Sector developments and company hires

Seasoned QMs proposed
The CFPB has issued a notice of proposed rulemaking (NPRM) to create a new category of seasoned qualified mortgages, with the aim of encouraging innovation and to help ensure access to a responsible, affordable mortgage credit market. To be considered a seasoned QM under the proposal, loans would have to be first-lien, fixed-rate covered transactions that have met certain performance requirements over a 36-month seasoning period.

Covered transactions would also have to be held on the creditor’s portfolio during the seasoning period, comply with general restrictions on product features and points and fees and meet certain underwriting requirements. For a loan to be eligible to become a seasoned QM, the proposal would also require that the creditor consider and verify the consumer’s debt-to-income ratio or residual income at origination. Seasoned QMs would only be available for covered transactions that have no more than two 30-day delinquencies and no delinquencies of 60 or more days at the end of the seasoning period.

In other news…

CLO print delayed
Citi has resigned as lead arranger on the US$400m Battalion XVIII CLO, which was due to price yesterday, amid a disagreement with the CLO manager – Brigade Capital Management – in connection with a US$900m payment the bank accidentally made to Revlon lenders. Brigade, along with HPS Investment Partners and Symphony Asset Management, has reportedly declined to return the cash and a federal judge has issued court orders freezing the assets.

EMEA
Aon has launched a new capital partners team in its reinsurance solutions business that will deliver additional sources of capacity to clients to help them to lower their cost of capital, reduce volatility and seize new opportunities for growth. Initially, the team will bring third-party property catastrophe capacity to clients in London, Bermuda, Europe and Asia. Eventually, the team will expand into other business lines and regions.

Richard Wheeler will lead the capital partners team, supported by Anshuman Srivastava as deputy head, both reporting to Nick Frankland, UK ceo of Reinsurance Solutions, and Paul Schultz, ceo of Aon Securities. These individuals have taken on these roles in addition to their existing roles.

North America
Aeolus Capital Management is set to appoint Nicholas Jagoda as a partner and portfolio manager after he fulfils his obligations with Elementum Advisors, where he is currently a partner and portfolio manager. Jagoda was part of the original team that launched Elementum in 2009 and played a key role in the subsequent founding of Elementum (Bermuda) in 2011.

BSI Financial Services has promoted two of its key leaders, John Lawrence and Larry Goldstone. Lawrence has been named president of servicing and lender services, while Goldstone has been named president of capital markets and lending.

Paul, Weiss, Rifkind, Wharton & Garrison has appointed Charles Pesant as a partner in its corporate department and the securitisation practice group, based in the New York office. Pesant focuses his practice on highly complex domestic and cross-border structured finance deals. He was previously a partner at White & Case.

Reporting templates updated
ESMA has published updated securitisation reporting instructions and XML schema (version 1.2.0) for the templates set out in the technical standards on disclosure requirements, which will enter into force 20 days after they have been published in the Official Journal of the EU. The updates address technical issues identified by stakeholders since December 2019. In order to facilitate the smooth implementation of these updates, reporting entities may choose to use version 1.1.0 or version 1.2.0 of the XML schema and validation rules until 1 February 2021. As of that date, reporting entities may only use the latest version, version 1.2.0.

‘True lender’ cases settled
Colorado Attorney General Phil Weiser has settled two precedent-setting lawsuits involving Colorado’s right to enforce its interest rate limits on consumer loans to protect residents from predatory lending practices. The AG had alleged that Avant and Marlette illegally partnered with two out-of-state banks - WebBank and Cross River Bank respectively - in a scheme to “rent” those banks’ ability to lend above Colorado’s rate limits.

Under the settlement, WebBank, Cross River Bank and all of their non-bank partners - including Avant and Marlette - have agreed to provide Colorado consumers with certain protections to ensure that they are making true banks loans. Additionally, they committed that they will not lend to Colorado consumers at rates above 36% and will provide consumers with other protections required by Colorado law. In addition, non-bank partners will maintain a Colorado lending license.

The companies will pay US$1.05m to the State of Colorado for consumer protection efforts consistent with the settlement agreement. Furthermore, the companies will make a US$500,000 contribution to the MoneyWi$er programme, a partnership between the AG’s office and the Colorado Department of Education that supports K-12 financial education in Colorado.