July 1, 2015 Newsletter
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July 1, 2015

SFIG Calendar

Advocacy Outlook

Industry News Highlights

 SFIG Wishes Our Members a Happy and Safe Independence Day!

On June 24, 2015, SFIG’s Board of Directors met to elect its new Board, effective immediately. Nine Board members rotated off and were replaced by nine new institutions. The new Board also elected Chris Haas of Bank of America as Board Chair, and Howard Kaplan of Deloitte & Touche LLP as Board Vice-Chair. New Board members and Board officers are elected for a two-year term. Please click here to view SFIG’s newly elected Board of Directors.

SFIG is committed to rotating a significant portion of Board members each year. By doing so, not only does the association ensure it can benefit from fresh perspectives, but it also enables full transparency into its governance process with all member institutions able to participate in the nomination and election process.

SFIG is grateful to both our inaugural Chair Reggie Imamura of PNC, as well as our retiring Board members for their leadership during the past year. We look forward to their continued contributions to SFIG and the industry.

The Board remains at 40 individuals. Continuing to be driven by a commitment to represent all member constituencies' viewpoints – a foundational principle for the organization that is included in its bylaws - the Board has a balanced allocation across key member groups including investors, banks, issuers, accounting firms, rating agencies, law firms, servicers, research firms, trustees and one at-large representative.

The Board will continue to oversee all of SFIG's activities, including directing policy initiatives; advising on advocacy efforts; organizing educational events; and ensuring that the organization properly represents the full spectrum of its members' views.


SFIG has sponsored an amicus curiae brief in the Madden vs. Midland case on behalf of the defendant, Midland Funding LLC. On May 22nd, the Second Circuit handed down a decision that a debt buyer, which purchased defaulted credit card accounts from a national bank, is not entitled to collect interest under the National Bank Act at the rate set in the cardholder agreement. The outcome of the case would significantly impair the ability to sell assets into the secondary market at the contracted interest rate, especially for nonperforming assets, as state usury laws are allowed to override national bank exemptions. SFIG engaged Sidley Austin LLP to draft this brief and SIFMA joined SFIG in its submission.


Last Thursday, June 25th, the Senate Appropriations Committee approved the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2016 (“THUD”) by a vote of 20-10. THUD includes an SFIG-supported provision, Section 231, which would prevent the Federal Housing Administration, Government National Mortgage Administration, or Department of Housing and Urban Development from facilitating the use of eminent domain in order to seize securitized mortgage loans for the purposes of modification. The bill now moves to the Senate floor for consideration. As SFIG reported on June 10th, the House of Representatives passed a similar provision as part of its THUD Appropriations bill by a vote of 216-210.

SFIG has consistently opposed the use of eminent domain to seize securitized mortgage loans for the purposes of modification, and signed a joint trade association letter endorsing the inclusion of Section 229 in the FY 2016 THUD Bill.

For a detailed overview of SFIG’s policy on eminent domain, please see our Eminent Domain Position Paper.


SFIG is proud to be the Lead Association Partner for IMN’s 21st Annual ABS East Conference, taking place at the Fontainebleau in Miami Beach September 16-18. Last year’s event welcomed nearly 4,000 industry participants. With over 80 sponsors and 1,000 participants registered including 825+ issuers and investors, ABS East 2015 is on track to surpass last year’s record attendance. Join SFIG and IMN for three days of educational programming and networking opportunities.

Make sure to register now to take advantage of the Early Bird discount, which expires on July 24th. Click here to view the conference agenda. For more details on sponsorship, contact Chris Keeping at ckeeping@imn.org or 1 (212) 901-0533.

We look forward to seeing you in Miami in September!

THURSDAY, July 2, 2015
11:00 a.m. – 12:00 p.m. (ET)
TUESDAY, July 7, 2015
11:00 a.m. – 12:00 p.m. (ET)
TUESDAY, June 30, 2015
11:00 a.m. – 12:00 p.m. (ET)
WEDNESDAY, July 8, 2015
2:00 p.m. – 3:00 p.m. (ET)
THURSDAY, July 9, 2015
10:00 a.m. – 11:00 a.m. (ET)
MONDAY, July 13, 2015
2:00 p.m. – 3:00 p.m. (ET)
WEDNESDAY, September 16, 2015 – FRIDAY, September 18, 2015
The Fontainebleau
Miami Beach, FL
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.

