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66 operate will scare away smaller originators who may decide to get out of mortgage lending altogether," he explained. "ey simply don't have the right tools, nor do they have the capital to take care of the consequences of mistakes. Certain originators will walk away because the cost of doing business as well as the cost of mistakes is much higher these days." D'Vari said securitization in 2013 was about $13 billion, which was less than 10 percent of pre-crisis years. "In 2014, we will probably see a fraction of non-agency prime RMBS offerings and no non-prime/subprime RMBS issuances," he explained. Conversely, he noted agency volume has steadily picked up since pre-crisis days but then pulled back a bit due to the rise of rates, although it is still available at acceptable levels. However, non-agency offerings are not doing so well. "is is almost the opposite of what the government wanted," he said, "which was to reduce the agency share of the market, thereby gradually shrinking the size of the GSEs and increasing private sector participation." at has not occurred because of the ambiguity in regulations and the continued willingness of origination channels to produce agency loans. us, the number of non-agency mortgages will be much smaller. "Although the demand from borrowers and investors for non-QM loans is there, the products are not being produced," D'Vari said. "To obtain these non-QM loans, borrowers must pay much higher down payments and/or be willing to pay much higher interest rates from non-bank lenders. Even so, a large percentage of prospective borrowers are willing and able to do this." Despite this trend, most lenders in the present economy are focused on agency loans compared to pre-crisis years when they preferred offering non-agency loans due to higher fees. Despite these elements, D'Vari suggested there will be some alternative money coming into the "private" securitization market, and he thinks the investors will be mostly hedge-fund investors. "Naturally the volumes are going to be a fraction of what they used to be," he said, "because although the demand is there, the size of available products will be limited and available only through special origination channels." is, in turn, he predicted, will limit the number of loans available for the RMBS market to investors. "In today's environment, the economics of the transactions are not as attractive as alternative whole-loan sale opportunities." NO FEAR AND LOATHING IN LAS VEGAS SFIG conference participants hear some encouraging news. By Sandra Lane Keynote speakers at the Structured Finance Industry Group (SFIG) convention that met in Las Vegas during the latter part of January shared some information with participants that offered some encouragement. Michael Stegman, a housing policy advisor for the U.S. Treasury Department, told participants that the government is serious about eventually overseeing the demise of Fannie Mae and Freddie Mac but did not estimate when this might occur. is was good news to securitization professionals who dislike the robust continuation of GSE loans because they discourage the use of private-label mortgages used in residential mortgage-backed securities (RMBS). Another positive message was given by former Congressman and SEC Chair Chris Cox, who said that soon the SEC will consider adopting the long-awaited amendments to Regulation AB and other rules affecting the offering process for asset-backed securities. In addition, he said that presently, the SEC's agenda makes no reference to any new disclosure requirements for private offerings, perhaps a result from the heavy industry commentary this has provoked. Cox added that the final interpretation of this regulation will include several improvements over the previous version. In addition, he said that a final risk- retention and qualified residential mortgage rule may also be relaxed. On a more cautious note, however, he warned that industry executives should be prepared for strict interpretation of certain SEC rules concerning securitization by the SEC enforcement division. He predicted that this will most definitely be an area more highly regulated by the SEC.