Industry-wide effort to restore investors’ trust in private label mortgage securitization

Amid investor focus on enhancing investor protections within existing Residential Mortgage-Backed Securities (RMBS) structures, the U.S. Treasury facilitated the common efforts over 18 months by a large number of mortgage market participants, including investors, mortgage originators and aggregators, mortgage servicers, trustees, rating agencies and others to identify and address reforms needed to revive the non-agency U.S. residential mortgage markets.

Earlier today, the group announced the “Deal Agent Framework” to reform securitization contracts for U.S. RMBS by providing fair investor protections, a flexible framework for adapting to unexpected events, and increased transparency for all mortgage market participants.

John Gidman, president of the Association of Institutional INVESTORS, commended Treasury’s leadership and the diligent efforts of the broad group of U.S. residential mortgage market participants to promote trustworthy and fair mortgage markets.

“I believe the ‘Deal Agent Framework’ will ultimately enhance investor protections within all U.S. RMBS structures by codifying robust and continuous fiduciary duties of care and loyalty,” said Gidman. “The Deal Agent Framework will promote enhanced trust and confidence in the private RMBS mortgage marketplace.”

“We all recognize the vital role robust housing finance markets play in our society.  These markets have traditionally enabled generations of American families access to home ownership, the essence of the American Dream. Much of this mortgage financing has ultimately been provided by our members’ clients who relied on the strength and depth of these mortgage markets to provide income for retirement,” Gidman continued. “The structural reforms embodied in the Deal Agent Framework will promote strong investor protections and lead to a more vibrant and effective mortgage marketplace for mortgage borrowers, originators, servicers, and institutional investors alike.”