Terwin Holdings LLC last week bought Hanover Capital Mortgage Holdings Inc.'s due diligence business for $1.2 million, a move that was reportedly made to complement the company's due diligence service operation located in Denver. The deal closed on Jan. 12. Hanover is no longer in the business of providing due diligence services to the financial services industry and government agencies, the company said last week. Hanover, which operates as a REIT, is expected to receive some $4.7 million in cash from the deal.
Residential Credit Solutions Inc., a Fort Worth start-up, has purchased the Los Angeles servicing platform of Aames Investment Corp. and the servicing rights on $700 million of loans from Accredited Home Lenders Holding Co., which bought Aames last year. Residential Credit Solutions is reportedly planning to invest in and service mortgages with special servicing requirements, such as poor underwriting or limited documentation. The company's chief executive Dennis Stowe was the president and chief operating officer of Saxon Capital Inc. up until 2004. Meanwhile, the company's chief administrative officer Mark Rogers was an executive vice president at Saxon's lending unit, and he also served as its chief financial officer.
Wall Street last week awaited the second roll of the ABX index. The 07-1 series was expected by most to display better performance than the 06-2 series, after a view of the deals to be referenced in the series was available. Sure to be the talk at the American Securitization Forum conference next week, standardized tranches of the ABX are set to begin trading Feb. 12. The tranches will reference both triple-B and triple-B minus sub-indices. Triple-B attachment points are expected at 0, 3, 7, 12, 20, 35 and 100%, and for triple-B-minus at 0, 5, 10, 15, 25, 40 and 100%.
Markit Group recently announced the appointment of James Savitsky and Thomas Geraghty as directors within the company's global ABS sales and product development teams. Savitsky and Geraghty will be based in New York. Savitsky will coordinate Markit's global ABS sales, distributing the firm's data and analytics services for the structured finance markets. He joins from Trepp where he headed sales and business development for the firm's CMBS platform. Geraghty joins the North American structured finance product development team, focusing on data and the modeling of structured securities. Geraghty joins from Wall Street Analytics where he was managing director for product development. Previously, he spent six-years as a mortgage-backed securities trader at JPMorgan.
RAM Holdings Ltd. announced the appointment of Paul Wollmann as managing director, structured and asset-backed finance. His responsibilities will include underwriting transactions involving ABS and other structured financings along with corporate, financial institutions and sovereign risks. Wollmann will report to Vernon Endo, RAM's chief executive officer. Previously, Wollman was managing director at RCS Ltd., a startup Bermuda surety company that develops alternative collateral to be used by reinsurance companies to obtain U.S. regulatory credit. He was also a managing director at Ritchie Capital Management (Bermuda) Ltd. and senior vice president at ACE Capital Re International Ltd. (now known as Assured Guaranty Re).
Derivative Fitch launched an updated version of its risk analytics platform for credit derivatives (RAP CD) last week. New features in its RAP CD version 1.2 include daily mark-to-market pricing and risk analysis as well as the platform's full support for CDO2 structures. RAP CD version 1.2 also includes the addition of portfolio reporting, which offers the ability to evaluate risk of a single name to an entire portfolio of synthetic CDOs, and improved graphical interface, the rating agency said. CDO2 analytics in the version 1.2 include two models from Reoch Credit Ltd., whose credit derivatives analytics business was acquired by Derivative Fitch in July 2006. The first model uses the super tranche method where the CDO2 is treated as a closest equivalent CDO. The second model looks at the base correlation skew of each inner CDO tranche and also that of the outer CDO tranche. Since its launch in July 2006, RAP CD has attracted a number of investors including BAWAG PSK, Deutsche Postbank, Shinwa Bank, Taishin Finance Bills Corp., TD Securities and WGZ Bank Ireland. RAP CD is a market risk assessment service for the synthetic CDO market.
German reinsurer Hannover Re boosted the volume of its K5 catastrophe risk securitization issued last year by $106 million to $520 million. New and existing institutional investors in North America, Europe and Japan provided the capital. The planned term of the transaction will expire on Dec. 31, 2008. The K5 securitization consists of non-proportional treaties for property catastrophe, aviation and marine (including offshore) reinsurance. Around 42% of this business is passed on to the investors. The company said that this new securitization transaction would enable the company to write more business while conserving its capital resources.
The Mortgage Funding Expert Group (MFEG) released its final report on the EU mortgage-funding markets. The report identifies specific areas for further integration of the pan-European mortgage-funding markets to improve efficiency and product diversity and encourage competition for capital markets funding instruments such as RMBS, covered bonds, whole-loan sales, and third-party enhanced structures. The report sets out 10 broad securitization principles that will help facilitate the use of RMBS. These recommendations include increased asset class and structure flexibility in national securitization legal frameworks; the ability of both banks and non-banks to originate mortgages; and more flexible regulation. The MFEG believes this should encourage new specialist lenders to enter the mortgage market in new locations, and increase the ability of existing lenders to expand cross-border across Europe. The report also highlights the importance of facilitating third-party and cross-border servicing of assets, which is an important element to increasing competition. The MFEG's group of experts - which include originators, investors, funders, issuers, credit ratings agencies, mortgage insurers, and commercial and investment banks - was selected in early 2006 by the European Commission (EC). The EC will review the MFEG's recommendations and present its views in a separate white paper due for release in June 2007. In the meantime, the commission welcomes comments on the report by mid-February.
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