Series 24: Regulation AB II

Regulation AB II

The Great Global Recession of 2007–2009 was fueled in no small part by mortgage securitization. When the rate of foreclosures in the sub-prime mortgage market began escalating in 2007, the housing market began a precipitous collapse. The decline in the quality of home mortgages led to a steep rise in the default rate of mortgage-backed securities and the CDOs that used them for collateral. As a result, CDO issuance collapsed from a high of $500 billion in 2006 to a low of $4 billion in 2011. In 2014, the SEC took a first step in reforming the ABS market with the following amendments to Regulation AB called,