Sector developments and company hires

Fannie Mae and Freddie Mac sold 154,972 non-performing loans with a total unpaid principal balance (UPB) of US$28.7bn during the period from programme inception in 2014 through 31 December 2021, according to the FHFA. The loans had an average UPB of US$185,292, an average delinquency of 2.8 years and an average current mark-to-market LTV ratio of 86%.

Specifically, Fannie Mae has sold 104,467 NPLs with an aggregate UPB of US$19bn, an average delinquency of 2.8 years and an average LTV of 84%. Freddie Mac has sold 50,505 loans with an aggregate UPB of US$9.7bn, an average delinquency of 2.7 years and an average LTV of 90%. Loans in New Jersey, New York and Florida represent 41% of the NPLs sold.

In terms of borrower outcomes, NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance, at 42.3% versus 17.1% for vacant properties. NPLs on vacant homes had a higher rate of foreclosure, at 77.9% foreclosure versus 33.7% for borrower-occupied properties.

In other news…

EMEA

True Sale International has recruited Peter Grijsen as associate director, with a focus on verification of securitisations for SVI. He was previously a manager at Deloitte in Düsseldorf.

Walkers has promoted securitisation lawyer Catherine Overton to partner in its London banking and finance group. She was formerly senior counsel at the firm, having previously worked as a senior associate at Berwin Leighton Paisner and Clifford Chance.

ISPV regime change eyed

The UK PRA has released a consultation paper that sets out some proposed changes in its approach to authorising and supervising Insurance SPVs (ISPVs) that are designed to support the development of the UK ISPV regime. The aim is to enable market participants to make more informed decisions regarding their participation in the UK ILS market and facilitate new ways of raising capital in the insurance market.

The proposed changes include: changes to the legal opinion expectation for non-English law governed contracts; clarification on the number of senior management function (SMF) holders needed for an ISPV; clarification of approach to multiple cedants ceding risk to a single cell via a single contract; clarification on the interpretation of ‘quantifiable risk’; and clarification on the requirement for written policies submitted for ‘standard’ applications. Regarding the SMF clarification, for example, the PRA is proposing that for a ‘standard’ application, a single individual with the relevant skills and experience could hold or perform more than one of the three required SMF roles for an ISPV. For ‘complex’ applications, the authority considers that the three SMF roles may need to be held by separate individuals, although this would be assessed on a case-by-case basis.

The PRA does not anticipate that firms will incur additional costs as a result of the proposals. Feedback on the consultation is invited by 11 October and the implementation date for the changes is expected to be 30 November or one week after the publication of the Policy Statement.

North America

John Hancock Investment Management has announced a partnership with Marathon Asset Management in a bid to expand its alternatives offerings for accredited investors with a new asset-based lending fund. The John Hancock Asset-Based Lending Fund will seek to offer high current income and capital appreciation, aiming to invest more than 80% of its net assets and borrowings in assed-based lending investments. The fund will undertake a flexible, all-weather strategy towards private credit, and aim to take advantage of its subadvisor’s, Marathon, expertise in an array of sectors including transportation assets, healthcare loans and royalty-backed credit, residential mortgage loans, commercial real estate loans, consumer-related assets, liquid securitised credit, and corporate asset-backed credit.