Bruce Rose, the CEO of Carrington Mortgage Services, said that the next generation of private-label securitization should revamp current, common pooling and servicing agreements.
The new versions, he predicts, will be a new standard where the equity-piece holder, the riskiest tranche, gets to decide the fate of the loans if performance wanes.
Rose spoke during an executive conversation with HousingWire publisher Paul Jackson at the REperform Summit in Dallas, a HousingWire conference for mortgage servicers.
“The idea is to maximize proceeds to the trust, and this does not include maximizing the benefit to the triple-A investor,” remarked Rose when questioned on whether he felt PSAs could do with some change.
“The guys who holds the risk (should) withhold the risk for the life of the trust,” he added.
In Carrington RMBS deals, Carrington is normally the riskiest investor. Another company owned by Rose also insures the notes. So critics often argue that this structure may lead to conflict.
Rose didn’t hold back on criticizing other aspects of the mortgage servicing business.
He was particularly hard on the national attorneys general settlement for robo-signing that is meant to set better standards for mortgage servicing.
“I don’t think any of the settlement did anything for the benefit for the borrowers,” Rose said.
