October 28, 2015 Newsletter
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October 28, 2015

Industry Jobs

SFIG Calendar



Advocacy Outlook

Industry News Highlights


Register now for the SFIG & IMN Private Label RMBS Reform Symposium, taking place November 12th at the New York Marriott Downtown. The full agenda is now available on IMN’s website. The Symposium will feature a keynote address from U.S. Congressman Scott Garrett (R-NJ), along with timely panel topics including:

  • State of the Non-Agency Market
  • What’s New in PLS RMBS Reform?
  • Overview of the New, Comprehensive Reps & Warranties Provisions
  • Servicer Oversight & Enforcement
  • Impact of Regulations on the RMBS Market
  • Proposed Deal Manager/Agent Frameworks
  • The Credit Risk Transfer Program: Impact on PLS RMBS
  • Paving the Way for Expanded Credit/Non-QM Products
  • The RMBS Investor Perspective
  • Strategies for Encouraging Issuer Adoption

To register, please click here. For more information on sponsorship, please contact Christopher Keeping at ckeeping@imn.org or at 212-901-0533.


Last Thursday, October 22nd, the Federal Deposit Insurance Corporation (“FDIC”) approved a Joint Final Rule on Swap Margin Requirements at its Board of Directors meeting.

This action is a joint final rule with the Office of the Comptroller of the Currency, the Federal Reserve Board, the Farm Credit Administration and the Federal Housing Finance Agency. The rule will apply to entities supervised by any of these agencies.

Important to SFIG members:

The Agencies have not modified the definition of financial end user to exclude structured finance vehicles or covered bonds issuers. The Agencies believe that all of these entities should be classified as financial end users; their financial and market activities comprise the same range of activities as the other entities encompassed by the final rule’s definition of financial end user. The Agencies note that the increased material swaps exposure in the final rule should address some of the concerns raised by these commenters with respect to the applicability of initial margin requirements.

SFIG previously advocated for securitization special purpose vehicles (“SPVs”) to qualify as “low risk financial end users,” presented criteria for such an exemption and highlighted the impact the rules would have on the securitization industry. In recent weeks, SFIG members and staff also met with Congressional staff to discuss the rule's applicability to almost all SPVs and the impact on the financing activities of consumer lenders who extend credit in major asset classes, such as credit cards, auto loans and equipment leases.

As part of their meeting, the FDIC also approved its final rule to conform safe harbor requirements to the final rule on Credit Risk Retention. The rule revises certain provisions of its securitization safe harbor rule relating to the treatment of financial assets transferred in connection with a securitization or participation “in order to clarify the requirements of the securitization safe harbor as to the retention of an economic interest in the credit risk of securitized financial assets in connection with the effectiveness of the credit risk retention regulations.”

If you are interested in joining SFIG’s Derivatives in Securitization Task Force or Risk Retention Task Force, please contact Alyssa Acevedo


SFIG currently has a position open for:

  • 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.

Some of the latest industry positions available include:

High Yield - Legal Analyst   Babson Capital Management 10-22-15
Finance Associate   Hogan Lovells US LLP 10-09-15
Attorney - Securitization   Ford Motor Credit Company 9-29-15
Consumer ABS Analysts   Kroll Bond Rating Agency, Inc. 8-19-15
Senior Vice President, RMBS Monitoring   Moody’s Corporation 8-18-15
Associate Analyst 1   Moody’s Corporation 7-29-15
Vice President, Senior Credit Officer (ABS Surveillance)   Moody’s Corporation 7-31-15
Associate Analyst 3   Moody’s Corporation 7-29-15
Capital Markets Associate   Cadwalader, Wickersham & Taft LLP 7-21-15
Associate Director / Director, Asset Backed Securities   Fitch Ratings 7-08-15

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.


FRIDAY, October 30, 2015
10:00 a.m. – 11:00 a.m. (ET)


MONDAY, November 2, 2015
2:00 p.m. – 3:00 p.m. (ET)


WEDNESDAY, November 4, 2015
9:00 a.m. – 10:00 a.m. (ET)


THURSDAY, November 5, 2015
10:00 a.m. – 11:00 a.m. (ET)


THURSDAY, November 5, 2015
2:00 p.m. – 3:00 p.m. (ET)


THURSDAY, October 29, 2015
Marriott New York Downtown
New York, NY

  • Jennifer Wolfe will speak on the “Thought Leadership & the Future of Regulation in US Marketplace Lending” panel
  • Richard Johns will speak on the “Development of Securitization in Marketplace Lending” panel
  • Kristi Leo will moderate the “Marketplace Lending & the Lenders’ Perspective” panel

Registration is available here. The agenda can be found here.


THURSDAY, November 12, 2015
Marriott New York Downtown
New York, NY

  • Richard Johns will deliver the opening remarks and speaking on the “RMBS Instant Replay” panel
  • Dan Goodwin will moderate the “State of the Non-Agency Market” panel
  • Mary Robinson will moderate the “Proposed Deal Manager/Agent Frameworks” panel
  • Michael Flood will moderate the “Credit Risk Transfer Program: Impact on PLS RMBS” panel

Registration is available here. The agenda can be found here.


