The U.S. mortgage-bond industry is taking steps toward creating standards meant to help kick-start sales as the government seeks to wean the housing market from its support, Bloomberg News reported today. The Structured Industry Finance Group (SFIG), which represents firms from banks to money managers, plans to release the first in a series of papers today mapping out its effort to create recommended contract language for new securities to address the mistrust that’s plagued the market since the 2008 financial crisis. The SFIG has about 250 members including lenders from Bank of America Corp. to JPMorgan Chase & Co., investors such as BlueMountain Capital Management LLC and Prudential Financial Inc., and issuers such as Redwood Trust Inc., as well as rating firms, trustees, lawyers and accountants. In the paper to be released today, the group is seeking to address mortgage-bond terms ranging from representations that loans aren’t fraudulent to disclosures of underwriting guidelines and criteria for triggering reviews of loan files for breaches. In some cases, they will recommend specific language, while in others they will offer a few options for those terms.
