July 22, 2015 Newsletter
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July 22, 2015

SFIG Calendar

Advocacy Outlook

Industry News Highlights


Last week, SFIG members and staff met with members of the House Committee on Financial Services and the Senate Committee on Banking, Housing, & Urban Affairs to discuss mortgage Real-Estate Investment Trust (“mREIT”) participation in government-sponsored enterprise (“GSE”) credit risk sharing transactions (“CRTs”). In 2013, the Federal Housing Finance Agency directed the GSEs to issue mortgage credit securities in order to move credit risk to the private sector and further protect the taxpayer.  However, there are regulatory obstacles that prevent mREITs from fully participating in CRTs. SFIG is advocating for clarification of mREIT rules to allow more private capital to be included in the housing sector.

Contact Michael.Flood@sfindustry.org to learn more about SFIG’s Congressional outreach efforts. 


On July 9th, Moody’s announced proposed changes to its rating methodology for securities backed by Federal Family Education Loan Program student loans. Moody’s has asked that industry participants provide comments to its Request for Comment by September 7, 2015.

SFIG has formed a Student Loan Working Group to respond to these proposed changes. If you would like to join this working group, please contact Alyssa.Acevedo@sfindustry.org


SFIG’s Women in Securitization (“WiS”) initiative welcomes the women of the structured finance industry to join their colleagues at a series of regional roundtables in celebration of WiS Week. To discuss actionable ideas and solutions that will help empower the women of structured finance, WiS Week regional roundtables will bring together industry women to address key issues such as:

  • Professional Development and Overcoming Structural Obstacles
  • Balancing the Demands of Personal and Professional Life
  • Gender-based Perceptions of Female Potential
  • The Likeability Issue - Encouraging Support for Our Female Colleagues

The full schedule of WiS Week roundtable events and registration is available here.

Attendance is open to all industry women signed up for WiS. If you have not yet signed up for WiS please do so here. Please note, capacity is limited for each event.

Many thanks to our host organizations for partnering with SFIG to present WiS Week’s roundtable series.


More than 1,100 issuers & investors have already confirmed their attendance for IMN's 21st Annual ABS East Conference, taking place September 16-18 at the Fontainebleau in Miami Beach. Be sure to reserve your place by Friday, July 24th, for Early Bird savings, and join more than 3,500 industry professionals for one of this year's most important structured finance industry conferences.

SFIG is proud to once again join the program as Lead Association Supporter, and will present the ‘Women in Securitization’ panel on Wednesday, September 16th

If you are interested in sponsorship opportunities, please contact Chris Keeping at ckeeping@imn.org or +1 212-901-0533. 


SFIG is seeking a Director of Mortgage Policy to lead all initiatives related to mortgage-backed securitization. This is a high profile position within the SFIG leadership team working directly with executive management, the Board of Directors, Committee Chairs and key members of SFIG’s membership. Additional information on the position, as well as a link to the application, is available online.

  • THURSDAY, July 23, 2015
    10:00 a.m. – 11:00 a.m. (ET)

  • THURSDAY, July 30, 2015
    10:00 a.m. – 11:00 a.m. (ET)
THURSDAY, July 23, 2015
2:00 p.m. – 3:00 p.m. (ET)
MONDAY, July 27, 2015
2:00 p.m. – 3:00 p.m. (ET)
THURSDAY, August 6, 2015 - SUNDAY, August 9, 2015
The Grand Del Mar
San Diego, CA
Please note, registration is by invitation only.

Richard Johns will be attending.
THURSDAY, August 13, 2015 - SUNDAY, August 20, 2015
Registration for WiS Week roundtables available here.
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.

SFIG has recently formed a Student Loan Working Group to focus on and respond to the Proposed Changes to Moody’s Approach to Rating Securities Backed by FFELP Student Loans.

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

The RMBS 3.0 Task Force released its Second Edition RMBS 3.0 Green Paper in November of 2014. 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 fall 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 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.

SFIG members who are interested in learning more about this initiative should email 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 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 Amanda.Bateman@sfindustry.org.


Global regulators are showing signs of a willingness to follow the European Union’s ("EU") lead in implementing reforms that will ease restrictions on ABS according to a recent Reuters’ article. The Basel Committee on Banking Supervision ("BCBS") has begun a fundamental review of capital requirements for assets, including pooled or securitized debt, in banks' trading books. This week as a part of the review, the BCBS sent a questionnaire to banks to test the impact of lower capital charges on securitized debt based on high quality loans. A senior European banking official who read the questionnaire said, “They have lowered the capital requirements on securitization, which is going with the political wind.” The EU is working on reforms for ABS that it says will help contribute to funding for businesses.


The Treasury Department (“Treasury”) is currently seeking public input on the growing online marketplace lending industry in order to “…allow policymakers to study the various business models and products offered by online marketplace lenders, the potential for online marketplace lending to expand access to credit to historically underserved borrowers, and how the financial regulatory framework should evolve to support the safe growth of this industry.”

