June 15, 2016 Newsletter
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June 15, 2016
 
 
SFIG News

Industry Jobs

SFIG Calendar

Meetings

Events

Advocacy Outlook

Industry News Highlights

 
SFIG NEWS
SFIG PUBLISHES RMBS 3.0 TRID COMPLIANCE REVIEW SCOPE © DOCUMENTATION

Today, June 15th, SFIG published its RMBS 3.0 TRID Compliance Review Scope © documentation, developed under the leadership of members from Third Party Review (“TPR”) firms across the industry and SFIG’s RMBS 3.0 Due Diligence, Data and Disclosure Working Group. The document was created with an aim to facilitate a uniform testing standard as a result of a consistent Truth-In-Lending Act liability interpretation according to our understanding of prevailing legal precedent and informal written guidance and webinars offered by the CFPB, as it applies to the Know Before You Owe / Truth In Lending Act (“TILA) – Real Estate Settlement Procedures Act (“RESPA”) Integrated Disclosure (“TRID”) Rule (78 FR 79730, as amended) across TPR firms.

The underlying premise of this documentation is to establish a best practices approach to pre-securitization testing logic that will drive the due diligence conducted by TPRs, however, the conclusions set forth in the document do not necessarily reflect how courts and regulators, including the CFPB, may view liability for TILA violations presently, or in the future. SFIG and its membership continue to work with the Consumer Financial Protection Bureau (“CFPB”) toward the goal of providing formal guidance for the benefit of the consumer, primary, and secondary mortgage markets.

In anticipation of the Grid requiring occasional revision, SFIG will conduct regular quarterly meetings to subject any member recommended revisions to review and evaluation. However, if a rule revision or court decision requires immediate and significant revision to the Grid, in the view of affected membership, then we require an ad hoc meeting to be convened to review such revision. All meetings, and the Grid itself, will be under the auspices of the RMBS 3.0 Due Diligence and Data Disclosure work stream and subject to the same protocols as other RMBS 3.0 work streams and work product. For questions about the TRID documentation and SFIG’s engagement with the CFPB, please contact Daniel.Goodwin@sfindustry.org. To join any of SFIG’s RMBS 3.0 working groups, please contact Amanda.Bateman@sfindustry.org.

*Please note: You must be logged into the website to view this document. If you do not already have an account, please create one here. If you are not a member and would like to purchase a copy of the RMBS 3.0 TRID Compliance Review Scope ©, please contact Daniel.Goodwin@sfindustry.org. Please do not copy and/or re-distribute without permission from SFIG.

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SFIG AND OTHER TRADE ASSOCIATIONS MEET WITH CFPB TO DISCUSS TRID

On Monday, June 13th, representatives of the Joint Trade Associations, including SFIG staff, met with the Consumer Financial Protection Bureau (“CFPB”), including Director Richard Cordray, to discuss the implementation of the Truth In Lending Act (“TILA”) – Real Estate Settlement Procedures Act (“RESPA”) Integrated Disclosure (“TRID”) rules. Meeting participants shared with the CFPB issues secondary and primary mortgage market participants have seen to date with the implementation of the TRID rules and provided feedback on possible means the CFPB can use to provide additional clarity to facilitate the industry’s compliance.

SFIG looks forward to continued engagement with the CFPB and the other trade associations on TRID. For questions about the meeting, please contact Daniel.Goodwin@sfindustry.org or Thomas.McCrocklin@sfindustry.org.

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SFIG TO RESUME WORK ON DEAL AGENT

In anticipation of a draft of the Deal Agent Agreement for publication in an upcoming release of the RMBS 3.0 Green Papers, we encourage all members interested in contributing to this effort to register for the Role of Transaction Parties Working Group. Please contact Amanda.Bateman@sfindustry.org if you would like to participate. The meeting date and time are to-be-determined, but please let us know as soon as possible if you would like to be included on the invite for this call.

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THANK YOU FOR YOUR SUPPORT IN OUR “WALK FOR REGGIE”


In honor of Reggie Imamura, a true Champion for the industry, SFIG staff, aka Team Reggie, had a fantastic 5K walk in Washington D.C.’s Purple Stride on Saturday morning, June 11th.

Thank you to everyone who donated and supported Team Reggie – your contributions helped us raise almost $15,000 to support the Pancreatic Cancer Action Network. We greatly appreciate your generosity.

If you would still like to donate to this great cause, please visit http://purplestride.kintera.org/dc/teamreggie.

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INDUSTRY JOBS

SFIG Positions

With SFIG continuing to expand its reach across new conferences and additional policy challenges, we are looking for additional talent.

If you are smart, hard-working, enthusiastic, and want to be part of a growing organization in a fun and supportive environment, please contact us at jobs@sfindustry.org or visit our website at www.sfindustry.org/jobs.

Opportunities exist for a variety of experience sets, ranging from Policy Analyst to Advocacy Manager. We look forward to hearing from you!


