An investor group working through the Dallas law firm Talcott Franklin PC said it has signed up the holders of about a third of the $1.5 trillion private-label mortgage-backed securities outstanding.
The group's collective power is aimed at giving these investors — including those that hold subprime and alternative-A bonds — more rights in how workouts on outstanding deals are handled.
Investors have sought this because "historically, when investors have approached the trustees about taking some kind of action … some of them have said [things like] 'there's a 25% requirement — come back when you have 25%,' " attorney Tal Franklin said.
Now that the "clearing house" group has met the requirements of many of these triggers, it is sending letters to trustees calling for better communication and resolving issues it feels will improve the "dismal" performance of residential mortgage-backed securities.
There has been talk since spring that some headway was being made in legal barriers preventing effective workouts of securitized residential mortgages in which investor groups were mentioned, but Franklin said it remains to be seen whether this will happen.
"This is really the first step. We're going to see who is willing to cooperate with us and we're hoping that everyone is."