A team from the Banking & Finance and Capital Markets practice at Egorov Puginsky Afanasiev & Partners has successfully completed their work providing legal support for a project called the Mortgage Securities Factory, a new tool used by the Agency for Housing Mortgage Lending (AHML) to refinance mortgages.
The first bond placement under AHML’s Mortgage Securities Factory programme for single-tranche mortgage-secured bonds took place today, 28 December 2016.
Egorov Puginsky Afanasiev & Partners provided comprehensive legal support for the project. The first bank to securitize mortgage-backed loans using the new tool was the Housing Finance Bank.
Associates from the Firm assisted in the preparation and approval of the necessary changes to the Federal Law “On the Securities Market”, the Federal Law “On Mortgage Securities”, and Issue Standards. Sample documentation for future transactions was drafted, and support was provided for a pilot transaction.
The “factory” transaction model provides for bonds to be issued, backed by mortgages, from the balance sheet of a mortgage agent. The mortgage agent is a subsidiary of AHML. Bonds are issued in a single tranche, with provisions made for variable rates, and are covered by an AHML payment guarantee. In addition, AHML is obligated to repurchase defaulting mortgages in the interest of bond holders.
These bonds will be of special interest to investors who are credit organizations due to the possibility of applying a preferential 20% coefficient of risk, resulting in a reduced burden on capital.
“The Housing Finance Bank, a specialized mortgage bank and a leader on the mortgage securitization market, is proud to announce that it is acting as both originator and servicer in the first transaction to be carried out by the Mortgage Securities Factory. We consider AHML’s Mortgage Securities Factory to be a new focus area in developing financing on the mortgage market, and with time, single-tranche transactions will come to occupy a dominant share of the market.
We would like to thank the teams at AHML and at Egorov Puginsky Afanasiev & Partners for their highly professional approach to this project,” said Ruslan Iseev, Chairman of the Board of the Housing Finance Bank.
“We were delighted to participate in a project of this scale. It was a great honour for us to work together with AHML to develop the mortgage market,” said Dmitry Glazounov, a Partner at the Firm.
The project was completed by a team of associates from the Firm’s Banking & Finance, Capital Markets practice, including Partner and Head of Practice Dmitriy Glazounov, Senior Associate Oleg Ushakov, and Associates Maria Kondratskaya, Gilyana Haraeva, Vladimir Goglachev, Alexander Filchukov, and Nadezhda Morgunova.