Industry Positions

Some of the latest industry positions available include:

JOB TITLE COMPANY POSTING DATE
Principal - Structured Product Group (RMBS) PGIM 05-04-2016
Director/Senior Director - Data and Operations Leader Fitch Ratings 05-03-2016
Director/Senior Director - Research and Criteria Leader Fitch Ratings 05-03-2016
Director/Senior Director - Asset Manager Leader Fitch Ratings 05-03-2016

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.

Current members are encouraged to advertise open positions within their company on SFIG's website by filling out the form here.

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SFIG CALENDAR
MEETINGS
MASTER SERVICER AND SERVICER SUBCOMMITTEE CALL

MONDAY, June 20, 2016
12:00 p.m. – 1:00 p.m. (ET)

 
 
RMBS 3.0 BONDHOLDER COMMUNICATIONS WORKING GROUP CALL

TUESDAY, June 21, 2016
2:00 p.m. – 3:00 p.m. (ET)

 
 
AUTO ISSUER COMMITTEE CALL

WEDNESDAY, June 22, 2016
2:00 p.m. – 3:00 p.m. (ET)

 
 
RMBS 3.0 REPRESENTATIONS AND WARRANTIES WORKING GROUP CALL

WEDNESDAY, June 22, 2016
3:00 p.m. – 4:00 p.m. (ET)

 
 
WEEKLY CREDIT CARD ISSUER COMMITTEE CALL

THURSDAY, June 23, 2016
10:00 a.m. – 11:00 a.m. (ET)

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EVENTS
IMN’s GLOBAL ABS 2016 CONFERENCE

TUESDAY, June 14, 2016 – THURSDAY, June 16, 2016
The Barcelona International Convention Centre
Barcelona, Spain
Registration available here.

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SFIG BOARD OF DIRECTORS MEETING

TUESDAY, June 28, 2016
12:00 p.m. – 5:00 p.m. (ET)
Morgan, Lewis and Bockius LLP
New York, NY
Note: Closed Meeting

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WOMEN IN SECURITIZATION (“WiS”) WEEK

MONDAY, August 1, 2016 – FRIDAY, August 5, 2016
Registration forthcoming

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IMN’s ABS EAST 2016 CONFERENCE

SUNDAY, September 18, 2016 – TUESDAY, September 20, 2016
The Fontainebleau
Miami Beach, FL
Registration available here.

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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.

The committee recently launched its “Best Practices” initiative to establish industry consensus and provide recommendations around one or multiple accepted approaches. The five established Best Practices work streams are 1) Data & Reporting 2) Representations & Warranties 3) Regulatory 4) Operational Considerations and 5) Enforcement.

The committee previously commented on the Treasury Department's Request for Input on Online Marketplace Lending on September 30th.

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 recently completed their White Paper, A Comprehensive Guide to U.S. Securitization, for Chinese regulators and the Chinese Securitization Forum to educate them on the U.S. securitization landscape. The committee also continues to hold discussions with a focus on SFIG’s partnership with the CSF, 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 will be developing a comment letter to the U.S. proposed net stable funding ratio (“NSFR”) requirements. The committee also recently submitted a response to Basel’s Consultative Document regarding Capital Treatment for STC Securitisations and will be addressing industry concerns related to the Federal Reserve Board’s Final Rule on the Liquidity Coverage Ratio (“LCR”). SFIG recently testified before Congress, focusing on global regulatory issues, including LCR, that affect lending across all asset classes.

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. SFIG recently testified before Congress, focusing on global regulatory issues, including HQS, that affect lending across all asset classes.

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

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INDUSTRY NEWS HIGHLIGHTS
WHITE HOUSE OFFICIALS MEET WITH FINTECH LEADERS AND REGULATORS

Last Friday, June 10th, White House officials met privately with regulators and leaders in the financial technology industry to discuss how the government can work with innovators, according to a recent Wall Street Journal article.

Senior administration officials, stakeholders from financial institutions, startups and academia, and regulators were invited, according to a CoinDesk article, “to discuss how fintech can help advance critical economic policy priorities,” said Adrienne Harris, Special Assistant to the President for Economic Policy.

“Technology isn’t just changing the financial services industry, it’s changing the way consumers and business owners relate to their finances, and the way institutions function in our financial system,” said Ms. Harris, who led the event. “From consumers’ financial health to growing and managing small businesses; from cybersecurity to helping developing nations prosper; and from big data to blockchain—we spent the day identifying those areas where partnership across industries and between the public and private sectors can help advance our financial well-being and economic prosperity.”

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NATIONAL MORTGAGE NEWS: CFPB RE-OPENING OF TRID COULD GIVE INVESTORS MUCH-NEEDED COMFORT ON LIABILITY CONCERNS

As highlighted in a recent National Mortgage News article, lack of clarity on investors’ liability under the Truth In Lending Act (“TILA”) – Real Estate Settlement Procedures Act (“RESPA”) Integrated Disclosure (“TRID”) rules has prompted some to stop buying loans out of fear they could be held accountable for those errors. According to the article, most of the assignee liability is associated with the Closing Disclosure form, provided to consumers prior to closing to help them understand the transaction costs, but issues have also arisen associated with the Loan Estimate form, which informs consumers about the loans key features, costs and risks.

