Rating Agency Developments (September 3 – September 16)

 

On September 16, DBRS Morningstar released an updated methodology titled Rating U.S. Wholesale Securitizations. Methodology.

On September 16, KBRA released a research report titled Global ABS Conference Recap: Day One. Report.

On September 15, KBRA released a research report titled Structured Finance: Virtual Conference: Credit & COVID-19 – Is the Worst Behind Us? Report.

On September 11, DBRS Morningstar released an updated methodology titled Third-Party Due-Diligence Criteria for U.S. RMBS Transactions. Methodology.

On September 11, KBRA released a research report titled RMBS Credit Indices: August 2020. Report.

On September 3, DBRS Morningstar released a report titled Rating European Consumer and Commercial Asset-Backed Securitizations. Methodology.

HUD Announces Flexibilities for CARES Act’s Emergency Solutions Grant Program

 

On September 9, the Department of Housing and Urban Development (HUD) announced additional requirements and flexibilities for $3.96 billion in emergency solutions grants provided to states and units of local government under the CARES Act. These flexibilities allow for additional eligible activities for which the recipients can use the funds and also extends the obligation deadline for the recipients. Release.

NY Fed Announces New CMBS Counterparties for 13(3) Facilities

 

On September 9, the Federal Reserve Bank of New York announced the first wave of new counterparties selected as part of the expansion program announced earlier in September. Widening the eligibility criteria for agency CMBS counterparties is intended to increase the operational capacity and reach of agency CMBS purchases. Two firms were selected to support the Commercial Paper Funding Facility (CPFF). Seven additional firms were selected to support the Secondary Market Corporate Credit Facility (SMCCF). The application process is open and ongoing and the New York Fed has announced its intention to name additional counterparties and agents, as applicable, for the CPFF, SMCCF and Term Asset-Backed Securities Loan Facility in the coming weeks. Release.

CFTC Further Extends Certain No-Action Relief to Market Participants in Response to COVID-19

 

On September 11, the Commodity Futures Trading Commission (CFTC) announced the Division of Swap Dealer Intermediary Oversight (DSIO) and the Division of Market Oversight (DMO) are further extending certain elements of the temporary no-action relief issued in response to the COVID-19 pandemic that are set to expire on September 30. The extended relief expires January 15. Such relief includes relief for affected firms from CFTC regulations related to voice trading and other telephonic communications, as well as time-stamping requirements when located in remote, socially-distanced locations. No-action relief will also be extended for SEFs and DCMs from certain CFTC regulations regarding audit trails, recording of oral communications, and related requirements as a result of the displacement of trading personnel from their normal business sites. Release.

SEC Updates and Expands Disclosures for Banking Registrants

 

On September 11, the U.S. Securities and Exchange Commission (SEC) announced that it has adopted rules to update and expand the statistical disclosures that bank and savings and loan registrants provide to investors. The rules also eliminate certain disclosure items that are duplicative of other Commission rules and requirements of U.S. GAPP or IFRS. Release.

Adverse Market Refinance Fee Implementation Now December 1

 

Fannie Mae and Freddie Mac have postponed the implementation date of their Adverse Market Refinance Fee from September 1 to December 1, per direction from the Federal Housing Finance Agency (FHFA). Certain Fannie Mae and Freddie Mac loans will also be exempt from the Adverse Market Refinance Fee. The fee is intended to cover costs to Fannie Mae and Freddie Mac associated with protections extended to renters and borrowers affected by COVID-19. Release.

Treasury and IRS Issue Guidance on Deferred Payroll Taxes

 

On August 28, the U.S. Treasury Department and the IRS issued guidance to employers regarding the executive action taken earlier this month to defer certain employee payroll taxes through the end of the year. The guidance allows employers to defer payment through the end of 2020 of the employee’s portion of Social Security payroll tax for employee’s earning monthly pre-tax wages of $4,000 or less. Release.

Rating Agency Developments (August 24 – September 1)

 

On September 1, KBRA published its Structured Finance: CMBS report titled Coronavirus (COVID-19): Affiliate of On-Demand Office Provider Regus Files for Bankruptcy—CMBS Exposure Examined. Report.

On September 1, DBRS Morningstar published its methodology titled DBRS Morningstar Global Structured Finance Related Methodologies. Methodology.

On August 28, DBRS Morningstar published its methodology titled U.S. Residential Mortgage Servicer Rankings. Methodology.

On August 28, DBRS Morningstar published its methodology titled U.S. Residential Mortgage Originator Rankings. Methodology.

On August 28, KBRA published its report titled CMBS/RMBS: Single-Borrower SFR Comprehensive Surveillance. Report.

On August 27, KBRA published its rating methodology titled ABS: Global Auto Loan ABS Rating. Methodology.

On August 24, KBRA published its research report titled Structured Credit: Coronavirus (COVID-19): U.S. BSL CLO Sector Exposure Map: July 2020. Report.

SEC Modernizes the Accredited Investor Definition

 

The Securities and Exchange Commission (SEC) amended the definition of “accredited investor” to more effectively identify institutional and individual investors that have the knowledge and expertise to participate in private capital markets. The amendments allow individuals to qualify as accredited investors based on measures of financial sophistication, including professional knowledge, experience or certification, as well as existing tests for income or net worth. The updates to the definition also expand the entities that may qualify as accredited investors. Release.

CFPB Issues Report on Impacts of COVID-19 on Consumer Credit

 

On August 31, the Consumer Financial Protection Bureau (CFPB) issued a report examining the early impact of the COVID-19 pandemic on consumer credit. The report noted no significant negative impact on consumer credit or delinquencies, focusing on mortgage, auto loans, credit cards and student loans, from March 2020 to June 2020, suggesting programs such as the CARES Act may have positively impacted consumer credit during this time. Report.