By Shane Kite
The American Securitization Forum (ASF), proceeding with its plan to create unique loan identifiers to increase transparency in the residential mortgage-backed securities (RMBS) market, is considering launching a Web-based data portal to help pay for the project.
According to ASF deputy executive director Tom Deutsch, the portal’s users would have access to the unique loan IDs and other loan-level data included in Project Restart, which the group started last summer to restore confidence in the RMBS sector.
Loan originators would have free online access to the data, while fees levied on RMBS investors would pay for management and storage of the loan IDs, said Deutsch. The portal idea is “getting a lot of support from industry members,” he said, “because on the one hand it pays for the unique loan ID system and on the other it will create a lot of transparency for the market.”
The ASF will tap either Equifax or the fixed-income risk management unit of Standard & Poor’s to create the loan IDs. S&P is promoting a global platform that would provide cross-references for the loan identifiers and deal IDs for asset-backed securities (ABS) and separate tranches. The Cusip Service Bureau, which S&P operates, already supplies IDs for syndicated loans and tranches on debt deals. Equifax, a credit reporting agency privy to a wealth of consumer financial data, has proposed a joint venture with the ASF to build an ID system that would be owned by securitization market participants.
According to Deutsch, the decision will probably be announced with the release of the final loan-level disclosure package, due this quarter. The ASF has been using a phased approach to introduce standardized data fields for the sector. The group--part of the Securities Industry & Financial Markets Association--also plans to issue a reporting package, but that has been delayed to incorporate changes stemming from the Obama administration’s loan modification program, which is designed to ease lending terms for homeowners.
Despite the progress on Project Restart, Deutsch noted in an ASF Webcast last week that it is “not sufficient. We have to address the overhang of outstanding securities. In the current environment, there’s simply too much supply of securities and not enough investor demand.”
And lack of investor confidence continues to affect the market. “I certainly wouldn’t put my money into one of these trusts, when you have so many unanswered structural questions,” said Dennis Moroney, research director at TowerGroup. “There is a lot of talk about transparency, but how about stability in the rules governing these trusts? Investors are unwilling to invest until rules governing ABS trusts are finalized.”
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