July 29, 2015 Newsletter
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July 29, 2015
 
SFIG News

SFIG Calendar

Advocacy Outlook

Industry News Highlights

Upcoming Events in Washington

 
SFIG NEWS
SFIG CONTINUES TO ADVOCATE FOR MORTGAGE REIT INVESTMENT IN GSE CREDIT RISK SHARING TRANSACTIONS

This week, SFIG staff continued to meet with members of the House Committee on Financial Services, including the staff for Representatives Maxine Waters (D-CA), Kyrsten Sinema (D-AZ), and Robert Hurt (R-VA) 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 shift 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.

 
 
DON’T FORGET TO REGISTER FOR WiS WEEK!

Limited spots remain to join your female colleagues and discuss ideas and solutions that will help empower the women of structured finance. From August 13-20th, WiS Week will provide you the opportunity to meet other women in the structured finance industry and engage in discourse on some of the issues we encounter in the corporate world, including:

  • 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.

Please note, the events are restricted to women only. Capacity is limited for each event and registration is filling quickly, so sign up today!

SFIG thanks our host organizations for their partnership in presenting WiS Week’s roundtable series.

 
 
WE ARE HIRING!

SFIG is seeking talent to fill three open positions:

  1. Director of Mortgage Policy: will 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 here.

  2. Communications and Media Manager: will be an integral member of SFIG staff, providing support across the whole organization and serving as a vital link between SFIG, its membership and other external audiences. Additional information on the position, as well as a link to the application, is available here.

  3. 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 co- ordination, 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.
 
 
SFIG CALENDAR
CREDIT CARD ISSUER COMMITTEE CALLS
  • THURSDAY, July 30, 2015
    11:00 a.m. – 12:00 p.m. (ET)

  • THURSDAY, August 6, 2015
    10:00 a.m. – 11:00 a.m. (ET)
 
 
GSE REFORM TASK FORCE CALL
THURSDAY, July 30, 2015
11:00 a.m. – 12:00 p.m. (ET)
 
 
STUDENT LOAN WORKING GROUP CALL
THURSDAY, July 30, 2015
1:00 p.m. – 2:00 p.m. (ET)
 
 
LEGAL COUNSEL COMMITTEE CALL
FRIDAY, July 31, 2015
12:00 p.m. – 1:00 p.m. (ET)
 
 
CHINESE MARKET COMMITTEE CALL
MONDAY, August 3, 2015
9:00 a.m. – 10:00 a.m. (ET)
 
 
BIWEEKLY RISK RETENTION INDUSTRY GUIDE CALL
TUESDAY, August 4, 2015
11:00 a.m. – 12:00 p.m. (ET)
 
 
BIWEEKLY AUTO ISSUER COMMITTEE CALL
WEDNESDAY, August 5, 2015
2:00 p.m. – 3:00 p.m. (ET)
 
 
THE HOUSING RENAISSANCE

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.

 
 
SFIG MEETING WITH FDIC, OCC AND FRB ON NSFR
TUESDAY, August 11, 2015
Note: Closed Meeting.
 
 
WOMEN IN SECURITIZATION WEEK
THURSDAY, August 13, 2015 – THURSDAY, August 20, 2015
Registration for WiS Week Roundtables available here.
 
 
SFIG MEETING WITH OCC ON HQS
TUESDAY, August 18, 2015
Note: Closed Meeting.
 
 
SFIG MEETING WITH SEC ON HQS
WEDNESDAY, August 26, 2015
Note: Closed Meeting.
 
 
IMN’s ABS EAST 2015 CONFERENCE
WEDNESDAY, September 16, 2015 – FRIDAY, September 18, 2015
The Fontainebleau
Miami Beach, FL
Registration is available here.
  • Richard Johns will be speaking on the “High Quality Securitizations” and “Assessing The Impact of Regulatory Reform on ABS Market Liquidity” panels.
  • Sairah Burk will be speaking on “The Realities of Implementing Reg AB 2” panel.
  • Michael Flood will be speaking on the “Single Asset/Single Borrower CMBS” panel.
  • SFIG will also be sponsoring a “Women in Securitization” panel.
 
 
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 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 (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 a draft response to the FHFA’s update to the single security initiative this Thursday. The task force will also receive an update from the SFIG participants on the Industry Advisory Group for the Common Securitization Platform and Single-Security. 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. Additionally, The task force will continue to engage the Federal Housing Finance Agency 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.

 
 
INDUSTRY NEWS HIGHLIGHTS
BCBS AND IOSCO RELEASE FINAL STC CRITERIA

Last Thursday, July 23rd, the Basel Committee on Banking Supervision ("BCBS") and International Organization of Securities Commissions ("IOSCO") released their final criteria for simple, transparent and comparable ("STC") securitizations. The criteria are intended to be applied to term securitizations and assist in the financial industry's development of STC structures. According to the press release, the criteria is not meant to be a substitute for investor due diligence. The criteria are also non-exhaustive and non-binding. BCBS and IOSCO note that “The criteria are not, of themselves, a prescription for regulatory action.”

BCBS and IOSCO initially proposed a framework for STC securitizations in December 2014. In the final version published last week, BCBS and IOSCO “have amended certain aspects of the proposed criteria that were considered overly prescriptive, and have clarified other issues where respondents raised doubts about their interpretation or implementation.”

