer look at small non-bank CMBS lenders comes at a time when such organizations have come to represent approximately 35 percent of CMBS loan origination. At the same time, the average loan-to-value ratio for CMBS conduit deals in the fourth quarter of 2015 was 118.2 percent, compared with 117.5 percent in 2007. According to a Reuters article, JP Morgan CMBS Analyst Meghan Kelleher wrote that “[s]trong lending competition has eroded underwriting quality in conduit CMBS, particularly as more small originators that compete for higher risk borrowers have entered the market.” 

Reg AB II, which took effect November 23rd, 2015, requires that each bond issuer in a CMBS transaction designate a senior officer to certify the validity of information provided in transaction documents. This requirement could make bank executives personally liable if even one loan in a CMBS pool is bad, according to Reuters, and may “help bring more caution to the market.”

 
 
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

Mary Robinson Policy 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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