Treasury Request for Public Input on Expanding Access to Credit through Online Marketplace Lending

On July 20, the Treasury Department published a Notice and Request for Information ("RFI") seeking comment on various aspects of online marketplace lending, including comment on the following:

• the business models and products offered to small businesses and consumers;
• the potential to expand access to credit to underserved market segments; and
• how the financial regulatory framework should evolve to support the growth of the industry.

Comments to the RFI are due no later than August 31, 2015.

HUD Announces Final Rule on Affirmatively Furthering Fair Housing

On July 8, the U.S. Department of Housing and Urban Development announced a final rule today to equip communities that receive HUD funding with data and tools to help them meet long-standing fair housing obligations in their use of HUD funds. Although the final rule will take effect 30 days after publication, it will not be fully implemented immediately.  Release.

On July 8, Moody's issued Rating Methodology – Moody's Approach to Rating Transactions Backed by Portfolios of Hedge Fund Investments.  Report.

On July 9, Moody's issued Rating Methodology – Moody's Approach to Rating Asset-Backed Commercial Paper.  Report.

On July 10, Fitch published Updated Global Structured Finance & Covered Bonds Criteria Hierarchy.  Release.

On July 13, Fitch updated its Global Surveillance Criteria for Structured Finance CDOs.  Release.

On July 14, Fitch finalized new Insurance Notching Criteria.  Release.

Decoding the Code: Reclamation Under Section 546(c) of the Bankruptcy Code

This is the second post in our "Decoding the Code" Series. The Series intends to discuss various sections of the Bankruptcy Code in a clear and easy to understand manner. Today's post addresses enforcement of reclamation rights in a bankruptcy case.

Read More.

RMBS Suit Against WMC Mortgage LLC Dismissed as Time-Barred

On July 10, 2015, Judge Alvin Hellerstein of the Southern District of New York granted defendant WMC Mortgage LLC's motion for judgment on the pleadings in an action brought by the Federal Housing Financial Agency ("FHFA") and Deutsche Bank National Trust Co. ("DBNTC"), in its capacity as Trustee of the SABR 2006-WM4 Trust.  Judge Hellerstein held that the action was time-barred under New York's six-year statute of limitations, citing the New York Court of Appeals' decision in ACE Securities Corp., Home Equity Loan Trust, Series 2006-SL2 v. DB Structured Products, Inc.  Judge Hellerstein concluded that the date on which the statute of limitations began to run was the signing date of the Pooling and Servicing Agreement, as opposed to the closing date, because the signing date was the point at which "all the right, title and interest" to the mortgage loans were transferred to the Trustee, and when all misrepresentations were made.  Order.

Judge Cote Grants Partial Summary Judgment in RMBS Suit

On July 10, 2015, Judge Denise Cote of the Southern District of New York granted partial summary judgment in favor of defendants WMC Mortgage LLC and GE Mortgage Holding LLC in an action filed by Trustee Bank of New York Mellon ("BoNY") in connection with the sale of over $900 Million in RMBS.  Judge Cote dismissed BoNY's failure to repurchase claim against WMC, citing ACE v. DB Structured Products, which held that a failure to repurchase claim is not a separately enforceable right that gives rise to a separate breach of contract claim independent of a claim for breach of representations and warranties.  Judge Cote also dismissed BoNY's indemnification claims against both defendants as duplicative of BoNY's claim for breach of the representations and warranties in the Mortgage Loan Purchase Agreements ("MLPAs").  BoNY's primary claim, for breach of representations and warranties, was not a subject of the motion for partial summary judgment.  Opinion and Order.

In a separate decision, also issued on July 10, Judge Cote denied the defendants' request for a jury trial, holding that the Trustee's remaining claims, for breaches of the MLPAs and Pooling and Servicing Agreement seek equitable remedies.  Opinion and Order.

BCBS Consults on Proposed Revised Version of General Guide to Account Opening

On July 16, 2015, the Basel Committee on Banking Supervision (BCBS) issued a consultation paper on a proposed revised version of its general guide to account opening.

The guide was first published in February 2003. The proposed revised version takes into account the significant enhancements that have been made to the Financial Action Task Force (FATF) recommendations and related guidance since it was first published.

The guide focuses on account opening. It is not intended to address every possible situation, but instead focuses on some of the mechanisms that banks can use in developing an effective customer identification and verification program that enables them to meet their obligations under anti-money laundering (AML) and counter-terrorist financing (CTF) requirements. The guide also sets out the information that should be gathered at the time of account opening and will help the bank to complete the customer risk profile. The aim is to support banks in implementing the FATF standards and guidance, which require the adoption of specific policies and procedures, in particular on account opening.

When finalized, the revised version of the guide will be added as an annex to the BCBS' guidelines for a sound management of risks related to money laundering and financing of terrorism, which were published in January 2014.

ISDA Publishes EMIR Classification Letter

On July 13, 2015, ISDA published a classification letter that will enable counterparties to notify each other of their status for clearing and other regulatory requirements under Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and repositories (EMIR) (Classification Letter).

EMIR imposes a number of regulatory obligations on counterparties in the derivatives market. The application of the EMIR requirements depends on how counterparties are classified. The Classification Letter has been prepared as a bilateral version of the classification tools that currently exist on ISDA Amend and is intended to facilitate compliance with EMIR by allowing counterparties to communicate their status by answering a series of questions. ISDA has published an explanatory memorandum to accompany the Classification Letter.

The clearing categorization in the Classification Letter covers interest rate derivatives only. It is anticipated that the Classification Letter will be expanded in the future to cover other classes of products that may become subject to the clearing obligation.