'One Data Tape' Arriving For Mortgage-Backed Securities
July 20, 2009
"The market for residential mortgage-backed securities won't reawaken until late this year or early 2010, according to Tom Deutsch, deputy executive director of the American Securitization Forum Or longer, if housing prices do not start to rise, again.
Deutsch's comment came at a meeting of the industry group to reviewed progress in its 18-month-old Project Restart, aimed at creating one set of standards and systems for creating, selling and exchanging mortgage-backed securities.
The first goal: To create "one data tape" for all investors and ratings agencies that provides more useful and accurate information about the mortgage loans and borrowers that underlie the securities.
Delivery of a more complete and clear "data tape" will prove to be the "next giant leap" in securitization, said Ralph DaIoisio, chairman of the forum's board of directors and managing director of French banking firm Natixis.
The forum's project started with 300 or more fields of data that might be included in the data tape, but that has been winnowed down to 167. Among the fields dropped: Net worth, since lenders do not always collect enough information about borrowers complete assets and liabilities to make the number meaningful, according to Kathryn Kelbaugh, a vice president of Moody's Investors Service.
While net worth didn't make it, a breakdown of a borrower's income and ability to sustain it for at least three years is important, Kelbaugh said.
While "one data tape" is the goal, that tape will vary, by instance. All "tapes," which really are strings of electronically transmitted information, will include a standard set of "mandatory fields" and to that can be added "credit enhancement fields,'' which will help understanding of the quality of the underlying loan, its payment history and its payor.
