October 29, 2014 Newsletter

SFIG News

SFIG Calendar

Advocacy Outlook

Issue Spotlight

Industry News Highlights

 
SFIG NEWS
APPROXIMATELY 400 INDUSTRY PARTICIPANTS JOIN SFIG FOR RISK RETENTION CALL

On Monday, SFIG held a call with nearly 400 people attending, to walk through the key points of the Risk Retention rules. Given the massive industry interest in this topic, SFIG opened the call to both members and non-members.

On October 22nd, six federal agencies, including the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, Securities and Exchange Commission and the Department of Housing and Urban Development, approved the final rule on Credit Risk Retention.

For an initial detailed summary of the final rule, please see here, and for a blackline of the Final Risk Retention Rule marked against the Re-proposed Rules, please see here, both of which were prepared by Julie Gillespie, Partner, Mayer Brown.

Additional member calls will be held at the Risk Retention Task Force level. If you are interested in joining SFIG’s Risk Retention Task Force or to listen to the October 27th call recording, please contact Alyssa Acevedo at Alyssa.Acevedo@sfindustry.org.

 
 
HIGH QUALITY SECURITIZATION TASK FORCE CREATED, SFIG WILL RESPOND TO EBA DISCUSSION PAPER AS FIRST ADVOCACY INITIATIVE

SFIG is pleased to announce the creation of our newest working group, the High Quality Securitization (“HQS”) Task Force, which was officially approved by SFIG’s Executive Committee on October 28, 2014. The HQS Task Force will serve as the forum through which SFIG will respond to recent initiatives that seek to define “qualifying securitizations,” such as the European Banking Authority’s (“EBA’s”) Discussion Paper on simple standard and transparent securitization, which was released on October 14th. The HQS Task Force will meet in the upcoming weeks to develop SFIG’s comments on the EBA Discussion Paper, which must be submitted by January 14, 2015. If you are interested in joining the HQS Task Force please email Amanda.Bateman@sfindustry.org.

 
 
SFIG CALENDAR
CLO COMMITTEE CALL RE: RISK RETENTION

THURSDAY, October 30, 2014
11:00 a.m. – 12:00 p.m. (EDT)

 
 
LEGAL COUNSEL COMMITTEE MONTHLY CALL

MONDAY, November 3, 2014
11:00 a.m. – 12:00 p.m. (EST)

 
 
EQUIPMENT ISSUER COMMITTEE REGULAR BIWEEKLY CALL RE: REG AB II

MONDAY, November 3, 2014
2:00 p.m. – 3:00 p.m. (EST)

 
 
CHINESE MARKET COMMITTEE CALL

WEDNESDAY, November 5, 2014
9:00 a.m. – 10:00 a.m. (EST)

 
 
AUTO ISSUER COMMITTEE REGULAR BIWEEKLY CALL RE: REG AB II

WEDNESDAY, November 5, 2014
2:00 p.m. – 3:00 p.m. (EST)

 
 
CREDIT CARD ISSUER REGULAR BIWEEKLY CALL RE: REG AB II

THURSDAY, November 6, 2014
10:00 a.m. – 11:00 a.m. (EST)

 
 
RESIDENTIAL MORTGAGE COMMITTEE REGULAR BIWEEKLY CALL RE: REG AB II

THURSDAY, November 6, 2014
2:00 p.m. – 3:00 p.m. (EST)

 
 
SFIG & IMN PRIVATE LABEL RMBS REFORM SYMPOSIUM

WEDNESDAY, November 12, 2014
8:00 a.m. – 5:45 p.m. (EST)
New York Marriott Downtown
New York City, NY
Registration and agenda are available here.

 
 
REAL ESTATE SUMMIT 2014: PARTNERING FOR CHANGE IN CALIFORNIA

FRIDAY, November 14, 2014
9:30 a.m. – 4:00 p.m. (PST)
Hyatt Regency Century Plaza
2025 Avenue of the Stars
Los Angeles, CA 90067

Sonny Abbasi will be speaking on the “Solutions for a Recovering Market: Housing Affordability and Financing Homeownership” panel.

