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 [分享]向抄金融底的战士们致敬，SEC也入伙了。 |
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theoretical
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作者：theoretical 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Subprime Lenders Get Big Accounting Break at SEC: Jonathan Weil
Commentary by Jonathan Weil
Jan. 30 (Bloomberg) -- Just when it seemed as if the mortgage mess had hit a new low, now comes this: The Securities and Exchange Commission's staff has granted the subprime-lending industry a huge exemption from the normal rules for off-balance- sheet accounting.
In effect, the move will let home lenders keep their balance sheets looking much smaller and less leveraged, even while the off-the-books loans they made get a makeover.
For months, banking regulators and politicians have been pressing lenders to freeze the interest rates on many adjustable-rate subprime mortgages that are scheduled to reset soon at higher interest rates. The idea is to minimize defaults and foreclosures.
While that's a noble objective, all good deeds must be accounted for, and that's been a sticking point for many banks. Through September, just 3.5 percent of subprime mortgages that reset in the first eight months of 2007 had been modified, according to Moody's Investors Service. Even lenders inclined to help don't want to hurt their financial results. And now they might not have to, thanks to a Jan. 8 letter from the SEC's chief accountant, Conrad Hewitt.
Here's the background: Many lenders recorded upfront profits by selling loans in bulk to off-balance-sheet trusts -- known as qualified special purpose entities, or QSPEs -- which then repackaged the loan pools into mortgage-backed securities. The trusts are supposed to be beyond the lenders' control. And if the companies servicing the loans tinker with them in ways that aren't spelled out in the trusts' charters, the sales must be reversed, and the trusts must come onto the lenders' books, under the Financial Accounting Standards Board's rules.
Financial Constraints
That would mean much more assets and debt, possibly limiting banks' ability to make new loans. Not surprisingly, some of the biggest mortgage lenders, including Washington Mutual Inc., Countrywide Financial Corp. and Wells Fargo & Co., had been pushing regulators for a break.
By following new guidelines issued last month by a banking- industry group called the American Securitization Forum, Hewitt said servicers will be allowed to modify subprime mortgages where defaults are ``reasonably foreseeable,'' without jeopardizing the trusts' off-balance-sheet treatment.
Hewitt's letter came in response to requests by the ASF, as well as the Treasury Department and others. On Dec. 6, the ASF published a ``streamlined'' framework for evaluating subprime mortgages issued from January 2005 to July 2007, where the initial rates are scheduled to reset before August 2010.
Loans that meet certain criteria -- based on things such as low credit scores, the number of days delinquent, and high loan- to-value ratios -- are eligible for ``fast-track'' modifications, on the basis that it's foreseeable they'll default, the ASF said.
Losing Status
The wholesale approach includes lots of room for discretion. For instance, if a borrower's credit score is too high, mortgage servicers can use an ``alternate analysis'' and consider a ``tailored modification for a borrower.''
Hewitt said such modifications wouldn't cause the QSPEs to lose their off-the-books status, though he did call for more disclosures by lenders about QSPEs' activities.
Hewitt said he realized there's no way to know how accurate the ASF criteria might be at predicting actual defaults, because there ``is a lack of relevant, observable market data that can be used to perform an objective statistical analysis of the correlation.'' Still, he said the group's criteria looked reasonable, ``based upon a qualitative consideration of the expectation of defaults.''
Hewitt declined to be interviewed, as did FASB officials.
作者：theoretical 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 [分享]向抄金融底的战士们致敬，SEC也入伙了。 -- theoretical - (3905 Byte) 2008-2-01 周五, 12:26 (1005 reads)
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