News
Condor Capital Corp., a New York based subprime auto-loan lender, is planning its first securitization and has not selected an underwriter. The deal is expected to be in the $130 million to $150 million range. Bank One Capital Markets, among others, are in discussions with Condor. A wrap is expected.
The White House is expected to designate Timothy O'Neill to chair the Federal Housing Finance Board. O'Neill currently serves as one of the Republican members of the five-member board. The White House published its intent to designate Mr. O'Neill on its website late Friday, but as of noon last Monday an official designation had yet to occur. If the designation is made, Chairman Allan I. Mendelowitz, a recess appointment during the Clinton administration, would remain as the Democratic board member. The board would then have three members: O'Neill,. Mendelowitz, and a designee of the Department of Housing and Urban Development, leaving open both a Republican and a Democratic slot. The FHFB oversees the 12 Federal Home Loan Banks, which are competitors, in a sense, of Fannie Mae and Freddie Mac.
Barclays Capital is said to have three RMBS deals and one CMBS deal in the pipeline for July. Subprime mortgages are expected to be included in that number.
Last week Standard & Poor's lowered its ranking to below average on FMAC as a servicer of franchise loans. S&P noted that there have been issues surrounding FMAC's delivery and disclosure of information, as well as issues involving S&P's confidence in FMAC's ongoing stability, and ability to maintain staffing levels.
Rumor has it that the retention compensation policy, which parent company Bay View Capital Corp. instilled last fall to keep its servicing staff after the bank announced it would no longer originate loans, expires within the month.
American Community Bankers (ACB) has revised its stand on the regulatory capital that Fannie Mae and Freddie Mac must hold against their investments under Basel II. The interest group had originally advocated that a zero risk-weight should apply to certain Fannie/Freddie debt in light of the agencies' mission to help the development of the U.S. housing market. However, last week, ACB changed its mind and asked instead for the maintenance of the status quo, which is that agencies should still carry a 20% risk-weighting. This move is part of ACB's belief that any modifications in the current regime would not make a whole lot of sense, and changes under Basel II would provide no real benefit.
We basically believe that the current system works and that changes that might be forthcoming under Basel II are not justified," said Michael Briggs, regulatory council for ACB. "This is the broader position which leads us to believe that the GSE risk-weighting should remain the same."
Canada Mortgage Bonds (CMB) - Canada Mortgage Housing Authority's newest housing program - had a $2.2 billion inaugural issue which was met with healthy demand, receiving orders exceeding $4 billion. However, the deal could not be immediately upsized because the proceeds from the transaction would be used to buy mortgages that have been pre-committed to be sold to Canada Housing Trust, which is the special purpose trust that issues the bonds.
However, sources say that if the big five Canadian banks, mortgage lenders trust companies, credit unions and a couple of mortgage lenders are able to come up with $750 million to $1 billion of five-year mortgages that qualify for this program, then a reopening would be possible within a four to six week period.
CMBS industry participants are working for a quick resolution on the FAS 140 issue, hoping for some answers before the board changes composition on June 30. The different associations are working with the Board to come up with alternatives that might be viable.
FASB representatives say that three new members are joining to replace the two members who are leaving and to fill a vacant slot. Market participants are fearful that if a resolution is not reached before the Board changes hands, then the CMBS issue would be put on the back burner.
Halsey Bullen, senior project manager at FASB, said that it would not necessarily be vital for the Board to come up with a resolution before the end of the month, but "it would just be more convenient because we wouldn't have to re-educate some Board members who haven't been through the educational process."
The issue will be once again presented to the Board this Wednesday.
People
Mark Moffat will be joining Bear Stearns' London office as a managing director in the Principal and Asset-Backed Finance Group, where he will be focusing on CDOs. Moffat reports to Andy Clapham, who heads the group. Moffat was formerly head of CDOs at ABN Amro. Moffat's appointment is the latest move in the ongoing expansion of Bear Stearns' international operations, under the leadership of Michel Peretie, head of fixed income and derivatives for Europe and Asia. Richard Downer, formerly of Merrill Lynch, joined Bear Stearns in late March as managing director of the group.
Dan Kramer has recently joined ORIX Financial Services as senior vice president of the Structured Finance Group (SFG). In this newly created position, Kramer will lead and manage SFG's marketing and sales activities for the Eastern and Central U.S. He will be reporting to Steve Crain, group president of SFG. Kramer most recently served as partner and managing director of Kramer, Clark & Co., offering financial consulting and lending services to both public and private companies. He was previously managing director of private placement origination for Hunter, Keith, Marshall and Co., and managing director of private placements and structured finance for Encore International.
