Reacting to what it termed as "misinformation circulating within the financial markets, " the American Securitization Forum (ASF) today released a statement standing behind the validity of transfers of residential mortgage loans to securitization trusts. This is in reaction to recent discussion around the market claiming otherwise.
"In the last few days, concerns have been raised as to whether the standard industry methods of transferring ownership of residential mortgage loans to securitization trusts are sufficient and appropriate," said ASF Executive Director Tom Deutsch.
Deutsch said that these concerns are without merit. The ASF membership, he said, is confident that these transfer methods are sound and are based on a well-established legislation governing a multi-trillion dollar secondary mortgage market.
In the next two weeks, the ASF will also be releasing a white paper providing added legal and market practice background on the transfer process.
"We have consulted with a number of ASF’s member law firms who are among the largest and most well-respected firms in the world, including Bingham McCutchen, Cadwalader, Wickersham & Taft, Dewey & LeBoeuf, Hunton & Williams, Orrick, Herrington & Sutcliffe, Sidley Austin and SNR Denton US, Deutsch said.
According to Deutsch, these law firms think that the conventional process for loan transfers embodied in standard legal documentation for MBS is enough and is appropriate to transfer ownership of mortgage loans to the securitization trusts according to the applicable law. He reiterated that this process is sufficient to establish ownership by the securitization trusts.