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 is reviewing the FHFA’s update to the single security initiative and preparing a response to the agency. 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 including the Johnson-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 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 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.

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
  • 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 submitted the first portion of this comment letter to the SEC regarding asset-level disclosure on June 23rd. 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 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 members who are interested in learning more about this initiative 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 ("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 securitization. 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 Amanda.Bateman@sfindustry.org.


On Friday, June 26th, the European Banking Authority (“EBA”) published an overview of its technical advice to the European Commission (“EC”) on a European framework for simple, standard and transparent (“SST”) securitization. The EBA presented slides summarizing its recommendations on qualifying SST transactions as well as their regulatory capital treatment during a public hearing the same day in London at the request of the EC. According to a related EBA news article, the hearing was intended to provide information to market participants ahead of July, when the central bank will formally deliver its opinion to the EC.

The EBA set forth the following 5 recommendations in its presentation:

  1. Recommendation for a holistic (cross-product and sector) review of the regulatory framework for securitizations and other investment products. Action should be taken where appropriate following the review.
  2. Recommendation to create a framework for “qualifying” securitizations, which would be defined in accordance with a two stage approach: whether the SST transaction meets criteria for simplicity, standardization and transparency; and whether the underlying exposures meet credit risk criteria.
  3. Recommendation on criteria defining “qualifying” term securitization, based on its October 2014 consultation and refinements made due to stakeholder feedback.
  4. Recommendation on criteria defining “qualifying” ABCP securitizations, regarding exposures to an ABCP securitization either at the transaction level or program level, for which different criteria should apply.
  5. Recommendation on the recalibration of the Basel Committee on Banking Supervision (“BCBS”) 2014 framework applicable to “qualifying” securitizations, which are summarized in the chart below.

The EBA caveats that its recommendations may have to be revisited pending the progress and decisions of BCBS and the International Organization of Securities Commissions on identifying a simple, transparent and comparable securitization framework, which has implications for global markets, and any recalibration of the capital framework as a result.

Finally, it is important to note that the report does not address synthetic securitizations and refrains from providing concrete recommendations on the implementation process. However, the EBA does warn that excluding the investor from the attestation process risks investor overreliance on the certification of others, while excluding a role of the originator in determining compliance is likely to make the implementation process more burdensome. A third-party may assist here, but the report concludes “issuers and investors retain responsibility for the ultimate compliance with the criteria and, in the case of investors, carry out the appropriate due diligence analysis.”


Following the publication of the Net Stable Funding Ratio (“NSFR”) Standard in October of 2014, the Basel Committee on Banking Supervision (“BCBS”) released its final NSFR disclosure standards on June 22nd, according to a press release.

The BCBS has developed its disclosure standards to “improve the transparency of regulatory funding requirements, reinforce the Principles for sound liquidity risk management and supervision, strengthen market discipline, and reduce uncertainty in the markets…” Banks will be required to comply from the date of the first reporting period after January 1st, 2018.

SFIG’s Regulatory Capital & Liquidity Committee will comment on the NSFR once the U.S. regulators release their proposed rulemaking. To sign up for the committee and contribute to this work, please contact Alyssa.Acevedo@sfindustry.org.


Issuance of European auto ABS is expected to hit a record level this year, according to an article in the Financial Times. “There is improvement in Europe, unemployment levels are coming down, there is growth in GDP and borrower sentiment is improving a lot — there is improvement in the flow and availability of credit”, said Vasundhara Goel of Morgan Stanley. The demand for auto ABS has remained strong amid a struggling ABS market, which has been significantly impacted by regulatory capital requirements. Contributing to the resilience of auto ABS is the fact that the bonds have short maturity periods and are seen as low-risk products. According to the article, auto ABS issuance is currently at €7.5 billion, up from €5.4 billion during the same time last year.


In its annual report published this Monday, June 29th, the Bank of International Settlements (“BIS”) criticized the global interest rate environment and central banks’ accommodative monetary policy that has made financial markets dependent upon those central banks. According to the BIS, low interest rates are indicative of “broader malaise in the global economy: the economic expansion is unbalanced, debt burdens and financial risks are still too high, productivity growth too low, and the room for manoeuver in macroeconomic policy too limited.”

