Market updates and sector developments

A court has ruled in favour of investors, in a case centred around RMBS trusts held by Deutsche Bank National Trust and a related clean-up call transaction by mortgage servicer PHH Mortgage Corp. The mortgage servicer had previously announced its intention to exercise its clean-up call rights and purchase the trusts’ assets at a contractually defined price. 

The Superior Court of California judge ruled that the price paid by PHH had to take into account the $75m of deferred principal payments owed by mortgage holders who had taken up home loan modification programs in the aftermath of the financial crisis. McKool Smith, which represented investors NAV and Stephen Finkelstein, says the ruling may have “far-reaching consequences” for RMBS trusts containing mortgages that were securitised in the early 2000s. 

In other news…

S&P drops numerical ESG scores

S&P Global Ratings is to stop issuing ESG credit indicator scores in credit rating reports. The agency has decided to outline any ESG factors that may impact creditworthiness in “analytical narrative paragraphs”, rather than using the numerical scale from one to five that it previously applied to each area of environmental, social and governance risks.