Posts by: Charlie McDonald

CFPB Issues Proposals to Amend Qualified Mortgage Definition and Extend GSE Patch

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On June 22, the CFPB issued two notices of proposed rulemaking (NPRMs) regarding the Qualified Mortgage (QM) exemption from the ability-to-repay requirements of Regulation Z. The first proposal would, among other changes, revise the general QM loan definition by replacing the QM borrower debt-to-income ratio limit with a price-based approach to determining loan eligibility. The second proposal would extend the current January 2021 sunset date in the provision granting QM status to mortgages eligible for purchase by Fannie Mae or Freddie Mac (the “GSE Patch”) to the date on which the amendments to the general QM loan definition become effective. Comments on the NPRM to revise the general QM loan definition are due 60 days following publication in the Federal Register. Comments on the NPRM to extend the GSE Patch are due 30 days following publication. Release. NPRM (General QM Loan Definition). NPRM (GSE Patch Extension).

Rating Agency Developments (June 18 – June 30)

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On June 30, Fitch published its criteria for Covered Bonds Rating. Criteria.

On June 30, DBRS Morningstar published its updated methodology for U.S. ABS General Ratings. Methodology.

On June 26, Moody’s published its updated methodology for Catastrophe Bonds. Methodology.

On June 26, KBRA published a ­­­­­­­­­­­­­­­release titled KBRA Assigns Ratings to BANK 2020-BNK27. Release.

On June 25, KBRA published a report titled Public Finance: Coronavirus (COVID-19): Unemployment Improves in All but Six States. Report.

On June 24, Moody’s published its revised methodology for rating Credit Card Receivables-Backed Securities. Methodology.

On June 24, Moody’s published its revised methodology for rating Credit Tenant Lease and Comparable Lease Financings. Methodology.

On June 19, Fitch published its revised criteria for rating Future Flow Securitizations. Criteria.

On June 19, Fitch published its revised criteria for rating CMBS Large Loans. Criteria.

On June 19, Moody’s published its revised methodology for rating Floorplan Asset-Backed Securities. Methodology.

On June 19, Moody’s published its revised methodology for rating Repackaged Securities. Methodology.

On June 18, Moody’s published its revised methodology for rating Covered Bonds. Methodology.

Rating Agency Developments (April 23 – May 6)

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On May 6, Fitch published its updated Future Flow Securitization Rating. Criteria.

On May 4, DBRS Morningstar published its updated Assessing U.S. RMBS Pools Under the Ability-to-Repay Rules. Methodology.

On May 1, Moody’s published its updated Tobacco Settlement Revenue Securitizations. Methodology.

On May 1, Moody’s published its updated US Tax Lien-Backed Securitizations. Methodology.

On April 28, KBRA published an article entitled Coronavirus (COVID-19): CMBS Special Servicing and Watchlist Trends. Report.

On April 27, DBRS Morningstar published an updated version of Rating and Monitoring Covered Bonds. Methodology.

On April 27, DBRS Morningstar published an updated version of Rating and Monitoring Covered Bonds Addendum: Market Value Spreads. Methodology.

On April 27, Moody’s published its updated Structured Settlement Securitizations. Methodology.

On April 24, Moody’s published its updated Non-Performing and Re-Performing Loan Securitizations. Methodology.

On April 23, Fitch published its updated Credit Card ABS Rating. Criteria.

On April 23, KBRA published an article entitled Coronavirus (COVID-19): Private Corporate Credit Market Poised for Resiliency. Report.

Federal Reserve Board Announces Expansion of Municipal Liquidity Facility

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On April 27, the Federal Reserve released an updated Term Sheet and FAQs expanding the scope and duration of its Municipal Liquidity Facility. Among other changes, the updated Term Sheet provides that eligible notes must have less than 36 months maturity (previously 24 months) and eligible issuers include counties with at least 500,000 residents and cities with at least 250,000 residents (previously 2 million and 1 million). The Federal Reserve also extended the program’s termination date by three months to December 31. Release. Updated Term Sheet. FAQs.

FHFA to Allow FHLBanks to Accept PPP Loans as Collateral for Member Advances

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On April 23, the Federal Housing Finance Agency issued a supervisory letter addressed to Federal Home Loan Banks’ (“FHLBanks”) presidents advising them that FHLBanks may accept Paycheck Protection Program (“PPP”) loans as collateral for advances made to member banks, subject to certain member-related conditions and loan-related discounts, caps and limits. Release. Supervisory Letter.

FHFA Strengthens Evaluation Criteria for GSE’s Duty to Serve Program

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On March 11, the Federal Housing Finance Agency (FHFA) issued revised guidance for evaluating Underserved Markets Plans submitted by Fannie Mae and Freddie Mac (the “GSEs”) for FHFA approval under the Duty to Serve regulation. The revised guidance strengthens the criteria for determining GSE compliance with the regulation, including through a revised ratings framework and higher expectations for impactful plans. Revised Guidance.

Federal and State Banking Agencies Encourage Financial Institutions to Meet Financial Needs of Customers and Members Affected by Coronavirus

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On March 9, the Federal Reserve Board, FDIC, OCC, Consumer Financial Protection Bureau (CFPB), National Credit Union Administration (NCUA) and Conference of State Bank Supervisors (CSBS) issued a joint statement encouraging financial institutions to work constructively with borrowers and other customers in communities affected by the coronavirus. The agencies also pledged to provide appropriate regulatory assistance to affected institutions subject to their supervision, including by working with affected institutions to expedite certain requests and minimize disruptions or burdens in connection with examinations. Release.

FFIEC Updates Interagency Guidance on Pandemic Planning

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On March 6, the member agencies of the Federal Financial Institutions Examination Council (FFIEC) issued updated guidance specifying that financial institutions’ business continuity plans should address the threat of a pandemic outbreak and its potential impact on the delivery of critical financial services. The guidance identifies actions that banks should take to minimize the potential adverse effects of a pandemic. FFIEC Guidance.

Rating Agency Developments

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On March 18, KBRA published its Coronavirus (COVID-19): Consumer ABS Braces for Disruptions. Report.

On March 13, KBRA published its General Global Rating for Asset-Backed Securities. Methodology.

On March 13, KBRA published its Aviation ABS Global Rating. Methodology.

On March 13, KBRA published its Equipment Lease & Loan Global ABS Rating. Methodology.

On March 13, KBRA published its Project Finance Global Rating. Methodology.

On March 13, KBRA published its Structured Credit Global Rating. Methodology.

On March 12, KBRA published its Financial Guaranty Global Rating. Methodology.

On March 11, DBRS Morningstar published a report entitled: Mapping Financial Institution Internal Ratings to DBRS Morningstar Ratings for Global Structured Credit Transactions. Methodology.

On March 10, Fitch published its rating for Aircraft Operating Lease ABS. Criteria.

On March 9, DBRS Morningstar published its North American CMBS Multi-Borrower Rating. Methodology.

On March 9, Moody’s published its proposed update for rating TruPS CDOs. Methodology.

On March 6, DBRS Morningstar published its North American CMBS Surveillance. Methodology.

On February 19, DBRS Morningstar published its U.S. Federal Family Education Loan Program Securitizations. Criteria.

On February 18, Fitch published its U.S. Public Finance Letter of Credit-Supported Bonds and Commercial Paper Rating. Criteria.