In attempts to keep on top of the game with an ever-growing asset-backed securities market, Moody's Investors Service has made some changes. Michael Kanef will assume the position of managing director. In his new position, Kanef will work closely with Linda Stesney, who will also be taking on responsibilities for the Latin American Finance team.
Addionally, Jay Eisbruck will now be responsible for the consistency in the rating committee process and he will also direct a team of rating analysts that will focus on esoteric assets. Andy Silver will also head up a new research team that will focus on refining existing rating methodologies to reflect the changing marketplace. Silver will develop new approaches to assets and structures within Moody's.
As part of the restructuring, Mark Adelson will take on Silver's former position of monitoring the process. Adelson will work to refine the group's publication strategy, and develop rating indicators.
Ginnie Mae announced two additional real estate mortgage investment conduits last week. The GSE announced GNR 2000-30 for $279 million last Thursday. The underlying collateral consists of $129 million 30-year GNMA I 8.5s and $150 million GNMA I 9s. PaineWebber is the lead underwriter. GNR 2000-31 totals $450 million and consists solely of GNMA II 8s. Bear Stearns is underwriting the issue. Both REMICs settle on October 30.
Issuance of securities backed by home loans with high loan-to-value ratios increased substantially in the third quarter from last year's level, according to Standard & Poor's. S&P, which rated all the high-LTV deals, said $1.78 billion of mortgage-backed securities backed by 125% LTV product was issued in the third quarter, up from $1.1 billion in the third quarter of 1999. GMAC Mortgage and its affiliate Residential Funding Corp. continued to be the dominant issuers of MBS backed by high-LTV loans.
Freddie Mac has announced the elimination of the 2-basis-point selling concession in its regular weekly Dutch auctions, effective with the first auction in January 2001. "An original objective of our weekly Reference Bill auctions was to establish a clear, precise pricing event," said Louise Herrle, Freddie Mac's vice president of liability funding. "The concession worked against this objective and unintentionally encouraged investors to buy Reference Bills only in the secondary market." The government-sponsored enterprise said it will continue to offer its settlement date option, which grants flexibility to dealers and participating investors in selecting a preferred settlement date. Minimum auction amounts will remain unchanged at $3 billion for one-, two-, and three-month auctions, and $1 billion for six- and 12-month auctions.
The first browser-based auction marketplace for mortgage-backed securities, Visible Markets, Inc., has appointed five new members to its Board of Advisors.
The new members include: Chip Elfner, former CEO Evergreen Funds; Anne C. Hodsdon, former president and coo of John Hancock Advisors, Inc., Michael A Jessee; president and ceo for Federal Home Loan Bank; Donald M. Mykrantz, CFA senior vice president, fixed income trading; MFS Investment Management; and Gabe Sunshine, principal of Bracebridge Capital.
As board members the new appointees will provide guidance and direction to further the growth of the company's business.
New to the loan market this year, First Horizon Home Loan Corporation recently filed a shelf with the Securities & Exchange Commission, allowing the company to securitize up to $1 billion in home equity loans.
First Horizon has already done four whole loan deals this year, totaling just over $1 billion, according to Thomson Financial Securities Data.
First Horizon's deals will be wrapped by Financial Security Assurance.
Freddie Mac and Fannie Mae are implementing capital, risk management, and disclosure practices that are expected to alleviate concerns about their safety and soundness (see story p. 1). The government-sponsored enterprises said they have committed to issue publicly traded subordinated debt semiannually to maintain core capital (plus subordinated debt) at a minimum of 4% of on-balance-sheet assets after a three-year phase-in period.
Additionally, it will maintain more than three months' of liquidity; instill an interim risk-based capital stress test until federal regulations are completed; obtain and disclose a rating of each company's financial condition from a nationally recognized rating organization; and disclose the results of monthly analyses of interest rate risk sensitivity and quarterly analyses of credit risk sensitivity.
GMAC Mortgage Corp.'s private-label loan servicing division, Client Branded Solutions, in Horsham, Pa., has received a solid ranking as an alternative residential mortgage servicer from Standard & Poor's Ratings Services. GMAC Mortgage said the division received strong rankings in every category, including management and organization, loan servicing, and financial condition.
Donna Tanoue, chairman of the Federal Deposit Insurance Corp. (FDIC) has warned that banks face potential risks as investors if a court rules that the loans must be rescinded. Tanoue wants banks to make sure they are not helping to finance predatory lending when investing in subprime mortgage-backed securities. The FDIC is expected to issue guidance on securitizations by the end the month.