KBRA Releases Research – Maryland Licensing Rule: Roadblock for Mortgage Securitization?

KBRA releases research on the potential impacts of recent Maryland Office of Financial Regulation (OFR) guidance on securitization financing for Maryland loans. The OFR issued a notice of emergency regulations and formal guidance on January 10 regarding the applicability of Maryland licensing laws to assignees of mortgage loans on properties in Maryland. The rule requires all persons engaged in mortgage lending, including mortgage trusts and their assignees, to obtain licenses under Maryland’s Installment Loan Licensing Law and Mortgage Lender Law.

There is still substantial uncertainty about the potential reach of the new guidance, but it could substantially impair Agency and non-Agency securitization financing for Maryland loans. Applicable licensing requirements for trustees will involve additional expenses and liabilities.

Over $475 billion in aggregate Maryland loan exposure existed in the RMBS 2.0 non-Agency market alone at issuance, with over $6 trillion in Agency issuance during the same period (as measured from government-sponsored enterprise (GSE) credit risk transfer (CRT) transactions). That liquidity to Maryland borrowers may need to be provided elsewhere if the securitization of Maryland loans is curtailed due to the guidance.

Click here to view the report.

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1007642

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