UPDATE 1-CDOs a thing of the past; MBS market needs fix-Fed

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WASHINGTON, Dec 4 (Reuters) - The market for mortgage securities will return to health only once the contracts and disclosure of those investments are standardized, a senior Federal Reserve Board official said on Thursday.

"I believe that markets for private-label (mortgage backed securities) are unlikely to recover unless comprehensive and standardized data for home mortgage pools are made widely available," Kroszner told a lending conference.

Wall Street took a large share of business from Fannie Mae and Freddie Mac and gobbled up flawed home loans during the recent housing boom and packaged them into 'private-label' securities. Mortgage investments backed by Fannie Mae and Freddie Mac, the two government-sponsored enterprises, are known as 'agency' investments.

Often, investors knew very little about the underlying home loan assets because mortgages were wrapped into byzantine securities, Kroszner said.

"The paucity and inaccessibility of data about the underlying home loans was, in my opinion, one of the reasons that private-label MBS was able to expand so rapidly," he said.

Some popular investments like collateralized debt obligations (CDOs) were dangerously opaque and will not return to the market, he said. Those investments typically bundled high-risk assets like subprime mortgages and other debt into a fresh securities for investors.

"I do not expect a revival for some of the most complex structures that were created in recent years,' he said.

Kroszner also criticized the contracts that underlay many mortgage investments.

"Non-agency mortgage securitization contracts contained numerous idiosyncratic features that limited the comparability of deals that may have appeared to be similarly structured," he said.

(Reporting by Patrick Rucker;)