Emerging Trends in Securitization Due Diligence and Analytics

Abstract

In this panel, held on Wednesday, January 30, 2013, at the ASF 2013 conference, the panelists’ discussion focused on the securitization industry’s increasing need to focus on due diligence, a need triggered by the unprecedented and truly remarkable expansion of federal regulation of residential mortgage lending. These regulations directly and intentionally affect the ability to sell loans into the secondary marketplace. The result is a heightened level of due diligence reporting now appearing in the industry. The panel discussed whether standard due diligence practices are emerging in the latest residential mortgage-backed securities transactions, the new regulatory landscape, ASF’s Project RESTART, bond pricing, the potential to standardize the assessment of regulatory compliance, and the likely impact of the Consumer Financial Protection Bureau’s just-issued Ability-to-Repay and Qualified Mortgage Rule on due diligence practices. The myriad new federal government agency rulings, expanded scope of federal and state examinations, combined with heightened investor, political, and public sensitivity to the risks associated with residential mortgage finance leave originators, investors, securitizers, insurers, and regulators no choice but to put greater emphasis on and dedicate greater resources to due diligence.

TOPICS: Technical analysis, fixed income and structured finance