Mortgage Performance Improvement Continues

On September 25, the OCC reported that the performance of first-lien mortgages serviced by large national and federal savings banks improved from a year earlier.  The OCC Mortgage Metrics Report, Second Quarter 2014, showed 92.9% of mortgages were current and performing at the end of the quarter, compared with 90.6% a year earlier.  The percentage of mortgages that were 30 to 59 days past due decreased 17.3% from a year earlier to 2.4% of the portfolio.  Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased 17.0% from a year earlier.  Report. 

Final Regulation AB II Rules Published in the Federal Register

On September 24, the final Regulation AB II rules were published in the Federal Register.  The final Regulation AB II rules become effective on November 24 and market participants must be in compliance with the final Regulation AB II rules (other than the asset-level disclosure requirements) no later than November 23, 2015 and with the asset-level disclosure requirements no later than November 23, 2016.  Published Rule.

On September 23, DBRS published a request for comments for rating European Covered Bonds.  The report described the DBRS criteria for rating all types of European covered bonds, whether issued under country-specific covered bonds legislation or outside.  Report.

On September 22, Fitch took various ratings action on tender option bonds corresponding to actions taken on their associated enhancement providers or underlying bonds.  Release.

 Note: Free registration is required for rating agency releases and reports.

RMBS Trustee Files New Repurchase Action Against Nomura

On September 17, HSBC Bank USA NA, as trustee for an RMBS trust, filed suit in the Supreme Court for the State of New York against Nomura Credit & Capital Inc. over approximately $613 million in RMBS issued in May 2007.  The complaint alleges that Nomura failed to repurchase securitized mortgage loans that breached representations and warranties made by Nomura concerning, among other things, the loans' credit characteristics, origination, and compliance with applicable laws and regulations.  The lawsuit seeks Nomura's repurchase of the allegedly defective loans or equivalent money damages.  The complaint follows the dismissal of a prior complaint in federal court that was dismissed for lack of subject matter jurisdiction.   Complaint.

EBA Publishes Final Guidelines on Public Support Measures under BRRD  

On September 22, the European Banking Authority (EBA) published final guidelines specifying the types of tests, reviews or exercises that may lead to support measures under Article 32(4)(d)(iii) of the Bank Recovery and Resolution Directive (BRRD).

The BRRD establishes a framework for dealing with unsound or failing credit institutions and investment firms. Article 32(4) of the BRRD stipulates that a firm should be deemed to be failing, or likely to fail, if, among other things, there is a need for extraordinary public support, unless all the conditions listed in Article 32(4)(d) are met.  Under Article 32(4)(d), the EBA is required to issue guidelines on the type of tests, reviews or exercises that may lead to capital shortfalls that may be eligible to be covered by public recapitalization.  Final Guidelines.

ESAs' Joint Committee Publishes Report on Risks and Vulnerabilities in the EU Financial System

On September 22, the Joint Committee of the European Supervisory Authorities (ESAs) published its bi-annual report on the risks and vulnerabilities in the EU financial system. The report considers those risks that have worsened or emerged since the ESAs' previous report, which was published in March and focused on a range of risks including weak economic growth, high levels of private and public debt, and the effects of persistently low interest rates and fragmentation.  Report.

PRA and FCA Issue Consultation on Data Collection on Remuneration Practices under CRD

On September 22, the UK Prudential Regulation Authority (PRA) issued a joint consultation paper with the Financial Conduct Authority (FCA) on data collection on remuneration practices under the Capital Requirements Directive (CRD IV) and the Capital Requirements Regulation.

The consultation sets out the PRA and FCA's proposals to amend their current approach to data collection of remuneration practices and the reporting requirements for banks, building societies, PRA-designated investment firms, IFPRU investment firms and other types of firms to the extent they are to be included in the scope of consolidation of an institution for which data is to be collected in accordance with CRD IV. The proposals concern the remuneration benchmarking information report and the high earners' report.  Consultation Paper.

G20 Publishes Report on Effective Approaches to Support Implementation of G20/OECD High-Level Principles on Long-Term Investment Financing by Institutional

On September 22, the UK Prudential Regulation Authority (PRA) issued a joint consultation paper with the Financial Conduct Authority (FCA) on data collection on remuneration practices under the Capital Requirements Directive (CRD IV) and the Capital Requirements Regulation.

The consultation sets out the PRA and FCA's proposals to amend their current approach to data collection of remuneration practices and the reporting requirements for banks, building societies, PRA-designated investment firms, IFPRU investment firms and other types of firms to the extent they are to be included in the scope of consolidation of an institution for which data is to be collected in accordance with CRD IV. The proposals concern the remuneration benchmarking information report and the high earners' report.  Consultation Paper.