SEC Approves New Securitization Risk Retention Rule with Broad Exception for Qualified Residential Mortgages
November 26, 2014 —
Neil P. Casey & Lori S. Smith – White and Williams LLPThe Securities and Exchange Commission (SEC) and five other federal agencies recently approved a joint rule (the “Risk Retention Rule”) mandating that sponsors of certain types of securitizations retain a minimum level of credit risk exposure in those transactions and prohibiting such sponsors from transferring or hedging against that retained credit risk.[i]The final Risk Retention Rule will be effective one year after its publication in the Federal Register for securitizations of residential mortgages, and two years after publication for securitizations of all other asset types. The SEC vote was 3-2, with sharp dissents from Commissioners Gallagher and Piwowar concluding that the adopting agencies had missed a prime opportunity to rein in risky mortgage lending practices that had precipitated the 2008 financial crisis.
Background
Following the meltdown of the securitization markets in 2007 (particularly subprime residential mortgage-backed securities), and the resulting global financial crisis, the Dodd-Frank Act mandated that the U.S. federal banking, securities and housing agencies adopt and implement rules to require sponsors of most new securitizations to retain not less than five percent of the credit risk of any assets that the securitizer, through the issuance of an asset-backed security, transfers, sells or conveys to a third party. It was thought that requiring securitization sponsors to keep “skin in the game” would align the interests of the sponsors with the interests of investors and thereby incentivize the sponsors to ensure the quality of the assets underlying the securitization through appropriate due diligence and underwriting procedures when selecting assets for securitization. Although the Dodd-Frank Act explicitly exempted securitizations of certain types of mortgage loans called “qualified residential mortgages” (or “QRMs”) from this risk retention requirement, it invited the rulemaking agencies to define that key term, provided that their definition could be no broader than the definition of “qualified mortgage”adopted by the Consumer Financial Protection Bureau (CFPB) pursuant to the Truth in Lending Act.[ii] In considering how to define QRM, the rulemaking agencies were directed by the Dodd-Frank Act to take into consideration “underwriting and product features that historical loan performance data indicate result in a lower risk of default.”[iii]
Reprinted courtesy of
Neil P. Casey, White and Williams LLP and
Lori S. Smith, White and Williams LLP
Mr. Casey may be contacted at caseyn@whiteandwilliams.com; Ms. Smith may be contacted at smithl@whiteandwilliams.com
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Are Housing Prices Poised to Fall in Denver?
December 10, 2015 —
Beverley BevenFlorez-CDJ STAFFDenver, Dallas, and Houston’s housing markets are rising too quickly and will soon hit “’bubble territory’” according to a housing market index by Florida Atlantic University and Florida International University, reported the Denver Business Journal.
"There is about a 70 percent chance that renters in Denver will get more wealth on average than buyers," Ken Johnson, a real estate economist at the university in Boca Raton, Florida, told the Denver Post.
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Nevada’s Home Building Industry can Breathe Easier: No Action on SB250 Leaves Current Attorney’s Fees Provision Intact
June 21, 2017 —
Aaron Lovaas – Newmeyer & Dillion LLPConstruction and design professionals in Nevada’s home building industry breathed a collective sigh of relief on June 5, 2017 when the 79th Session of the Nevada Legislature adjourned without entertaining Senate Bill 250, which sought to reinstate homeowner plaintiffs’ nearly automatic right to recover attorneys’ fees, expert costs, and costs of investigation when bringing suit for alleged constructional defects.
Until 2015, homeowners’ recovery of such damages was the reality of the construction defect landscape in Nevada. While Chapter 40 of the Nevada Revised Statutes specifically allowed for recovery of “reasonable” attorneys’ fees, expert costs, and costs of investigation, the trend in Nevada was that plaintiffs were all but guaranteed awards of all such sums. Of course, this environment incentivized plaintiffs’ lawyers to bring claims of questionable or little repair value in cases where the attorney’s fees and expert costs often far exceeded the costs of repair.
HOW AB125 CHANGED THE LANDSCAPE
Such was the reality in Nevada until 2015 and the passage of Assembly Bill 125, which eliminated the nearly automatic award of attorneys’ fees and expert costs and overhauled Chapter 40 in many other respects. AB125 made over portions of Chapter 40 by:
- Placing awards of attorneys’ fees into the framework of offers of judgment, utilized extensively in other fields of civil litigation and available equally to homeowner plaintiffs as well as construction industry defendants; and
- Reworking expert costs and costs of investigation to allow for the award of those items only in the case of proven defects and only as to those costs directly related to the investigation and proof of those defects.
INTRODUCING SB250
The 2017 Legislative Session saw efforts to return Chapter 40 to its pre-2015 version through the introduction of SB250. Fortunately for construction and design professionals in the home building industry in Nevada, the State Senate Judiciary Committee did not act upon the bill and the effort died having never made it to a floor vote. Considering that Nevada’s Legislature meets biannually, the current framework of Chapter 40 is intact until at least 2019. The 2017 Legislative Session, however, is an illustration to how quickly those of the construction defect plaintiffs’ bar can move to initiate efforts to turn back the clock to a much riskier time for construction and design professionals.
Those in the industry should remain vigilant and monitor future legislative efforts to reinstate such awards or other clearly anti-builder measures. Such measures simply drive-up the overall cost and expense of home construction and, in turn, home ownership, which it is often said, is one of the cornerstones of the American dream.
