From: Henry W. Hayssen
Sent: Monday, October 27, 2008 11:41 AM
To: Comments
Subject: Deposit Insurance Regulations Temp Increase in Standard Coverage
Amt - RIN-3064-AD36
Robert E. Feldman,
Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, D.C. 20429
Attn: RIN 3064-AD36
Re: Interim Rule Regarding Mortgage Servicing Accounts
73 FR 61658 (October 17, 2008)
Dear Mr. Feldman:
As a securitization professional with over 20 years in the industry, I
believe this change in policy for covering principal and interest payments
held at FDIC insured institutions for the benefit of securitizations is long
over due. Although securitization funds are often invested outside of
insured institutions, they nearly always pass through such institutions on
the dates surrounding distributions. It is an unnecessary risk to the
transactions that the funds might not be fully insured. To help the
credit/financial markets recover from the current crisis, it is imperative
that all possible steps be taken to restore confidence in all aspects of the
securitization system. To this end, the FDIC should extend the current
policy to similar cash flows from all types of securitizations, not simply
mortgages. The contagion that began with mortgage performance is affecting
all types of asset-backed securities, and all of these markets need the same
support that the mortgage industry is receiving under the temporary rule.
Furthermore, the FDIC should make clear that tax and insurance accounts, as
well as any similar accounts, held by a servicer, paying agent or like party
would not be aggregated with personal accounts of a mortgagor. Mortgagors
often are unaware of which depository institution is holding their funds
from these accounts and therefore are unlikely to act to limit their
exposure to an insured institution beyond the insurance cap amount. (In
other words, a mortgagor may be holding $250,000 in personal funds at an
institution while the servicer of their mortgage could be holding, say
$50,000, in tax and insurance funds for that individual’s mortgage. Both
sets of funds should be covered separately by the FDIC. It is not clear to
me from my reading of the proposed rule that the policy would work in this
manner.
Sincerely yours,
Henry W. Hayssen
New York City, New York