WEDNESDAY, December 9, 2015
12:00 p.m. – 5:00 p.m. (ET)
Deloitte & Touche
New York, NY 10112
Note: Closed Meeting


SUNDAY, February 28, 2016 – WEDNESDAY, March 2, 2016
The Aria Resort & Casino
Las Vegas, NV
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’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 Amanda.Bateman@sfindustry.org.

SFIG’s Student Loan Committee is focusing on and responding to the Proposed Changes to Moody’s Approach to Rating Securities Backed by FFELP Student Loans. SFIG submitted an extension request on August 14th and Moody’s announced the deadline for comments has been extended to October 30th.  

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. The task force’s most recent work product will be presented at the November 12th SFIG/IMN Private Label RMBS Symposium. 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; 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 submitted its comments on FHFA’s update to the single security initiative on October 7, 2015. The task force also recently received 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 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 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 Working Group 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

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.


On October 16th, the Securities and Exchange Commission (“SEC”) released an order extending a temporary conditional exemption for Nationally Recognized Statistical Rating Organizations (“NRSROs”) from the requirements of Rule 17g-5(a)(3) with respect to rating covered transactions. The exemption has been extended to December 2, 2017.

Pursuant to this order, an NRSRO is not required to comply with the rule with respect to credit ratings where: (1) the issuer of the structured finance product is a non-U.S. person; and (2) the NRSRO has a reasonable basis to conclude that the structured finance product will be offered and sold upon issuance, and that any arranger linked to the structured finance product will effect transactions of the structured finance product after issuance only in transactions that occur outside the U.S.


According to a recent article in the Financial Times, a top official at Autorité des marchés financiers—France’s market regulator—told the publication that the European Commission’s (“EC”) framework for simple, transparent and standardized securitization (“STS”) may not succeed in restoring investor confidence without regulatory oversight of its enforcement. Guillaume Eliet, managing director of regulation policy at the French agency, reportedly told the Financial Times, “[t]here should be a regulated entity to manage the vehicle in the interests of investors at every step and to make sure there is no conflict of interest.”

In the EC’s Securitization Regulation adopted as part of its Capital Markets Union Action Plan in September, the EC places the onus on issuers and investors to verify a transaction meets the criteria for STS. Eliet contends there should be an outside authority that ensures the vehicle structure is “well organized and transparent.” However, one EU official explains, “[w]e did not take up the option of public authority certification since stakeholders were concerned about the risk of having a too slow approval system,’’ and “[s]ome national supervisors were also against this approach.”

Eliet’s view on certification underscores an issue that makes implementation of the framework ambiguous—with many of the criteria being open to interpretation, how can STS securitizations be unequivocally differentiated from non-STS ones?

As noted in another Financial Times article out yesterday, the uncertainty in interpretation means who is certifying the transactions as STS will matter significantly. According to David Covey, head of ABS strategy at Nomura, the problem is clarity: “If there is a disagreement or grey area, the penalties or sanctions on originators cannot be so huge that it deters them from self-attesting STS compliance in the first place.” The risk of uncertainty may be too great for some originators, as “materially incorrect or misleading” claims can result in sanctions of up to €5 million ($5.47 million), or 10 percent of firm turnover.


According to a recent Wall Street Journal article, the International Organization of Securities Commissions ("IOSCO") spent the last three months gathering feedback on liquidity from those within the corporate bond market. IOSCO surveyed nearly 100 banks, asset managers, trading platforms and regulators from August to October, asking questions about corporate bond market conditions pre and post crisis.

The article also explained how this survey may lay the foundation for future proposals on ways to improve global bond-market structure. IOSCO is expected to review the survey responses at a meeting in Brazil this week. Several banks and asset managers have noted that post-crisis rules restricting the amount of bonds banks can hold have made it harder to trade without significantly affecting prices.


According to an article in HousingWire, Fitch says in a client note that it is seeing the costs of servicing rise while enhanced regulatory scrutiny and increased compliance focus is also increasing. “Higher regulatory capital requirements may become a factor too, especially for smaller servicers,” the note says. “Smaller servicers (many not rated by Fitch) may experience greater difficulty in the environment of rising costs and may begin to look to strategic alternatives,” said Fitch.

Fitch rates servicers on a scale of one to five with one being the highest rating. Of the 89 individual servicer ratings covered within RMBS:

  • 9% within the level one range (1 or 1-);
  • 54% within level two (2+, 2 or 2-);
  • 29% within level  three (3+, 3 or 3-); and
  • 8% currently at level four.

No servicers carry a five rating.


Today, October 28th, the House of Representatives is expected to vote to pass a two-year budget plan that also raises the debt-limit through mid-March 2017, according to an article in Politico. The bill is supported by the White House as well as the leadership of both parties in the Senate and House of Representatives.

