Mergers and acquisition transactions for securitization sponsors and servicers present unique issues that require in depth knowledge of the underlying securitization structures and risks, as well as related financing, regulatory and technology issues.
Congress amended the Truth in Lending Act in May 2018 by directing the Consumer Finance Protection Bureau to prescribe ability-to-repay regulations with respect to Property Assessed Clean Energy (“PACE”) financing. PACE financing helps homeowners cover the costs of home improvements, which financing results in a tax assessment on the consumer’s property. Ability-to-repay regulations, which TILA and the CFPB currently impose in connection with most closed-end residential mortgage loans, would generally require a creditor to consider specific factors about a consumer’s finances, including income, assets, and debt obligations, and to verify the income and assets with reliable third-party documentation, prior to extending the financing.
On March 4, 2019, the CFPB issued an Advance Notice of Proposed Rulemaking (“ANPR”) seeking information regarding, and responses to specific questions related to, PACE financing.
Read more in Mayer Brown’s Legal Update.
As more countries propose and implement risk retention rules for securitisation transactions, a few Mayer Brown attorneys have prepared a helpful chart comparing the EU, US and Japanese securitisation risk retention rules.
Chambers and Partners published recently its Practice Guide Securitisation 2019. Mayer Brown’s German securitization lawyers were pleased to contribute the Germany chapter.
Asset based finance and in particular securitisations are an important tool to provide funding to the economy and regulatory risk transfer to financial institutions. The Germany chapter of Chambers and Partners’ Practice Guide Securitisation 2019 had been written by experienced senior German securitisation practitioners and provides interested readers and market participants with a first hand overview on key structural and regulatory information as well as information on the legal background of German securisations.
Freddie Mac is revising its reporting cycle for greater alignment with Fannie Mae and Ginnie Mae, and to help pave the way for Fannie Mae’s and Freddie Mac’s joint initiative to develop a single mortgage-backed security for issuance by both. Read more about it here.
A repurchase facility (“Repurchase Facility”) is a financing arrangement pursuant to which a bank or other credit institution (a “Buyer”) provides liquidity to an entity that originates or acquires real estate related assets (a “Seller”) by purchasing such assets with a simultaneous agreement that the Seller will repurchase the assets on a future date. A Repurchase Facility may be used to aggregate mortgage loans or other qualifying assets that a Seller has originated prior to a takeout in connection with a securitization, or a Repurchase Facility could be used to provide financing for a static pool through the maturity date of the mortgage loans.
The past week in Germany has attracted and increased raised interest in blockchain based transactions.
Last week, three announcements brought further attention to the use of blockchain technology for capital market transactions in Germany. Initially, banks focused on the digitalisation of German Schuldschein loan issuances and OTC derivatives. Last week a very first ABCP issuance (see press release) and a plain money market issuance (see press release) via blockchain were published. However, both transactions are not governed by German law (but by Irish and Luxembourg law). In addition, the German regulator BaFin approved a securities prospectus for a public offer to retail investors of a subordinated uncertificated note issuance by a fintech company located in Berlin that is referenced by a token. This decision of BaFin appears to mark a new development in terms of the interpretation of the long established definition of a “security” under the European Prospectus Directive (and the respective definition under MIFID). Even though this definition is a regulatory based term and must therefore not fully be in line with German civil law, there remains a linkage to German civil law in particular when it comes to the question on whether or not the specific debt receivable/instrument is tradable and fungible. Continue Reading Raising interest in blockchain based transactions in Germany
We have recently survived the longest government shutdown in U.S. history and narrowly avoided another. Congress passed a full appropriations bill on February 15, 2019, which the president signed. Parts of the appropriations begin to expire as early as October 1, 2019. Here’s a look at how the ABS markets are affected during a government shutdown.
Buying and selling receivables, the obligor of which is the United States government, requires consideration of the Federal Assignment of Claims Act (“FACA”). As is the case with non-government account debtors, the federal government, in its capacity as an obligor, has the ability (with certain limited exceptions) to set off contractual payments owed by it to a seller of the right to receive such payments, against amounts payable to it by such seller for both (x) damages and related payments caused by such seller’s failure to perform under the applicable contract and (y) any other amounts owing to the government by such seller (including federal tax liability). In the case of non-government obligors, under the terms of the Uniform Commercial Code, a purchaser of the right to receive a contractual payment owing by such obligor may, generally, limit or cut-off the applicable set off rights of the related obligor, by providing a somewhat simple notice to such obligor that the seller has assigned its right to receive such payments. In order for a purchaser to limit the set off rights of the federal government, however, the purchaser must comply with the more complicated requirements of FACA.
As we pack our bags for Las Vegas (and it looks like our winter coats too), we are happy that several Mayer Brown partners will be featured speakers at SFIG Vegas 2019, being held February 24-27, 2019. See the more information at the conference website.
Leading off on Sunday, February 24, 2019, Brad Keck will share his experiences as a practice leader and Hiring Partner, on a panel discussing The Law Firm of the Future: Successfully managing the Modern Practice. Then on Monday, February 25, Carol Hitselberger, a leader not only at Mayer Brown but also in the securitization industry, will participate on a panel entitled, Beyond GSE CRT: Expanding the Use of Credit Risk Transfer; and Matt O’Meara, head of the firm’s Private Credit practice, will moderate the Private Credit Funds: 2019 Market Outlook panel. Credit Funds will be front and center at SFIG this year.