 
 
EQUIPMENT ISSUER COMMITTEE REGULAR BIWEEKLY CALL RE: REG AB II

MONDAY, November 17, 2014
2:00 p.m. – 3:00 p.m. (EST)

 
 
AUTO ISSUER COMMITTEE REGULAR BIWEEKLY CALL RE: REG AB II

WEDNESDAY, November 19, 2014
2:00 p.m. – 3:00 p.m. (EST)

 
 
CREDIT CARD ISSUER REGULAR BIWEEKLY CALL RE: REG AB II

THURSDAY, November 20, 2014
10:00 a.m. – 11:00 a.m. (EST)

 
 
RESIDENTIAL MORTGAGE COMMITTEE REGULAR BIWEEKLY CALL RE: REG AB II

THURSDAY, November 20, 2014
2:00 p.m. – 3:00 p.m. (EST)

 
 
ANDREW DAVIDSON & CO., INC.’S HOUSING FINANCE BEFORE AND AFTER THE CRISIS: ANALYTICAL CONCLUSIONS THAT IMPACT PUBLIC POLICY

THURSDAY, November 20, 2014
5:30 p.m. – 8:30 p.m. (EST)
National Press Club
529 14th Street NW
Washington, DC
Registration is available here.

Richard Johns will be speaking to important questions affecting housing finance reform.

 
 
SFIG MEETING WITH FHFA REGARDING SINGLE SECURITY

WEDNESDAY, December 3, 2014
11:00 a.m. (EST)
Note: Closed Meeting

 
 
PLI SEMINAR: NEW DEVELOPMENTS IN SECURITIZATION 2014

THURSDAY, December 4, 2014
9:00 a.m. – 5:00 p.m. (EST)
PLI New York Center
1777 Avenue of the Americas
New York City, NY

Richard Johns will be speaking on the “Examining Key Regulations Through a Global Lens” panel.

 
 
CHINESE MARKET COMMITTEE CALL

FRIDAY, November 21, 2014
9:00 a.m. – 10:00 a.m. (EST)

 
 
SFIG & IMN ABS VEGAS 2015

SUNDAY, February 8, 2015 – WEDNESDAY, February 11, 2015
The Aria Resort and Casino
Las Vegas, NV
Registration available here

 
 
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.

The RMBS 3.0 Task Force continues to work towards completing its Second Edition RMBS 3.0 Green Paper. The Task Force continues to address issues specific to private label mortgage securities on 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. We encourage members to participate in any or all of the working groups to contribute towards the mission of RMBS 3.0. SFIG, along with IMN, is hosting a Private Label RMBS Reform Symposium on November 12, 2014. For additional information on RMBS 3.0, or to join the Task Force, please contact Mary.Robinson@sfindustry.org.

The GSE Reform Task Force has been actively engaging the Federal Housing Finance Agency in recent months, including SFIG’s October 13th response to the proposed structure for a single agency security. SFIG has also recently submitted comments on guarantee fee pricing and FHFA’s Strategic Plan for 2015-2019. The Task Force previously reviewed various proposals in Congress including the Johnson-Crapo bill, with SFIG staff summarizing members’ recommendations in a briefing book, and the PATH Act. If you would like to learn more about SFIG’s activities in these areas, 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 in February of this year. 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 Volcker Task Force.

The Risk Retention Committee met on October 27th to discuss the newly released Credit Risk Retention final rule. Please contact Alyssa.Acevedo@sfindustry.org with any questions.

SFIG’s Chinese Market Committee held its second full committee call on October 22nd. Future calls will continue to focus on a high-level description of SFIG’s partnership with the Chinese Securitization Forum, potential upcoming educational discussions and a 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; and
  • 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. Monthly task force calls will be held to identify and address key questions regarding the implementation of the final rule. We will also be holding bi-weekly calls for the asset-level committees. 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 forming a working group to address industry concerns related to the Federal Reserve Board’s Final Rule on the Liquidity Coverage Ratio (“LCR”) and will also be looking at the latest LCR rules out of Europe. To become involved in SFIG’s advocacy on the Final LCR rule, please contact Alyssa.Acevedo@sfindustry.org.

SFIG has created a High Quality Securitization Task Force, our newest working group which will lead SFIG’s response to proposals that aim to define “qualifying securitizations.” As its first advocacy effort, the task force will comment on the European Banking Authority’s (“EBA”) Discussion Paper on simple standard and transparent securitization, released on October 14th. The task force will begin meeting in the coming weeks and SFIG encourages members with an interest in Regulatory Capital & Liquidity to engage. If you would like to join the High Quality Securitization Task Force, please email Amanda.Bateman@sfindustry.org.

