Bring Trust Back To Residential Mortgage Backed Securities
Best Mortgage Rates
Mortgage interest rates are effected by the buying and selling of mortgage backed securities, called MBS. Specifically, Residential Mortgage Backed Securities (RMBS) investors supply much of the money needed to fund residential mortgages.
The more demand there is by investors to purchase Residential Mortgage Backed Securities, the more secure the supply of that money source, and the lower the cost of the money to consumers seeking to refinance or purchase a home.
In a good economy, there is trust, shown by demand. Investors will buy RMBS when they feel the product is safe and honest. It is currently the job of the American Securitization Forum (ASF) to recommend improvements in the regulations on RMBS and bring back the trust investors are missing.
Mortgage News From The American Securitization Forum (ASF)
Code named "Project Restart", the ASF is seeking to restore trust to investors by a series of regulation improvements. The most remembered buzz word of 2009, as disseminated by the Obama administration, will be "transparency." Essentially, that equates to "what you see is what you get." The ASF seeks to build investor trust again by making the quality of the mortgages pooled for sale "transparent." Investors should know what they are getting and feel confident. No smoke and mirror tricks, just honest products with reliable returns.
ASF Recommendations Will Effect Mortgage Loan Applications
On July 15, 2009 the ASF released its final recommendations for the "transparency, disclosure, and due diligence standards for new Residential Mortgage Backed Securities (RMBS)." In her article dated July 19, 2009, Julie Messina, writing for Examiner.com, outlines these new accountability standards. Article
New requirements for strengthening the qualify of RMBS include Form 4506-T which allows the lender to communicate directly with the IRS regarding income records, Broker Indicator which identifies when a broker originated the loan, number of properties the borrower owns, whether the loan met the lagal definition of "high cost," and a computer-generated property value (AVM) with confidence rating.
These new requirements will likely slow the mortgage approval process. But new standards will combat fraud, increase the quality of RMBS, and therefore stimulate confidence for the RMBS investor.