Some important questions that Treasury is asking pertain to whether online marketplace lenders should have risk retention requirements:

  • To what extent, if any, should platform or 'peer-to-peer' lenders be required to have 'skin in the game' for the loans they originate or underwrite in order to align interests with investors who have acquired debt of the marketplace lenders through the platforms?
  • How would the concept of risk retention apply in a non-securitization context for the different entities in the distribution chain, including those in which there is no pooling of loans?
  • Should this concept of 'risk retention' be the same for other types of syndicated or participated loans?

A recent American Banker article noted that risk retention requirements would likely prove problematic for online marketplace lenders. Jo Ann Barefoot, a former official at the Office of the Comptroller of the Currency and now a consultant to consumer finance companies, noted that “[p]art of the strength of [marketplace lending] now is the ability to run very light and lean and match up borrowers and investors.”

The comment period for public comments opened on July 20th and will remain open for 45 days.


Today, July 22nd, Freddie Mac made materials from last week’s Industry Advisory Group (“IAG”) meeting publicly available on its website. As reported in SFIG’s newsletter on July 15th, the IAG meeting was attended by SFIG Executive Director Richard Johns along with SFIG members Keith Bickel of Bank of America, Raghu Kakumanu of Wells Fargo and Faith Schwartz of CoreLogic, as well as representatives from Fannie Mae, Freddie Mac, Common Securitization Solutions (“CSS”) and several other trade organizations.

The meeting was the inaugural session of the IAG, which was created for industry leaders to provide feedback and share information on efforts to build the Common Securitization Platform and implement the Single Security. The materials posted on Freddie Mac’s website include:

Additional information can be found by referring to the Frequently Asked Questions available here or on the websites of Fannie Mae and CSS. To view SFIG’s statement on the creation of the IAG, please click here. To view the CSS press release, please click here. For questions regarding SFIG’s participation in the Industry Advisory Group, please contact Michael.Flood@sfindustry.org.


According to a recent Politico article, Chairman Jeb Hensarling (R-TX) of the House Financial Services Committee is contemplating a renewed effort at housing finance reform during the 114th Congress. According to Politico, Chairman Hensarling is engaging the Obama administration “at a very high level” to find common ground on housing finance. Hensarling revealed few details of the talks, but he did tell a group of reporters last Thursday, July 16th, that “there may be some modest, modest progress dealing with housing finance reform.

With respect to reintroducing his earlier bill, known as the PATH Act, Politico reports that Hensarling stated, “If you’re asking me do I think the administration’s ready to negotiate the PATH Act? No, I don’t think they are.” The bill, which aimed to eliminate the GSEs and also any form of government guarantee, implicit or otherwise, was passed by committee along party lines but stalled in the House of Representatives. Chairman Hensarling’s comments suggest that any bill proposed this Congress will be a more watered down attempt at GSE reform, as the opportunity to do a “heavy lift” does not currently exist.


Today, July 22nd, the Senate Appropriations Subcommittee on Financial Services and General Government approved the FY2016 Financial Services Appropriations Bill that includes Senator Shelby’s (R-AL) Financial Regulatory Improvement Act of 2015. Shelby’s bill is aimed at revising several portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Important to SFIG members, the bill addresses the following areas:

  1. Section 106: Safe Harbor for qualified mortgages held in portfolio (p. 20); 
  2. Section 116: A study of the regulatory and capital requirements for mortgage servicing assets (p. 36); 
  3. Section 704: Requires the Federal Housing Finance Agency ("FHFA") Director to establish a committee of market participants to advise the agency on the development of a market infrastructure, including a common securitization platform (“CSP”) (p. 152); 
  4. Section 705: Requires the FHFA Director to report annually on development of a CSP, establish a Board of Directors—including industry participants—for the CSP, and transfer the CSP to a non-profit entity within five years of enactment of the bill (p. 152); and 
  5. Section 706: Establishes minimum annual levels of risk sharing, which must be at least 150 percent of the previous year’s level, and at least fifty percent of which must be front-end risk sharing, for securities issued by Fannie Mae and Freddie Mac (p. 161).

Shelby’s bill passed the subcommittee and will be considered by the full committee tomorrow, July 23rd. Treasury Secretary Jack Lew indicated earlier this week that “this Administration will strongly oppose these efforts...” and “[f]aced with bills that threaten to turn the clock back to 2008 and leave the American people vulnerable to another crippling crisis, I will recommend the President veto them."


According to an article in National Mortgage News, Freddie Mac is planning a new form of mortgage risk sharing designed to improve taxpayer protection and encourage the return of private capital to the mortgage backed securitization sector. According to sources cited in the article, Freddie Mac will offer $22.5 million of junior-ranking bonds, part of a $300 million mortgage backed securitization, without the government-backed guarantee. The article also states that a spokesman for Freddie Mac declined to comment on the pending transaction.


Bond graders are warning that investors are at risk from potential defaults in newly issued U.S. commercial mortgage bonds, according to an article in Bloomberg Business. The record measure of leverage in the market has analysts concerned that loan originator’s appraisals are not taking record real-estate prices into consideration. The loan-to-value ratio on debt in new CMBS rose to 117.8 percent in the second quarter, whereas the pre-crisis peak in mid-2007 was 117.5 percent. The article states, “Moody’s found that, among some of the riskier portions of CMBS sold last quarter, the average loss cushion was about half of what it would have required to protect against the risk of losses.”  


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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