Aaron Lovaas is a partner in the Las Vegas office of Newmeyer & Dillion. As a transactional attorney and business litigator, Aaron has the ability to evaluate legal issues from both points of view and help his clients understand their best option. He can be reached at aaron.lovaas@ndlf.com.
About Newmeyer & Dillion
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949-854-7000 or visit www.ndlf.com.
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Ortega Outbids Pros to Build $10 Billion Property Empire
March 19, 2014 —
Jesse Drucker – BloombergAmancio Ortega Gaona, already the world’s fourth-richest person based on the success of his Zara fashion retail stores, has quietly amassed a real estate empire worth as much as $10 billion and is emerging as a formidable competitor for prime properties from London to Beverly Hills.
Relying on all-cash offers, he has outbid the world’s biggest institutional funds and professional property investors, such as Tishman Speyer Properties LP.
“He’s at the very highest levels of high net worth investment and competing with some of the biggest sovereign wealth funds for the primest properties in the market,” said Joseph Kelly, director of market analysis for Real Capital Analytics in London, a real estate research firm.
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Jesse Drucker, BloombergMr. Drucker may be contacted at
jdrucker4@bloomberg.net
Congratulations to Nicole Whyte, Keith Bremer, John Toohey, and Tyler Offenhauser for Being Recognized as 2022 Super Lawyers!
February 07, 2022 —
Dolores Montoya - Bremer Whyte Brown & O'Meara LLPBWB&O is proud to announce that Partners Nicole Whyte, Keith Bremer, John Toohey, and Tyler Offenhauser have been named as 2022 Southern California’s Super Lawyers! We are also honored to share that Nicole Whyte is included in two of the top lists, Top 50 Women Lawyers in Southern California and Top 50 Lawyers in Orange County!
Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations, and peer evaluations. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. During the final selection process, only lawyers in the top 5% of the total lawyers in the state are selected to the Super Lawyers list.
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Dolores Montoya, Bremer Whyte Brown & O'Meara LLP
Brazil's Detained Industry Captain Says No Plea Deals Coming
September 03, 2015 —
Sabrina Valle & Yasmine Batista – BloombergMarcelo Odebrecht, the most prominent executive who has been detained in Brazil’s largest corruption scandal, said he sees no reason to strike a plea bargain with authorities because he has nothing to reveal.
Odebrecht said in a congressional hearing Tuesday that he probably discussed with President Dilma Rousseff and her predecessor Luiz Inacio Lula da Silva the relationship between Odebrecht SA and Petrobras, the state-controlled oil producer at the center of the kickback investigation. It was a natural topic given the economic importance of his construction and engineering empire, he said. He declined to answer questions related to the criminal case, saying it is ongoing and he is unaware of the full extent of the accusations.
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Sabrina Valle, Bloomberg and
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An Overview of the New EPA HVAC Refrigerant Regulations and Its Implications for the Construction Industry
September 30, 2024 —
Stefanie A. Salomon, Nadia Ennaji & Ali Heyat - Peckar & Abramson, P.C.The U.S. Environmental Protection Agency (EPA) recently announced a series of significant changes to the rules governing the use of refrigerants in heating, ventilation, and air conditioning (HVAC) systems. These changes, which were promulgated under the American Innovation and Manufacturing (AIM) Act, are designed to phase down the use of hydrofluorocarbons (HFCs), a class of potent greenhouse gases.
The AIM Act: A Game-Changer for HVAC Industry
The recent changes to refrigerant regulations by the EPA signify a substantial shift in environmental policy that will have profound implications for the construction industry. For the construction industry, this means a transition to next-generation technologies that do not rely on HFCs. The AIM Act’s sector-based restrictions will affect a wide range of equipment, including refrigeration and air conditioning systems integral to building design and function.
Starting January 1, 2025, the manufacturing or importing of any product in specified sectors that uses a regulated substance with a global warming potential of 700 or greater is prohibited (40 C.F.R. § 84.54(a)). The specified sectors listed include R-410A, the most common refrigerant used in the HVAC industry. The installation of systems using a regulated substance with a global warming potential of 700 or greater in specified sectors is allowed until January 1, 2026, provided that all system components are manufactured or imported before January 1, 2025. See 40 C.F.R. § 84.54 (c). “Installation” of an HVAC system is defined as the completion of assembling the system’s circuit, including charging it with a full charge, such that the system can function and is ready for its intended purpose. See 40 C.F.R. § 84.52.
Reprinted courtesy of
Stefanie A. Salomon, Peckar & Abramson, P.C. and
Nadia Ennaji, Peckar & Abramson, P.C.
Ms. Salomon may be contacted at ssalomon@pecklaw.com
Ms. Ennaji may be contacted at nennaji@pecklaw.com
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Atlantic City Faces Downward Spiral With Revel’s Demise
August 13, 2014 —
Terrence Dopp – BloombergThe shuttering next month of Revel, the $2.6 billion hotel and casino that was meant to usher in a new era of opulence in Atlantic City when it opened in 2012, is set to quicken the seaside community’s downward spiral.
Five years after the longest recession since the 1930s, hotel rooms sit vacant and revenue keeps falling in what was once the second-largest U.S. casino market. New Jersey Governor Chris Christie’s turnaround plan for the municipality, begun in 2011 and hinged on Revel’s success, hasn’t delivered, prompting Moody’s Investors Service to cut the city’s $245 million of general-obligation debt to junk last month.
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Terrence Dopp, BloombergMr Dopp may be contacted at
tdopp@bloomberg.net