The Derivatives in Securitization Task Force will be commenting 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 submitted a comment letter at the end of June, advocating for asset-backed securities issuers to qualify for the “low-risk financial end user” designation proposed by prudential regulators in the original proposal. SFIG members who are interested in learning more about this initiative should email Amanda.Bateman@sfindustry.org.

The Credit Rating Reform Task Force has been discussing the SEC’s recent Final Rules with respect to Nationally Recognized Statistical Rating Organizations (“NRSROs”) and third party due diligence services for transactions involving registered and private asset-backed securities with assigned credit ratings. The rules are meant to enhance governance, protect against conflicts of interest, and increase transparency to improve the quality of credit ratings and improve rating agency accountability according to the SEC, but will likely impact a broader range of industry participants than NRSROs. SFIG is working to help our members better understand the rules and those interested in learning more should contact Amanda.Bateman@sfindustry.org.

The Money Market Fund Reform Working Group submitted a comment letter on Tuesday regarding the Securities and Exchange Commission’s July 23rd 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 acomment letter in September 2013 on Money Market Fund Reform. If you are interested in joining this working group, please contact Alyssa.Acevedo@sfindustry.org.

 
 
ISSUE SPOTLIGHT
MID-TERM ELECTIONS: POTENTIAL IMPLICATIONS FOR THE SECURITIZATION INDUSTRY
By Michael Flood, Director of Advocacy, SFIG
Michael Flood
On November 4th, all 435 seats in the House of Representatives (“House”) and roughly 1/3 of the seats in the Senate (36 of 100 seats) are up for election. At present, the Republican Party holds a majority of seats in the House (233-201), and the Democratic Party holds a majority of seats in the Senate (53-45-2). The two independent senators caucus with the Democratic Party, creating a 55-45 seat majority.

This election will determine whether these majorities grow, hold or change completely. In the Senate, the Republicans must gain six seats to become the majority party. In the House, Democrats must gain 16 seats to become the majority party.

Conventional wisdom suggests that Republicans will maintain or grow their majority in the House, while Democrats will either hold onto the majority in the Senate, or Republicans will become the majority party by a slim margin.

The preponderance of recent securitization reforms were enacted as part of Dodd-Frank. While its approval rating currently sits at 13%,[1] Congress passes and oversees such laws that govern or industry. Regardless of whether one approves of Congress, we, as an industry, have to care tremendously about the outcome of this election and what it may mean for securitization and structured finance.

Let’s examine the 2014 mid-term election and why it matters to our industry.

Defining Mid-Term Elections:   Federal elections are held every two years during even numbered years. Congressmen are elected to serve two-year terms, Presidents are elected to four-year terms and Senators are elected to six-year terms. There are two important notes to these basic election rules:
  1. Presidents are limited to two terms (eight years in office), whereas Congressmen and Senators can serve as many terms as the voting public allows
  2. Senators have “staggered” elections, meaning that every two years, roughly 1/3 of the Senate is up for re-election, while 2/3 are serving out the remainder of their six-year terms

A “mid-term” election occurs when the President is in the “middle” of his or her term, and is not on the ballot. Next Tuesday is considered a “mid-term” election, as President Obama was re-elected in 2012 and is expected to serve out his term through 2016.

It is also important to note that a mid-term during the President’s first term in office is different than a mid-term during a President’s second term in office. This election is the latter, and the President is less beholden to the voters, considering he cannot run again, and may be more amenable to negotiation. For example, President Clinton signed the Financial Modernization Act into law during the final two years of his presidency.

The Significance of Mid-Term Elections: On November 4th, voters will choose who will represent them in the House. Some voters will also choose which candidate will represent them in the Senate. Control of the House and the Senate rests on the outcome of these elections. Control matters, as the party in charge sets the legislative agenda for the next two years.

For the House, whichever party wins 217 of the 435 seats will be the “majority party,” and will set (and control) the legislative agenda, including what is debated and what receives a vote. Such control manifests itself through the majority party choosing the House leadership (e.g. Speaker of the House) and every chair and subcommittee chair.

