As per our annual publishing break, Asset Securitization Report's next issue date will be Sept. 9. Also, please note the contact changes on our masthead, as the editorial and production staff has relocated.
John Prestley has resigned from his post at the Hartford Investment Management Co., according to IFR Markets. Prestley was a vice president with Hartford, and specialized in ABS. There is no word why he left or where he has gone.
A class action complaint has been filed against Household International alleging that the company has been concealing its true delinquency ratios. The filing was made in the U.S. District Court for the Northern District of Illinois by the Ark.-based law firm Cauley Geller Bowman & Coates LLP. Household and certain of its officers and directors were charged with violating the Securities Exchange Act of 1934 for improperly re-aging the company's accounts, thereby concealing the its actual delinquency ratios. The complaint also alleges that during the class period - from Oct. 23, 1997 to Aug. 14, 2002 - the company caused its shares to trade at artificially inflated levels. This is the second class action suit filed against the company in recent days. The other lawsuit accused Household of issuing false statements about its business and prospects.
JP Morgan Chase has completed the transfer of servicing of the Providian Master Trust accounts to the Chase platform. The charge-off policy of the purchased Providian accounts will be modified to conform with Chase's policies and FFIEC guidelines. Bankrupt accounts will now be charged off upon the earlier of 60 days after receipt of notice or when the account becomes 150 days delinquent, a change from Providian's policy, which was to immediately charge-off bankrupt accounts. As a result, charge-offs will be temporarily lower in September and October. Performance of the Providian Master Trust has already improved with charge-offs decreasing to 7.81% in July from a peak of 9.69%.
In an IPO-related S-1 filing with the Securities & Exchange Commission, TRW Automotive Inc. indicated that it plans to establish a receivables securitization facility with conduit lenders once it "spins off" from its current parent company TRW Inc. TRW Inc. had established a similar facility in late 2001, currently amounting to about $350 million, according to the filing. The spin-off is merger related, as Northrop Grumman Corp. intends to acquire TRW Inc.
A drop in a drought-stricken market, real estate receivables certificates worth R$105.9 million (US$34.4 million) are due out in Brazil by the end of August, according to Juan Pablo de Mollein, associate director of Standard & Poor's Latin American Structured Finance. "It's one of the few up ahead," Mollein said. The certificates are from Walter Torre PIC Companhia Securitizadora de Creditos Imobiliarios (Walter Torre PIC) and will mark Brazil's first real estate receivables certificates issuance of 2002. They carry a preliminary national-scale rating from S&P of A'. Underlying assets are all credits, rights, and residual compensation amounts linked to a lease agreement between Volkswagen Brazil and Walter Torre LTD. WT has sold its credit rights to the lease payments to Walter PIC, a Brazilian offshore trust. The trust will issue the paper. Certificate holders will receive monthly interest and principal payments tied to the lease payments. The certificates carry a 12-year tenor and will be priced at a floating rate pegged to the IGP-M general price index.
The Bond Market Association and the American Securitization Forum sent a letter addressed to Secretary Jonathan Katz of the Securities & Exchange Commission. The letter contained comment relating to the Commission's proposed rules on the specified certification requirements for a company's quarterly and annual reports by its principal executive officers and principal financial officers. The SEC had asked for comments on the proposed rules in light of the requirement that the Commission adopt similar rules under Section 302 of the Sarbanes-Oxley Act of 2002. The letter focused on the proposed rules as they relate to ABS, which could, in an extreme example, require a servicer to certify financial statements related to deal performance statistics. It mentioned the fact that the public market for ABS is quite large, citing that $303 billion were publicly issued for this year alone.
Standard & Poor's announced last week that the closure of 327 Ames Department stores has no immediate impact on the ratings now assigned to 27 CMBS deals that include loans secured by Ames Department (Ames) stores. The rated conduit transactions have 38 loans secured by Ames stores. S&P cited the fact that these deals benefit from a diverse mix of retail tenants. The Ames concentration in the identified deals represents only a small portion of the collateral. The rating agency will continue to monitor the liquidation of the Ames Stores, which is expected in the next 10 weeks, and the potential impact on any of its rated transactions.
Freddie Mac's retained portfolio grew in June. It expanded by $2.3 billion, which is equivalent to a 5.4% annualized growth rate. The firm's purchase commitments totaled $19.6 billion in July, up from $12.5 billion June. Freddie's total PC portfolio increased $2.9 billion from June, which amounts to 3.3% annualized growth rate.