While the bulk of the report entailed commentary regarding the impact of decisions by central banks on the global economy, it highlighted certain regulatory actions taken to address “flaws in the securitization market”. The BIS report states that the Basel Committee on Banking Supervision’s (“BCBS”) final revisions to the securitization framework account for lessons learned during the financial crisis by including “comply or explain” provisions that encourage banks to reduce reliance on external ratings and limits on the number of approaches available for banks calculating regulatory capital requirements.

Regarding recent proposals to develop a high quality securitization framework, the report notes that risk assessments for such pools will still be surrounded by considerable uncertainty which, unaddressed, would materially raise the likelihood that tranches are severely under-collateralized. The BIS cites a BCBS study arguing that too little capital is required to be held for mezzanine tranches and welcomed steps to address this in their final framework.


On Monday, June 29th, the Commodity Futures Trading Commission (“CFTC”) announced it has voted to propose a rule to apply its margin requirements for uncleared swaps in cross-border transactions. The proposal would require U.S. covered swap entities to comply with the CFTC’s margin rulemaking for all uncleared swaps, but would allow substituted compliance with respect to margin they post—but not that they collect—for swaps with certain non-U.S. counterparties. For uncleared swaps of non-U.S. covered swap entities, the CFTC proposes 1) they be treated the same as uncleared swaps of U.S. covered swap entities if their obligations under the relevant swap are guaranteed by a U.S. person; and 2) that they be eligible for substituted compliance if their obligations under the relevant swap are not guaranteed by a U.S. person, unless the counterparty to the swap is a U.S. covered swap entity or a non-U.S. covered swap entity whose obligations under the swap are guaranteed by a U.S. person.

An exemption from compliance with the margin rules would be granted for uncleared swaps between a non-U.S. covered swap entity and a non-U.S. counterparty provided that neither party’s obligations under the swap are guaranteed by a U.S. person and neither party is a U.S. branch of a non-U.S. covered swap entity nor consolidated in the financial statements of a U.S. person.

The CFTC has invited comment on its proposal, which must be submitted not later than 60 days after the proposed rule’s publication in the Federal Register.


On November 10, 2014, the Financial Stability Board (“FSB”) released a plan that would establish a global standard for minimum amounts of Total Loss Absorbency Capacity (“TLAC”). These regulations are aimed at the 30 “too-big-to-fail” banks regulated by the FSB. The plan would oblige lenders to maintain a substantial capital cushion by requiring them to hold 16 percent – 20 percent of their risk-weighted assets in equity and cancelable debt.

After receiving critiques from the industry, the FSB released a new proposal of the TLAC rules on June 4, 2015. According to Mark Carney, the head of the FSB, the new plan would be “very similar” to the initial draft, except for two main changes: 1) eligibility of some structured notes to be considered loss-absorbing and 2) a phasing out of the availability of planned exemptions for emerging-market banks.

The proposed change of structured note inclusion would “allow principal-protected structured notes to be TLAC-eligible subject to the home authorities being satisfied that such liabilities can be exposed to loss in resolution,” a FSB working paper stated. In addition, the paper detailed how FSB Members need more time to contemplate how an exact phase-out of the emerging-market bank exception could be formulated, while taking into consideration the emerging banks that have “limited access to wholesale funding”.

The TLAC rule is set to take market effect in 2019 at the earliest.


The U.S. Department of Agriculture (“USDA”) Rural Development Single Family Housing Guaranteed Loan Program is about to become more expensive for certain borrowers. On Friday, June 26th, USDA Rural Housing Service reported it will raise the cost of its home-loan guarantees for purchases made in certain areas without down payments. According to a Reuters’ article on the decision, agency spokesman David Sandretti stated in an email that the upfront fee paid by buyers under the program will increase from 2 percent to 2.75 percent on October 1st.

Reuters reports that borrowers would be able to add the increase in upfront fees to the monthly payments for their 30-year loans, which would add up to approximately $4.83 per month for a typical mortgage of $135,000. The added cost to consumers is meant to help the program “continue to sustain itself without a congressional appropriation to offset credit-related costs,” according to Sandretti.


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

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