For the Senate, whichever party wins 51 seats will be the “majority party,” and will set the agenda for the chamber in much the same way as the House, including the committees. However, there is a slight wrinkle, as the Senate can end up in a 50-50 tie. In this case, the Vice-President serves as the tie-breaking vote, when one is needed. If the 2014 mid-term elections ended in a 50-50 tie, then Democrats would maintain control of the Senate, with Joe Biden as the Vice-President.

Regardless of next week’s outcome, President Obama will continue to maintain control over who heads each Federal Department and Agency. For securitization, this includes the heads of each federal regulator (e.g. the FDIC, CFPB, SEC, OCC and FHFA), the Department of Housing and Urban Affairs, and the Federal Reserve.

Control of Congress Matters for the Securitization Industry: It is well within the jurisdiction of Congress to oversee the implementation of the very laws it passes and the President signs into law, such as Dodd-Frank.   In its most basic form, Congress “oversees” legislative implementation through hearings at both the committee and sub-committee level.  

Usually, Congressional committees conduct oversight through hearings, where expert witnesses from the regulators, industry and academia are invited to testify about progress on implementing a law. The Committee then determines if further action is required, such as more hearings, letters to the regulators, or legislative adjustments.

Finally, the volume and level of oversight is determined by the chair of the relevant committee with jurisdiction. For structured finance, the two committees that matter most are:

  1. The House Committee on Financial Services (“Financial Services”), and
  2. The Senate Committee on Banking, Housing, & Urban Affairs (“Senate Banking”)

Therefore, whoever controls the House and Senate will choose the chair of each committee, and how much oversight of Dodd-Frank and structured finance is necessary. Financial Services is currently chaired by Jeb Hensarling, a Republican from Texas. Senate Banking is chaired by Tim Johnson, a retiring Democratic Senator from South Dakota. The elections will determine (a) if Jeb Hensarling remains as chair of Financial Services, and (b) who will replace Senator Johnson as Chair of Senate Banking.

Potential Electoral Outcomes and the Effects for our Industry:  While we cannot predict the future, we can predict a few likely priorities that will affect securitization based upon potential Congressional election results. It is also important to note that the 2016 Presidential election cycle will begin in late 2015, the year in which both parties will want to distinguish themselves. As a result, Congress will likely have one year, 2015, in order to move any meaningful legislation.

Below is an analysis of three potential electoral results, ranked from most likely to least likely:

Republicans Gain Control of Both Houses of Congress:

  1. House: Jeb Hensarling (R-TX) would remain chair of Financial Services. Congressman Hensarling is allowed, under House rules, to serve three terms (six years) as chair of the Financial Services committee. After this election, he will have four years remaining on his term as chair.
  2. Senate: Senators have the same six-year term limit for serving as ranking member or chair of a committee that their counterparts have in the House. Either Senator Crapo (R-ID) or Senator Shelby (R-AL) would become the next chair of Senate Banking. While Senator Crapo is the current ranking member on the committee, Senator Shelby has seniority. Shelby had been ranking member of Senate Banking for four years during Dodd-Frank. After Dodd-Frank, Shelby relinquished his position as ranking member on Senate Banking in order to be the ranking member on Appropriations. Shelby may reclaim his seniority over Senator Crapo in order to Chair Senate Banking for two years.

Outcome: Congressman Hensarling and either Senator Shelby or Senator Crapo would likely work together to set agendas that aligned Financial Services and Senate Banking. Furthermore, all three have been vocal critics of Dodd-Frank. Thus, we would expect increased oversight of the law as a priority, including oversight of securitization reforms, the Consumer Financial Protection Bureau (“CFPB”) and “too-big-to-fail” banking reforms. They may also consider a “Dodd-Frank” technical correction bill that would likely need to contain bi-partisan changes in order to persuade the President to sign such a bill.   Finally, Hensarling, Shelby and Crapo have all pinpointed housing finance reform as an issue that they believe should have been dealt with during Dodd-Frank. Crapo worked with Senator Johnson (D-SD) last year to produce a bipartisan housing bill, while Hensarling pushed the PATH Act through Financial Services last year. Senator Shelby did not support Johnson-Crapo. However, we would expect him to review housing finance reform, as he has been a proponent of increased capital standards and private sector investment. However, it may be difficult for housing finance reform legislation to work its way through Congress, considering the latter half of 2015 will begin the Presidential election cycle.

