Fieldstone Mortgage filed for Chapter 11 last week, shortly after announcing that it would stop accepting loan applications and funding mortgage loans. According to court documents, the company has liabilities of more than $100 million, with creditors including Morgan Stanley and Bear Stearns, who are seeking $38.5 million and $15.3 million, respectively. Fieldstone's parent company, Fieldstone Investment was acquired by C-Bass in July.
Cummins, a manufacturer of diesel engines and power generation systems, completed a $400 million accounts receivable securitization that could be increased to $500 million. Norwalk, Conn.-based Cummins completed the deal through GE Commercial Finance Corporate Lending, but financing is just one way in which GE Commercial has assisted the manufacturer. GE also extended services through its GE Access program, which provides businesses access to GE management practices, to help boost companies' performance.
Willis Engine Finance is preparing a $210.4 million securitization of leases on aircraft engines. Part of the proceeds from the deal will be used to refinance existing warehouse notes from Series 2005-A2 and 2005-B2, according to Fitch Ratings. The 2007-A1 and 2007-B1 include an increase on the limit for leases maturing in any 12-month period from 50% to 60%. Also, the maintenance reserve mechanism has been adjusted, whereby the reserve may utilize excess funds to acquire additional engines for the trust. The structure also uses a revolving credit liquidity facility for the A1 notes, rather than a senior restricted cash account.
Sen. Charles Schumer (D., N.Y.) sent a letter to Ronald A. Rosenfeld, chairman of the Federal Housing Finance Board last week, expressing concern over the significant lending volume the Federal Home Loan Bank of Atlanta made to Countrywide Bank. As of Sept. 30, 2007, FHLB Atlanta made $51.1 billion in advances to Countrywide Bank, representing 37% of the Bank's total outstanding advances and far exceeding advances made to the next largest borrower, Schumer noted. The senator urged Rosenfeld to review the loans that are being held as collateral for FHLB advances in an effort to determine if FHLB Atlanta has adequate collateral to secure such advances, in light of the uncertainty regarding Countrywide's loans. This quarter, Countrywide reported that 89% of its 2006 originations of pay-option ARMs did not conform to the joint regulators' guidance, which increases the likelihood that Countrywide is pledging loans deemed predatory by the regulators as collateral for FHLB advances, Schumer said in his letter. Countrywide reportedly held $27 billion of pay-option ARMs as of Sept. 30, 2007, accounting for more than one-third of the loans held for investment by the bank, the letter said.
JPMorgan plans to cut 91 jobs at its subprime mortgage loan facility in Ontario, Calif. effective Dec. 15, according to a recent filing with the California Employment Development Department. The layoffs are the result of tighter underwriting standards in the mortgage industry, which have reduced the number of loan applications.
Bear Stearns will cut another 650 jobs, or 4% of its global workforce, which totaled 15,500 at the end of the third quarter, according to reports. The cuts will be companywide.
Wholesale mortgage lender Paul Financial decided to temporarily stop accepting new loan submissions last week. All loans that are currently in process will be evaluated based on current underwriting guidelines and completed as appropriate, the company said on its Web site. Paul said the dry-up of liquidity in the market has prevented the company from bringing new programs to the market, and it will look for alternative resources to help restart its loan programs.
Moody's Investors Service last week downgraded a series of tranches from 2004 scratch-and-dent transactions that were backed by first-lien fixed and adjustable-rate scratch-and-dent mortgage loans. The deals have experienced an increasing proportion of severely delinquent loans while losses and step downs from performance triggers have caused credit enhancement to decline, the rating agency said. Among those deals with tranche downgrades are Bear Stearns Asset-Backed Trust 2004-SD1, Bear Stearns Asset-Backed Trust 2004-SD3, Truman Capital Mortgage Loan Trust 2004-1, Truman Capital Mortgage Loan Trust 2004-2, Morgan Stanley ABS Capital I Trust 2004-SD1, Morgan Stanley ABS Capital I Trust 2004-SD2, Morgan Stanley ABS Capital I Trust 2004-SD3, RFSC Series 2004-RP1 Trust, CSFB 2004-CF1,Countrywide Home Loan Trust 2004-SD1 and Countrywide Home Loan Trust 2004-SD2.
