Release Date: March 16, 2011
Contact: Katrina Cavalli, 212.313.1181, firstname.lastname@example.org
SIFMA Statement on the State Attorneys’ General Term Sheet for Mortgage Servicers
New York, NY, March 16, 2011—SIFMA today released the following statement from Randy Snook, executive vice president, business policies and practices, in response to the State Attorneys’ General term sheet for mortgage servicing standards:
“SIFMA has reviewed the State Attorneys’ General term sheet for the five largest mortgage servicers that was recently made public. While we recognize this is an initial draft, and we support sensible reforms to mortgage servicing that address the needs of borrowers and mortgage-backed securities investors, it is important to note that the term sheet as proposed is unprecedented in its scope and prescriptiveness and requires a careful legal and market impact analysis, particularly for unintended consequences. Any reform of mortgage servicing standards must be considered through the interest of the consumer and what would have the best outcome for the housing market and broader U.S. economy as we continue to address foreclosure issues.
“SIFMA notes that any settlement regarding the creation of servicing standards for the nation’s largest mortgage servicers will likely be viewed as new industry standards, and therefore have a broad impact beyond those firms. We therefore express initial concern that such critically important and consequential mortgage servicing reforms are being contemplated in a closed process. Furthermore, this settlement, as proposed, would put at risk mortgage-backed securities investors who stand to absorb the losses from significantly extended foreclosure timelines due to the implementation challenges of the prescriptive terms of the settlement. This would further harm their confidence in the private-label securitization markets that are so vital to the nascent economic recovery. Extended foreclosure timelines would also adversely impact communities saddled with vacant housing as well as the broader economy. Additionally, borrowers would likely see higher prices for mortgages under the proposed agreement. Given the broad impact of this reform, we firmly believe the process of developing broad servicing standards should be open to input from a range of stakeholders.
“While it would be premature to comment further, SIFMA is making all efforts to develop a fully informed analysis with our members."
The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of hundreds of securities firms, banks and asset managers. SIFMA's mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit www.sifma.org.