The Bipartisan Budget Act of 2015 increases discretionary spending by $112 billion for fiscal years (“FY”) 2016 and 2017 over the spending caps set by the 2011 Budget Control Act. Of note, the bill would allow debt collectors to use automated calling of cell phones as a means of collecting debt either owed to or guaranteed by the federal government, which would include student loans. The proposal requires the FCC to issue implementing regulations for such automated calling within 9 months of passage of the bill. The bill would also change large partnership audit rules under current law to require both Internal Revenue Service audits and associated tax assessments for partnerships with 100 or more partners to occur at the partnership level, which would affect hedge funds and private equity firms. 

The House is expected to pass the bill by a large bi-partisan vote. The Senate is also expected to quickly pass the legislation tomorrow, and would be sent to the President for signature.

The bill will likely be the last major piece of legislation passed by the House under Speaker Boehner’s (R-OH) leadership, who is scheduled to retire on October 30th.  

Importantly, it allows incoming Speaker Paul Ryan (R-WI) to avoid any budgetary and debt-ceiling negotiations until 2017.


According to a recent Moody’s Investors Service announcement, securitization analysis for Asia requires a blend of qualitative and quantitative factors.

Moody’s new report, Key Factors in Assessing Credit Risks in Asian Emerging Market Securitization Transactions, analyzes securitization transactions in emerging Asian economies and involves a thorough examination of various qualitative and quantities factors. Jerome Cheng, a Moody's Senior Vice President stated:

When Moody's determines the final rating of any transaction, it will discuss various model inputs and review the model outputs, including the expected loss and weighted average life of the relevant notes. Many jurisdictions in Asia have some way to go in developing their securitization markets. In our report, we have listed a few credit considerations on how we analyze securitization transactions in emerging markets in Asia, in particular with examples from China transactions.

The various considerations include:

  • Legal and regulatory (considers whether the relevant transactions have sufficient bankruptcy remoteness protection, including the establishment of a bankruptcy remote special purpose vehicle and protection from the potential bankruptcy of the transaction sponsors or sellers);
  • Quality of the underlying assets (focuses on the probability of default on the assets, the chance of recovery in the event of default, and the uncertainties associated with these default probabilities and recoveries);
  • Operational and counterparty risk;
  • Structure and credit enhancement;
  • Currency and interest-rate risk; and
  • Local and foreign currency country risk ceilings (country risks arising from political, institutional, financial and economic factors either within a particular country or externally).

According to a recent American Banker article, regulators are turning their attention to credit risk again, stating that banks need to have a plan in place to spot any trouble signs.

"While I have no intention of letting up in our emphasis on operational risk, we are reaching that point in the cycle where credit risk is moving to the forefront," said Comptroller of the Currency Thomas Curry in a recent speech.

Curry noted that he is specifically concerned with how banks originate longer-term loans and then package them into asset-backed securities to attract investors. Curry stated:

Today, 30 percent of all new vehicle financing features maturities of more than six years, and it's entirely possible to obtain a car loan even with very low credit scores. With these longer terms, borrowers remain in a negative equity position much longer, exposing lenders and investors to higher potential losses. Although delinquency and losses are currently low, it doesn't require great foresight to see that this may not last. How these auto loans, and especially the non-prime segment, will perform over their life is a matter of real concern to regulators. It should be a real concern to the industry.

Comptroller Curry also noted improvements in addressing credit quality since the financial crisis such as the reduction of exposure to home equity lines of credit up for maturity and the reduction of banks’ leverage lending exposure after guidance was issued in 2013.


In a letter dated October 22nd, Democratic members of the Senate Banking Committee and House Financial Services Committee sharply criticized efforts by Republicans to roll back reforms enacted under the Dodd-Frank Wall Street Reform and Consumer Protection Act by attaching the Shelby bill to necessary funding legislation.

In May 2015, Republican members of Congress attempted to pass the Shelby Regulatory Reform bill by attaching it to the Fiscal Year 2016 Financial Services and General Government Appropriations bill being voted on by the Senate Appropriations Committee in an attempt to bypass Democratic opposition to the bill. Senator Sherrod Brown (D-OH) and Representative Maxine Waters (D-CA) state in the letter to Senate Majority Leader Mitch McConnell (R-KY), Minority Leader Harry Reid (D-NV), Speaker John Boehner (R-OH) and House Minority Leader Nancy Pelosi (D-CA) that they “are opposed to the inclusion of all inappropriate and ideological policy riders to funding legislation” and “are specifically concerned about ones designed to repeal, undermine, or delay provisions of Wall Street reform.”

The Democratic leaders’ state:

Wall Street Reform was Congress’ response to the worst financial crisis since the Great Depression.  It has strengthened our nation’s financial stability and provided much-needed consumer protections to millions of American families. We hope that Congress does not make the same mistake this year by including riders that weaken Wall Street Reform in end-of-the-year funding legislation.

As noted in previous newsletters, the bill addresses the following:

  • Section 106: Safe Harbor for qualified mortgages held in portfolio (p. 20);
  • Section 116: A study of the regulatory and capital requirements for mortgage servicing assets (p. 36);
  • 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);
  • 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
  • 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).

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 Policy Analyst

Daniel Tees Policy Analyst

Jennifer Serpas Office Manager

Allison Creswell Events Coordinator

Sarah Clarke Executive Administration

1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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