Saturday, October 23, 2010

Sloppy Servicers Now Feel The Heat From Disgruntled Mortgage Bond Buyers As Concerns Rise Over Crappy Monthly Remittance Reports

Asset-Backed Alert (a weekly update on worldwide securitization) reports:

  • Mortgage-bond buyers are losing faith in the accuracy of remittance reports, and some say the apprehension could soon factor into their investment strategies. Remittance reports, distributed monthly by securitization trustees, are supposed to provide routine snapshots of the cashflow-collection and distribution activities of servicers. However, investors say there has been a rash of recent instances in which the reported data differed considerably from what actually happened - making it impossible to determine values for their holdings.

  • Frustrated with what they consider insufficient efforts by servicers to address the discrepancies, certain buysiders are even grumbling that they'll direct their money elsewhere. Should they take such steps en masse, the conflict could undermine both recent gains in the secondary-market values of mortgage bonds and plans by issuers to bring new deals to market.

For more, see Investors Grumble Over Flawed Remittances.

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