Status Quo: Democrats Run the Senate, Republicans Run the House:

  1. House: Jeb Hensarling would remain chair of Financial Services.
  2. Senate: Either Senator Schumer (D-NY) or Senator Brown (D-OH) would likely become the next chair of Senate Banking. Mr. Schumer is currently part of Senate leadership, and it is therefore likely that Mr. Brown would take the helm.

Outcome: Congressman Hensarling would likely continue vigorous oversight of Dodd-Frank and work towards housing finance reform as mentioned above. However, we would expect that Hensarling’s agenda may not align with Senator Brown, as the latter supported Dodd-Frank.   As a result, we would expect Senator Brown to support a more strict interpretation of Dodd-Frank implementation than Hensarling during any oversight hearings.

At the same time, we would expect housing finance reform to remain at the forefront for both committees. While Brown and Hensarling both believe reform is necessary, they take different approaches. We believe that Hensarling would likely begin with the PATH Act as a basis for reform. However, we do not think it likely that Sherrod Brown would begin with Johnson-Crapo, as he voted against the bill. Specifically, Brown believed Johnson-Crapo provided funding advantages for large banks over community banks and credit unions. Further, he is not convinced that it is time to do away with the affordable housing goals and duty to serve requirements of the government-sponsored enterprises.

We also believe there are areas where agreement could be reached between the two chambers. This includes support for a bill that would allow the Federal Reserve to tailor Basel capital standards for large insurance companies that are designated as systemically important financial institutions (“SIFIs”).

Democrats Gain Control of Congress

  1. House: Maxine Waters (D-CA) would likely become chair of Financial Services.
  2. Senate: Either Senator Schumer (D-NY) or Senator Brown (D-OH) would likely become the next chair of Senate Banking. Brown would likely become the Chair for reasons mentioned above.

Outcome: Both Maxine Waters and Senator Brown are supporters of housing finance reform.. With a Democrat in the White House, housing finance reform could move through Congress in this most unlikely scenario. Housing finance reform would likely have to move quickly, considering the Presidential election cycle will be in full-swing in in the fourth quarter of 2015. Additionally, both Waters and Brown are vocal supporters of Dodd-Frank. Therefore, oversight would likely call for a more strict interpretation of the law. Finally, both are critics of large banks, and could call for increased capital standards for SIFIs.

Conclusion: As you can see, the outcome of the mid-term elections will determine which party controls the House and Senate agendas, and how securitization is treated by Congress. 

Please stay tuned after the elections, as SFIG will analyze the mid-term outcome and its effect on securitization and structured finance.

[1] Real Clear Politics Congressional Approval Average, http://www.realclearpolitics.com/epolls/other/congressional_job_approval-903.html (October 13-27, 2014). 

 
 
INDUSTRY NEWS HIGHLIGHTS
GINNIE MAE ANNOUNCES NEW ISSUER NET WORTH AND LIQUIDITY REQUIREMENTS, SCORECARD

On October 20th, the Government National Mortgage Association (“Ginnie Mae”) announced new Issuer requirement changes and a new Issuer scorecard at the 2014 Mortgage Bankers Association annual convention. According to Ginnie Mae’s related press release on the announcement, the new Issuer net worth and liquidity requirements include the following:

  • Single-Family Issuer Minimum Net Worth: Single-Family Issuers’ minimum adjusted net worth requirement of $2,500,000 plus 0.20 percent (20 basis points) of the Issuer's total effective outstanding Single-Family obligations will be increased to $2,500,000 plus 0.35 percent (35 basis points) of the Issuer's total effective outstanding Single-Family obligations.
  • Single-Family Issuer Minimum Liquidity: Single-Family Issuers’ minimum liquid assets requirement of 20 percent of required net worth will be changed to the greater of $1,000,000 or 0.10 percent (10 basis points) of the Issuer's outstanding Single-Family securities.
  • Issuers Approved for More Than One Program Minimum Net Worth and Liquidity: Issuers who are approved to participate in more than one program type (Single-Family, Multifamily, Manufactured Home, and/or HECM MBS) will have to meet a minimum adjusted net worth and liquid assets requirement equal to or greater than the sum of the minimum requirements for all the program types in which the Issuer is approved to participate, as opposed to the highest program requirement.

Ginnie Mae has proposed various dates for the changes to take effect, but applicants seeking Issuer approval are required to meet these new standards beginning January 1, 2015.

