TRID Scuttling Revival of Private-Label Securitizations

By Kate Berry

Add this the list of things working against a revival in private-label securitization of residential mortgages: investors are rejecting loans at unprecedented rates because they do not comply with new regulations.

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Latest News

Honda Markets 1st 2016 ABS with $1.03B Offering

– The notes are backed by Honda’s typically strong collateral in prime loans with high-quality credit borrowers (average FICO of 761) and lengthy seasoning (13.61 months), and supported by a hard credit enhancement of 2.75%. But the new securitization continues a recent trend in Honda ABS issuance that includes more long-term loans in excess of 60 months.

NewStar Financial to Issue $350M CLO

– NewStar Financial is releasing its first CLO since September 2015 with a $350 million portfolio of loans it has originated for small to medium-sized companies.

Two More Subprime Auto Lenders Add $602M to Pipeline

– Flagship Credit Acceptance and Tidewater Finance Co. are marketing a combined $602 million of securities backed by subprime auto loans, according to rating agency reports.

Morgan Stanley Reaches $3.2B Settlement Over Mortgage Bonds

– Morgan Stanley agreed to pay $3.2 billion to end a joint federal-state investigation into its handling of mortgage-backed securities, the fourth deal to be struck in a probe of the big U.S. banks' role in the subprime mortgage meltdown and the financial crisis it spawned.


Featured Articles

FHFA Is Right: Captives Don't Belong in Home Loan Banks

– The Federal Home Loan Bank System was designed to provide liquidity to community lenders and traditional insurers, not to unregulated lenders that circumvent the membership rules.

Federal Judge Grills Regulator on ‘Skin in Game’ Rule for CLOs

– The central argument in a federal lawsuit challenging rules requiring CLO managers to keep “skin in the game” of their deals is that they were never in the game to begin with.This might carry some weight with the U.S. Court of Appeals in Washington, if oral arguments at a hearing last week are any indication.

Most Banks Are Shrugging Off Regulators’ CRE Warnings

– Bankers are defending the industry's aggressive push into commercial real estate despite regulators' warnings about the growing risk — and the potential for losses — in that sector.

Reimbursement, Not Timing, is Key to GSE Risk Sharing

– Kevin Palmer, senior vice president of credit risk transfer at Freddie Mac, hold that the timing of transactions offloading the risk of default on mortgages is less important than what he terms “reimbursement risk."

Energy Overweight CLOs Face Deteriorating Metrics

– The ongoing deterioration in crude oil prices is raising concerns that the energy sector’s distress will drag down CLOs that have overweight debt exposure to exploration/production and oilfield services firms.

CFPB's Auto Finance Push Hurts Consumers

– The way the Consumer Financial Protection Bureau is regulating the auto finance industry's relationships with dealers is simply wrong — both legally and ethically. It's also directly counterproductive to its goal of protecting consumers.

How REITs May Challenge FHLB Membership Rule

– The Federal Housing Finance Agency may face legislation or a lawsuit in the near future as it tries to force captive insurance companies to exit the Federal Home Loan Bank System,

The New Way CLO Managers are Financing 'Skin in the Game'

– Non-traditional loan facilities offer a number of advantages over equity financing. But these structures must balance a lender's right to foreclose with a manager's ability to stay in compliance with risk retention rules.

Community Banks Turn to New Kind of CDO to Raise Capital

– Raising capital has been tough for community banks ever since the financial crisis, especially the smallest ones. But a few investment firms have developed structured products that offer community banks a chance to band together to raise needed Tier 1 capital at relatively low cost.


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Why Florida May Be the Next Big Source of PACE Bonds

Property Assessed Clean Energy loans have been available in Florida since 2010, but lending, as well as securitization of these loans, has lagged far behind California largely due to a series of lawsuits. A ruling by the Florida Supreme Court in October could change that.

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