The American Securitization Forum has released recommended best practices for the presentation and description of home equity trigger mechanisms. These best practices are aimed at promoting better disclosure of different collateral-based performance trigger mechanisms that change the allocation of cashflows in these types of deals, said the ASF in a release. The ASF believes that these improvements will increase the awareness as well as understanding of how these trigger mechanisms work, thus promoting more efficiency in the secondary market for home equity mortgages.
The best practices make recommendations that are focused on offering materials and ongoing investor reporting through remittance reports, and take the form of both statements that manifest best practices and questions the offering materials and remittance reports should answer. The best practices were developed by the ASF's home equity loan ABS triggers task force that includes representatives from dealer, investor, issuer, rating agency and other ASF member firms. The task force circulated a draft of recommended standards late last year and incorporated industry feedback into the final best practices.