The Securities Industry and Financial Markets Association (SIFMA) said that issuance of securities in the U.S. capital markets reached $5.06 trillion in the first nine months of 2007, a 7.7% increase over the same period in 2007. Third-quarter issuance volume was lower at $1.33 trillion compared with $1.92 trillion in the second quarter of 2007 and $1.51 trillion in the third quarter of 2006, SIFMA said. Long-term municipal issuance continued at a record pace due to refunding activity, and corporate bond issuance was ahead of 2006. Not a surprise was the drop-off in agency and MBS, ABS and CDOs, which fell in the third quarter due to housing sector weakness and subprime mortgage market deterioration.
Standard & Poor's global bond insurance group is getting ready to launch a series of commentaries on bond insurers' subprime exposure. The rating agency is updating its assumptions for its stress scenario to reflect current market conditions and recent rating revisions in the RMBS and CDO of ABS sectors. The new stress scenario will also expand the vintage period covered to incorporate the entire period of 2005 through the third quarter of 2007, as well as include Alt-A loans, closed-end second mortgages, net interest margin securities and HELOCs. S&P will also review insured CDO transactions with overcollateralization-linked events of default to gauge potential courses of action that an insurer might follow in the event of an EOD trigger, the rating agency said.
The Office of Federal Housing Enterprise Oversight (OFHEO) announced last week that the maximum 2008 conforming loan limit for single-family mortgages purchased by Fannie Mae and Freddie Mac will remain at $417,000 for one-unit properties for most of the U.S. However, higher limits do apply to Alaska, Hawaii, Guam and the U.S. Virgin Islands, as well as to properties with more than one unit. The Federal Housing Finance Board (FHFB) reported a decline in the average price of a home by 3.49%, from $306,258 in October 2006 to $295,573 in October 2007. The two-year decline is now 3.65%, FHFB said.
Moody's will begin making raw performance data for Moody's-rated ABS and RMBS securities available to subscribers through a new data feed. The ABS and RMBS data will be available as Excel-compatible text files through a direct file transfer protocol data feed. The data feed will offer validated data, which has been formatted by the rating agency. Moody's data feed encompasses more than 13,000 U.S. ABS and RMBS deals and over 1,200 EMEA and Asia RMBS deals. The data feed tracks over 100 performance metrics at the deal, pool and tranche levels, and users are able to receive the data by region, asset class and active versus inactive deals.
The Islamic Funds Conference 2007, held earlier this month in Dubai, examined the developing Shari'ah compliant investment opportunities. Shari'ah compliant funds are still a relatively small, but fast growing market, of about $500 billion to $700 billion. Islamic finance must avoid the receipt/payment of interest, or riba, and parties must share the risks and rewards of the transactions. The investing has thus far mainly been regulated to wealthier sections of investors because of the higher fee structures, according to Alka Banerjee of Standard & Poor's Global Equity.
The housing slump has finally hit Wells Fargo & Co., as the bank announced it would recognize $1.4 billion in fourth-quarter losses on home equity loans that are not being repaid. Most of its losses are tied to a $11.9 billion bundle of high-risk home equity loans that the bank will liquidate, according to reports. This represents roughly 14% of the bank's $83.4 billion home equity portfolio. The company's shares dropped by $1.40, or 4.7%, in extended trading that followed a Securities and Exchange Commission filing outlining the bank's home equity loan losses. Wells Fargo still remains in pretty good standing because it sold most of the $2 trillion in home loans that it originated in 2001 and has invested very little in mortgage-backed securities. The bank had previously announced a $153 million third-quarter loss on its home equity portfolio.
With issuance more or less back on track for established asset classes, Mexico's domestic market is embracing new collateral. HSBC Mexico is readying a deal backed by equipment leases, touted as the first of its kind in the peso arena. Sized at Ps500 million ($46 million), the ABS will be split into a senior piece with an average life of about two years, and a subordinated chunk with a 5.8-year life, according to a source close to the deal. The transaction could price before the end of the year.
Originator El Camino Resources Mexico is a unit of the eponymous U.S. company based in California. Operating 14 years in the country, the Mexican subsidiary currently exceeds the U.S. assets of its parent, the source said. Camino's clients south of the border include cement market Cemex and department store titan Liverpool, in addition to foreign-owned multinational companies.
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