DBRS says Corker bill will revitalize private RMBS market
Ratings agency DBRS says a proposed Senate bill to wind down Fannie Mae and Freddie Mac, while creating a national mortgage registry is the right remedy for sluggish private-market mortgage securitization. The Residential Mortgage Market Privatization and Standardization Act was proposed earlier this month by Sen. Bob Corker, R-Tenn. Sen. Corker's bill aims to terminate the government-sponsored enterprise side of the mortgage market within 10 years, and establish national standards on pooling and servicing agreements with a uniform electronic mortgage registration system that could resolve many of the legal issues and uncertainties associated with the mortgage securitization process. The electronic registry would be similar to the Mortgage Electronic Registration System, or MERS, but would be designed with the intent of providing investors with more certainty about mortgage recordings during the securitization process, DBRS analysts concluded in their weekly U.S. structured finance newsletter. The plan proposes the creation of an industry-financed database that publishes performance and loan data through a portal operating under the umbrella of the Federal Housing Finance Agency. The bill aims to create a to-be-announced mortgage market with no government guarantees, while replacing the qualified residential mortgage and risk-retention requirements under Dodd-Frank with a standard 5% minimum down payment and a full documentation requirement. Under Corker's plan, technology, home price indices and other systems owned by the GSEs would eventually be sold to private investors. The plan garnered quite a bit of national attention due to Corker's focus on creating MERS 2.0, or a national uniform mortgage registry, to streamline mortgage transfers. DBRS said MERS 2.0 "has the potential to resolve issues regarding the ownership and assignment of mortgages, which may alleviate MBS investor concerns regarding foreclosures on loans assigned" by MERS. Write to Kerri Panchuk.