U.S. SEC considers relaxing post-crisis structured mortgage product rules
LIT Editor’s Comment: If this passes, it is a Disaster for Democracy. Securitization is for making the bankers and the rich, more wealthy off the back of the average citizen. This must be stopped or you’ll end up losing your homes to REITs and be living in rentals akin to private ‘council houses’. Oh and yes, the latest property developers for these ‘real estate investors’ are making tiny houses – modern trailer homes – in replacement to standard floor plans in America..Do you get the picture?
The U.S. Securities and Exchange Commission (SEC) on Wednesday said it was seeking feedback on whether disclosure rules were discouraging firms from issuing SEC-registered residential mortgage-backed securities (RMBS) as the Trump administration seeks to overhaul the U.S. housing finance market.
SEC Chairman Jay Clayton said that he had asked agency officials to review SEC disclosure requirements for RMBS introduced in 2014 in a bid to revitalize offerings for these products and help boost capital formation in the housing market.
With the future privatization of Frannie Mae and Freddie Mac, the RMBS market will likely shrink and decrease funding available for home loans without changes.
“Potential issuers of SEC-registered RMBS have expressed concerns regarding the scope and interpretation of disclosure requirements,” Clayton said in a statement. “In light of the absence of SEC-registered RMBS offerings, I have asked SEC staff to review our RMBS asset-level disclosure requirements with an eye toward facilitating SEC-registered offerings.”
The review was recommended by the U.S. Treasury Department in its blueprint published last month for removing mortgage giants Fannie Mae and Freddie Mac from government control. The pair, which guarantee over half the nation’s mortgages, were put into conservatorship in 2008 as losses mounted on their subprime mortgage portfolios
RMBS are a type of asset-backed security comprised of bundled loans, such as mortgages, student loans or auto loans. The loans are typically packaged in risk tranches, with holders of low-risk loans like 30-year-fixed mortgages paid first, and investors in high-risk assets such as subprime mortgages paid afterward. Many crisis-era RMBS investors did not fully appreciate their level of risk exposure to the subprime tranche.
Following the crisis, the agency introduced rules requiring SEC-registered RMBS issuers to provide greater information, including 270 different data points, about the quality of underlying loans. These requirements can be difficult to satisfy and may have stymied private-label securitization, the Treasury said last month.
By contrast, Fannie and Freddie RMBS offerings require only 100 data points. The pair have issued nearly $4.5 trillion of RMBS since 2014.
The SEC said it was seeking comment on, among other issues, whether the SEC should implement a “provide-or-explain regime,” which would allow an issuer to omit any asset-level data point, as long as the issuer identifies the omitted field and explains why it cannot provide the information.
Zombie Properties Slip Below 3 Percent Of All Foreclosures Nationwide
LIT COMMENT; Because all the Real Estate Investors have purchased the properties for their REITs and Real Estate Rental Portals (after they renovate and then rent for astronomical rental fees) and/or banks are keeping the properties on their books longer and paying fines.
Overall Vacant Properties At 1.5 Million in Q4 2019
IRVINE, Calif., Oct. 31, 2019 /PRNewswire/ — ATTOM Data Solutions, curator of the nation’s premier property database and first property data provider of Data-as-a-Service (DaaS), today released its Q4 2019 Vacant Property and Zombie Foreclosure Report showing that over 1.5 million (1,527,142) U.S. single family homes and condos, representing 1.5 percent of all homes, were vacant in the fourth quarter of 2019.
The report analyzes publicly recorded real estate data collected by ATTOM Data Solutions — including foreclosure status and owner-occupancy status — matched against quarterly updated vacancy data. (See full methodology enclosed below.)
The report shows that during the fourth quarter of 2019, about 288,300 homes were in the process of foreclosure, with 8,535, or 2.96 percent sitting empty as “zombie” foreclosures. The percentage of zombie properties is down from 3.2 percent in Q3 2019 and 4.7 percent in Q3 2016, the last comparative foreclosure vacancy report.
“The fourth quarter of 2019 was a repeat of the third quarter when it came to properties abandoned by owners facing foreclosure: the scourge continued to fade. One of the most visible signs of the housing market crash during the Great Recession keeps receding into the past,” said Todd Teta, chief product officer with ATTOM Data Solutions. “While pockets of zombie foreclosures remain, neighborhoods throughout the country are confronting fewer and fewer of the empty, decaying properties that were symbolic of the fallout from the housing market crash during the recession.”
Q4 2019 Vacant Home Infographic for Top ZIPS
High-level findings from the report:
A total of 8,535 properties facing possible foreclosure were vacated by their owners nationwide in the fourth quarter of 2019. Washington, D.C. continued to have the highest percentage of zombie foreclosures (10.5 percent). States where the zombie foreclosure rates were above the national rate of 2.9 percent included Kansas (7.9 percent), Oregon (7.9 percent), Montana (7.4 percent); Maine (6.7 percent) and New Mexico (5.8 percent). The lowest rates – all less than 1.2 percent – were in North Dakota, Arkansas, Idaho, Colorado and Delaware.
New York had the highest actual number of zombie properties (2,266), followed by Florida (1,461), Illinois (892), Ohio (823) and New Jersey (398). But those numbers were all lower than in Q3 2019.
Among metropolitan areas with at least 100,000 residential properties, Peoria, IL, continued to have the highest percent of vacant foreclosures (zombies) at 13.5 percent, followed by Wichita, KS (10.2 percent), Lexington, KY, (9.8 percent); Syracuse, NY (9.3 percent) and Honolulu, HI (8.6 percent).
Among zip codes with a population of 10,000 or more and least 1,000 vacant properties, the highest rates of zombie foreclosure properties remained concentrated in the Midwest. The zip codes with the top percentages included 48505 and 48504 zip codes in the Flint, MI metro area; 46407 and 60426 zip codes in the Chicago, IL metro area; 29928 zip code in the Hilton Head, SC metro area; and 46016 zip code in the Indianapolis, IN metro area.
The top zombie foreclosure rates in counties with at least 500 properties in foreclosure included Peoria County, IL (17.2 percent); Baltimore City/County, MD (11.5 percent); Broome County, NY (10.3 percent); Onondaga County, NY (9.7 percent) and Cuyahoga County, OH (9.4 percent).
The highest levels of vacant investor-owned homes were in Indiana (8.7 percent), Kansas (6.6 percent), Minnesota (6.0 percent), Ohio (5.9 percent) and Rhode Island (5.9 percent).
The highest overall vacancy rates for all residential properties were in Tennessee (2.7 percent); Kansas (2.7 percent); Indiana (2.6 percent); Oklahoma (2.5 percent) and Mississippi (2.5 percent). The lowest were in New Hampshire (0.4 percent); Vermont (0.4 percent); Delaware (0.5 percent); Idaho (0.6 percent) and North Dakota (0.7 percent).
Report Methodology
ATTOM Data Solutions analyzed county tax assessor data for more than 98 million single-family homes and condos for vacancy, broken down by foreclosure status and, owner-occupancy status. Only metropolitan statistical areas with at least 100,000 single-family homes and condos and counties with at least 50,000 single-family homes and condos were included in the analysis. Vacancy data is available at https://www.attomdata.com/solutions/marketing-lists/.
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