While a December letter from Consumer Financial Protection Bureau (“CFPB”) Director Richard Cordray could be viewed as a step in the right direction for giving market participants comfort on the matter, the article notes that the CFPB could provide more meaningful clarity on loan purchaser liability when it re-opens the rules for comment in July. As one industry participant cited in the article explains, "I think that probably the biggest and best thing that could come out of this proposal, hopefully, is for the CFPB to officially endorse those policy statements that they have already made and hopefully make people a little less worried in the secondary market."

Among those policy statements the CFPB could formalize is its indication that a TILA provision that does not hold lenders or investors liable for a violation when it is an unintentional, good-faith error should also apply to TRID errors. According to Grant Bailey, Managing Director at Fitch Ratings, "That's part of the ambiguity, that it's unclear what carries through from TILA and what carries through from RESPA. So I think providing some of that clarity is what they're going to focus on."

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WHITE: SEC TO REPROPOSE BAN AGAINST CONFLICTS OF INTEREST IN ABS DEALS

During a U.S. Senate Committee on Banking, Housing & Urban Affairs hearing on June 14th, Mary Jo White, Chair of the U.S. Securities and Exchange Commission (“SEC”), stated that the SEC is currently working on a reproposal of their 2011 proposed prohibition against conflicts of interest in certain securitizations. The reproposal is aimed at barring bets against ABS deals to eliminate conflicts of interest.

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REPUBLICANS UNVEIL ANOTHER BILL TO SCALE BACK DODD-FRANK

On Tuesday, June 14th, House Speaker Paul Ryan (R-WI) unveiled a Republican regulatory overhaul plan that would scale back the Dodd-Frank Wall Street Reform and Consumer Protection Act, expand energy production on federal land and limit lawsuits against businesses. According to a Bloomberg article on the matter, “The wide-ranging proposal is the third plank of a six-part policy agenda that Ryan… and other House leaders are releasing to unify the party ahead of November elections.”

Bloomberg notes that the financial services section of the plan largely resembles legislation from a proposal released earlier this month by House Financial Services Committee Chairman Jeb Hensarling (R-TX). As reported by SFIG, the Hensarling plan would “end taxpayer-funded bailouts of large financial institutions; relieve banks that elect to be strongly capitalized from ‘growth-strangling regulation’ that slows the economy and harms consumers; and impose tougher penalties on those who commit fraud as well as greater accountability on Washington regulators.”

The Ryan plan notably incorporates additional legislation that would wind down Fannie Mae and Freddie Mac and block new Obama administration rules requiring U.S. brokers managing retirement accounts to put customers’ interests ahead of their own, according to Bloomberg.

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EU PARLIAMENT PROPOSES INCREASED RISK RETENTION REQUIREMENT ACROSS ABS MARKET

A recent draft report by the EU Parliament’s Committee on Economic and Monetary Affairs proposes an increased risk retention requirement, calling for issuers to hold as much as 20 percent of their deals, while reviewing new regulations meant to revamp Europe’s ABS rules and to incentivize “simple, transparent and standardized” (“STS”) deals, according to a recent Reuters’ article.

Paul Tang, a member of the EU Parliament in charge of steering the plan, said the tougher requirements will "help avoiding moral hazard and make the securitization market more stable during times of crisis.” The proposed risk retention levels would apply to all securitizations, even those that do not qualify under the STS framework.

Many in the industry, however, have objected, stating that it will make ABS funding “completely uneconomic,” according to Reuters.

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CFPB RELEASES NEW KBYO AUTO LOAN SHOPPING SHEET

Last Thursday, June 9th, the Consumer Financial Protection Bureau (“CFPB”) unveiled a new Know Before You Owe (“KBYO”) online guide and shopping sheet to help consumers evaluate costs and shop for auto loans. According to the CFPB’s press release on the matter, “the shopping sheet helps consumers see the total cost of a loan and make apples-to-apples comparisons among loan products.” The KBYO auto initiative also helps guide consumers through the auto finance process so they are better able to decide how much they can afford to borrow and the best options for them.

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FTC CALLS FOR FURTHER MPL REGULATION

According to a recent American Banker article, the Federal Trade Commission (“FTC”) does not believe that the number of self-regulatory plans over the last year by marketplace lenders is sufficient.

"To be meaningful, these types of efforts need robust procedures to monitor compliance and tangible consequences when the rules aren't followed," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection.

If you would like to join SFIG’s Marketplace Lending (“MPL”) Committee and learn more about our recommended market best practices initiative, please contact Jennifer.Wolfe@sfindustry.org.

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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

Dan Goodwin Director, Mortgage Policy

Tom McCrocklin Director, Advocacy

Jennifer Wolfe Manager, ABS Policy

Hua Liu Communications & Social Media Manager

Alyssa Acevedo Senior Analyst, ABS Policy

Amanda Bateman Senior Analyst, MBS Policy

Jennifer Serpas Office Manager

Sarah Clarke Events Coordinator

Dani Hernandez Executive Administration

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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