Financial institutions are set to overhaul standards for mortgage securities to give investors, servicers and rating agencies greater certainty over credit quality and how home loans can be changed when borrowers fall behind on payments.
Industry bodies in the US, Europe and Australia will unveil the recommendations today as part of a package of initiatives intended to revive securitisation markets.
Such markets have all but shut down in the financial crisis, making mortgages and other loans increasingly difficult to obtain and threatening to prolong the economic downturn.
George Miller, executive director of the American Securitisation Forum, said the standards would help address problems in existing securitisations that were exposed by the housing downturn.
Chief among these was the lack of consistent information, making it difficult to assess what securities should be worth.