SFIG commented on the earlier proposal through its High Quality Securitization (“HQS”) Task Force on February 13, 2015. The HQS Task Force will reconvene soon to review the final framework and plan its next steps for advocacy on this topic. To join the HQS Task Force, please contact Amanda.Bateman@sfindustry.org.

 
 
NEW DETAILS ON $300 MILLION FREDDIE CASH CRT SECURTIZATION

Last week, Freddie Mac introduced a new credit risk transfer product dubbed the Freddie Mac Whole Loan Security (“WLS”). As highlighted in a GlobeSt.com article, the WLS is a cash securitization structure that will offer guaranteed senior and unguaranteed subordinate actual loss securities. Freddie Mac believes that the WLS “represents another important capability to transfer credit risk.” According to a statement from the Vice President of Freddie Mac Single-Family strategic credit costing and structuring, Kevin Palmer, the WLS “addresses some of the key concerns that investors experienced during the financial crisis.”

The WLS, priced last week, will issue about $278 million in guaranteed senior certificates and $23 million in unguaranteed subordinate certificates. As SFIG reported earlier, the inclusion of the unguaranteed subordinate notes is seen as a move to increase Freddie Mac’s risk-sharing with the private market. According to Palmer’s remarks, Freddie Mac expects regular WLS offerings in the future.

 
 
GAO RECOMMENDS REVIEW OF QM AND QRM RULES

On Monday, July 27th, the U.S. Government Accountability Office (“GAO”) published a study on the effects of the qualified mortgage (“QM”) and qualified residential mortgage (“QRM”) rules. The study recommends that the Consumer Financial Protection Bureau (“CFPB”), Department of Housing and Urban Development (“HUD”) and the agencies responsible for the QRM regulations review both rules, including identifying specific metrics, baselines and analytical methods. According to the GAO, the CFPB, HUD and Federal Deposit Insurance Corporation agreed with the recommendations, while the other QRM agencies—the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Housing Finance Agency and Securities and Exchange Commission—did not explicitly concur but outlined ongoing efforts to plan their reviews.

The report examined views on the expected effects of the rules and the extent to which agencies will be planning to review their effects. According to GAO reviews of academic, industry and government analyses, QM and QRM regulations would have limited initial effects given that most loans originated in recent years already conform to QM criteria. While the implementation of the QRM final rule in December 2015 is expected to have limited effect on the availability or securitization of mortgages in the current market, questions still remain about the size and viability of the secondary market for non-QRM-backed securities.

 
 
SENATE APPROPRIATIONS ADVANCES SHELBY REGULATORY RELIEF BILL

Last Thursday, July 23rd, the Senate Appropriations Committee approved a funding bill that included the entire text of Senator Richard Shelby’s (R-AL) Financial Regulatory Improvement Act of 2015. This 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).

According to a recent American Banker article, this is a strategy by Shelby, the Chairman of the Senate Banking Committee who also sits on the Appropriations Committee, to try to force opposing Democrats to negotiate on regulatory relief.

Democrats criticized the maneuver, arguing it was inappropriate to add to an appropriations measure a bill that makes many regulatory changes to an appropriations measure.

 
 
FINANCIAL STABILITY BOARD SECOND ANNUAL REPORT PUBLISHED

On Friday, July 24th, the Financial Stability Board (“FSB”) released its second annual report covering FSB activities from April 1, 2014 to March 31, 2015. Established by the G20 in 2008, the FSB has worked to implement policy reforms that address the major fault lines that caused the crisis. In its “Message from the FSB Chair,” Mark Carney said that progress has been made on efforts including building more resilient financial institutions and markets, addressing the problem of too-big-to-fail, preventing regulatory arbitrage and ensuring that all financial markets, products and participants are regulated or subject to oversight, as appropriate to their circumstances. He noted that efforts to end too-big-to-fail in particular have progressed, and several initiatives will be finalized before the end of 2015.

For the upcoming year, “the priorities for the FSB’s work in the next phase of reform will be the full, consistent and prompt implementation of agreed reforms; finalizing the design of remaining post-crisis reforms; and addressing new risks and vulnerabilities” including risks from market-based finance and misconduct risk. According to Mr. Carney:

Given the growing importance of market-based credit intermediation (including the growing role of asset management), in conjunction with the perception of the decline in secondary market liquidity in certain markets and compressed liquidity premia, a number of members have raised concerns that a sharp sell-off in financial markets potentially could propagate stress throughout the financial system. The FSB will assess structural vulnerabilities and potential near-term risks to financial stability from this conjuncture and, as appropriate, develop policy measures to mitigate these vulnerabilities.

 
 
UPCOMING EVENTS IN WASHINGTON
U.S. DEPARTMENT OF THE TREASURY - FINANCIAL STABILITY OVERSIGHT COUNCIL MEETING
FRIDAY, July 31, 2015
For more information, please click 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 Senior Director, ABS Policy

Michael Flood Director of Advocacy

Mary Robinson Policy Manager

Alyssa Acevedo Senior Analyst, ABS Policy

Amanda Bateman Policy Analyst

Daniel Tees Policy Analyst

Jennifer Serpas Office Manager

Allison Creswell Events Coordinator

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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