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ASF Issues Recommended Investor Reporting Standards for Modifications of Securitized Residential Mortgage Loans
December 6, 2007
Press Release
New York, NY – The American Securitization Forum (ASF) today issued recommended standards for loan servicers and trust administrators to use when reporting loan modification activity to investors in securitized residential mortgage loans. The guidance establishes a common, minimum recommended framework for securitization monthly reports, and includes provisions for defining modified loans and recommended loan modification data fields.
These standards were issued in conjunction with ASF’s Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime Adjustable Rate Mortgage Loans and as a follow-up to its June, 2007 Statement of Principles, Recommendations and Guidelines for the Modification of Securitized Subprime Residential Mortgages, which advocates the use of loan modifications under appropriate circumstances and provides related guidance for servicers of securitized subprime mortgage loans. ASF's overall goal in issuing recommendations on these topics is to facilitate wider and more effective use of loan modifications and other loss mitigation options in appropriate circumstances.
“By recommending baseline, minimum reporting standards for loan modification activity in securitizations, these guidelines should enable investors and others to evaluate the impact of modifications on collateral and deal performance,” said George Miller, executive director of the American Securitization Forum. “We encourage servicers and trust administrators to adopt these standards as soon as possible, to enhance investor reporting and transparency.”
The investor reporting standards define a loan modification as a formal revision to the contractual payment terms of the mortgage note. Specific data fields that should be reported include, among others, the modified loan amount, the pre- and post-modification maturity dates and interest rates, and any capitalized amounts or forgiven interest and principal amounts. The ASF is also in the process of developing additional, prospective guidance relating to the treatment of modified mortgage loans for delinquency and cumulative loss “trigger” calculations.
Media Contact: Katrina Keller, 646.637.9281, kkeller@americansecuritization.com