The risk of material breach of representations and warranties "should be on the issuer," not the investor, an executive at one company that has been preparing to issue private-label securitizations told attendees at an industry conference in New York.
However, reps and warrants "are not a performance guarantee," said the executive, Eric Kaplan, managing director at Shellpoint Partners.
Rather, these say that the company has made the loan properly, and that the loans put into the trust are what they are said to be, he said at the Mortgage Bankers Association's National Secondary Market Conference during a panel on RMBS due diligence.
Kaplan said he expects disclosures will be a big focus for issuers in the new PL residential mortgage-backed securities market given that they have been the subject of a lot of litigation surrounding past deals.
