American Securitization Forum Releases Study on Mortgage Loan Transfers in Securitizations
The American Securitization Forum today has released a detailed study on the principles of valid mortgage loan transfers in securitization transactions.
This project began in the wake of recent concerns expressed by commentators questioning whether securitization trusts (both private and government-sponsored) have valid legal title to the trillions of dollars of mortgage notes in those trusts. The initial response by the securitization industry indicated that the methods for conducting these transfers were "adequate and appropriate" and "in accordance with applicable law." The study results released today provide ample support for this position.
In a statement released to members, the American Securitization Forum stated that the study "...finds that traditional legal principles and processes, including the common law rule that “the mortgage follows the note,” are fully consistent with today’s complex holding, assignment and transfer methods for mortgage loans and those methods are legally effective for participants in the secondary mortgage market to transfer mortgage loans."
This is good news for the securitization industry and all its participants, and hopefully the study will provide reassurance to issuers and investors alike, such that the still sluggish securitization market can continue to improve.