Ginnie Mae also announced the creation of a so-called Issuer Operational Performance Profile, described as a “scorecard” that will enable issuers to better understand and comply with Ginnie Mae expectations; and provide issuers with a framework and methodology from which they can gauge their effectiveness against a pre-determined set of Ginnie Mae expectations (metrics) as well as how they rank against their peers. The firm says the changes are part of its broader strategic efforts to appropriately manage risk and resources as it adapts to an ever evolving housing finance market.

 
 
FREDDIE MAC REPORT NOTES SLOW HOUSING RECOVERY

Despite relative stability in the markets least impacted by the housing crisis, the most recent Multi-Indicator Market Index (“MiMi”) report from Freddie Mac indicates that the overall recovery in the market continues to be slow and uncertain. The report, released last Friday, shows that 13 of 50 states have stable MiMi values. However, the overall American housing market is weak and experienced a three-month decline in relative market stability of 0.47 percent.

The MiMi combines proprietary Freddie Mac data with current market information to analyze the housing market for localities, states, and the U.S. While the recent MiMi report noted the overall slow recovery, year-over-year the stability of the U.S. housing market has improved by 4.09 percent. Freddie Mac’s Deputy Chief Economist said in a press release, “The good news from MiMi this month is the improvement across more markets and not just the large markets….More homeowners are making timely mortgage payments, the employment picture is improving, and cheap mortgage rates are helping to support affordability.”

 
 
AGENCIES REQUEST FOR COMMENT ON PROPOSED FLOOD INSURANCE RULE

On Friday, five federal regulatory agencies, including the Board of Governors of the Federal Reserve System, the Farm Credit Administration, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, announced the approval and request for comment of a joint notice of proposed rulemaking to amend regulations concerning secured property loans in specific flood hazard areas.

The proposed rule would implement provisions of the Homeowner Flood Insurance Affordability Act of 2014 concerning escrowing flood insurance payments and exempting certain detached structures from the mandatory flood insurance purchase requirement.

Comments on the proposed rule are due 60 days after it is published in the Federal Register, which is expected shortly.

 
 
SAN FRANCISCO VOTES TO UNDERTAKE STUDY OF POTENTIAL EMINENT DOMAIN JOINT POWERS AGREEMENT

Following several delays in voting on a proposal to enter into a joint powers agreement (“JPA”) with the city of Richmond regarding the use of eminent domain to seize underwater mortgage loans, San Francisco City Supervisor John Avalos made several amendments to the resolution before presenting it to the Board of Supervisors for a vote.  The City of Richmond needs to enter into a JPA with another municipality to move forward with eminent domain because it has been unable to muster the requisite number of votes—a “super majority”—to move forward on its own eminent domain proposal independently.

A key change to the resolution is described as replacing language requiring negotiation of a JPA to language urging the city of San Francisco to study the possibility of a JPA.  The resolution, which was approved subsequent to the amendments, also includes review of other options to assist home owners unable to meet their mortgage payments.  The Office of Housing will have 75 days to provide the city with information on the use of the JPA and other alternatives.  The Board of Supervisors approved the amended resolution unanimously.

 
 
HOUSE MAJORITY LEADER LAYS OUT PLAN FOR NEXT CONGRESS

On October 22nd, Majority Leader Kevin McCarthy (R-CA) released a memo in which he sets forth his goals for the next Congress.

The Majority Leader focused on streamlining government agencies and identifying where some are failing to accomplish their functions and goals. This leads to economic growth and job creation consequences, according to McCarthy. Therefore, the central policy goal of the next Congress will focus on these issues.

McCarthy also emphasized the importance of a competent government, stating, “the government’s role in our lives must be measured, limited in its ambitions, constitutionally based, and focused on the big things that only governments can address.” He recommends shrinking the government to its appropriate scope and mission and reforming how the government operates in order to restore this competency. Government competence also requires collaboration and so McCarthy is urging other House members to share their legislative ideas or process reforms as next year’s legislative agenda is formulated.

 
 

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

Sonny Abbasi Director of MBS Policy

Sairah Burki Director of ABS Policy

Michael Flood Director of Advocacy

Mary Robinson Policy Manager

Alyssa Acevedo Policy Analyst

Amanda Bateman Policy Analyst

Jennifer Serpas Office Manager

Allison Creswell Executive Administration


1775 Pennsylvania Ave. NW
Suite 625
Washington, DC 20006

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