According to sources the Reserve Bank of india's committee on the development of 'Housing Finance Securitization Market' has recommended setting up a government sponsored intermediary to "enable market making and standard setting". Meanwhile the committee, in its report to the RBI, has recommended that "an intermediary to promote housing finance securitization with the primary functions of standard setting and market making should be established by National Housing Bank".
Reportedly "It is also proposed that this entity would have 51% ownership by the government through the NHB initially and the government ownership in the entity would then be gradually reduced to 26% over a period of 5 years.
Moreover the committee also pointed out the need to develop standards for "loan origination, loan servicing, loan documentation, and loans to be eligible for securitization, including standardized formats for data collection and aggregation". Perhaps it called for a separation of regulatory guidelines for "direct assignment transactions and transactions involving pass through certificates" as well as for mortgage backed securities (MBS) and asset backed securities (ABS).
