I elaborated on these themes in remarks I made at a Federal Reserve conference last week on the future of the mortgage market. 4 There I argued that a recovery in the market for mortgage-backed securities (MBSs) will require greater transparency and less complexity, and importantly, comprehensive and standardized loan-level data that will allow more independent credit analysis.
For example, the structures of cash flows from mortgage payments in the pool to the various tranches of MBSs should be much less complex than some of those created in recent years, and securitization contracts will need to be made more homogeneous so as to allow greater comparability of risk profiles across deals and perhaps promote more robust liquidity.