RBS Greenwich Capital has shed more than 15 capital markets professionals in the last week, according to people familiar with the bank. Among those who exited the firm were Jesse Litvak, a bond trader who joined the company in 1997, and Morris Sachs, a managing director who was head of the company's sovereign debt business, according to market sources. The departures are just the latest in a long string of exits from Wall Street firms, which have totaled about 34,000, according to some news reports. In RBS Greenwich Capital's case, the cuts followed the floundering of its MBS origination and trading business in the wake of instability afflicting the subprime MBS sector. For several years, beginning in 2005, RBS Greenwich had been a rising star among lead managers for all public ABS deals, regularly placing in the top 10 among book runners. At the end of 2007, the Royal Bank of Scotland Group, parent of RBS Greenwich, ranked seventh among lead managers who handled RMBS deals, according to the ASR Scorecard database. RBS Greenwich declined to comment.
Advisory firm Westwood Capital has launched a hedge fund that will patronize a segment of the mortgage market that most investors are avoiding. The New York City-based advisory firm created the fund in a partnership with ARC Global Partners, also of New York, and has begun bidding on loans. The targeted assets: first-lien, owner-occupied, nonperforming loans in the 60-day-plus delinquency bucket, according to sources familiar with the situation. At its bare essentials, Westwood's strategy is to pick up the loans at a discount and use its servicer, which was not named, to get the loans to re-perform. To spearhead the initiative, Westwood appointed three industry veterans. Morton Dear, former vice chairman of The Money Store, is chairman of the new fund; Evan Mitnick joined as president. Mitnick joined Westwood Capital in June 2007 after leaving New Century Financial, where he was a senior vice president. Mitnick was also a director at Citigroup Global Markets.
The Seaport Group, a Miami-based securities firm, continues to add to its trading staff. The company hired Chip Wheeler as a trader, where he will handle subprime MBS, auto and credit-card ABS, according to sources familiar with the company. At press time, it was unclear whether The Seaport Group would make additional hires for its trading desk, although a source at the company added: "it can go either way. We don't need to, but if there is a great fit, then sure."
Michael J.T. McMillen has joined Fulbright & Jaworski as head of the law firm's Islamic finance practice. The new hire's Islamic finance work has included real estate, project finance and private equity projects. He has also focused on Islamic bonds and asset securitizations or Sukuk financings, investment funds, bankruptcy funds, index-tracking funds, derivatives and new product development. McMillen joins Fulbright as a partner and will work primarily from the law firm's New York and Middle East locations in Riyadh and Dubai. He also plans to spend time in the London office.
Mission Capital Advisors announced that Kevin Callan has joined as a director in its loan sale advisory group in Los Angeles. Callan will work alongside Scott Mehlman, who is also a director in Mission's L.A. office, and his job will be to find performing and distressed residential and consumer whole loan sale assignments and build up the company's West Coast business. Before joining Mission Capital, Callan was chief executive officer of IndyMac Securities Corp. from 2006 until 2008. Before that, he served as first vice president of sales and trading at Washington Mutual Bank from 2001 until 2006, as well as holding various positions with Credit Suisse, UBS and Countrywide Home Loans.
While a cloud of uncertainty hung over Bear Stearns last week, the bank's LatAm team closed a private auto loan ABS for Ford Credit de Mexico, according to a source close to the transaction. Exactly a week ago, a Ps1.69 billion ($158 million), 15-month tranche priced at 75 basis points over 28-day TIIE, while a Ps947 million 20-month piece yielded 85 basis points over. The three leading rating agencies gave both chunks a triple-A on their respective national scales. The deal also included a 2.5-year Ps430 million piece, which priced at 157 basis points over TIIE. Bear isn't licensed as a Mexican broker-dealer, but the transaction was private. Local institutional investors were the buyers.
Moody's Investors Service last week proposed five specific enhancements to the securitization process for U.S. RMBS. These additions have been designed to improve transparency, data integrity and accountability, the rating agency said in a release. Moody's is asking market participants to comment on the proposed enhancements. The specific enhancements are stronger representations and warranties; an independent third-party pre-securitization review of underlying mortgage loans; a standardized post-securitization forensic review; expanded loan-level data reporting of initial mortgage pool and ongoing loan performance; and more comprehensive originator assessments. These proposals follow the more general enhancements Moody's proposed on Sept. 25.
Fitch Ratings has decided to maintain its insurer financial strength (IFS) and debt ratings on MBIA and its subsidiaries for the foreseeable future. Fitch expects to maintain the MBIA ratings as long as the rating agency believes that it can maintain a clear, well-supported credit view without access to certain non-public details concerning MBIA's insured portfolio, to which Fitch will no longer have access. "We are disappointed that MBIA has requested that we withdraw our IFS ratings and that they have decided to stop providing us important non-public information about their portfolio," said Stephen Joynt, Fitch president and chief executive officer. "While we respect MBIA's decision not to provide us that information, we trust that they will respect our decision to continue to maintain a rating on MBIA, a company about which many investors are so clearly interested. The approach we are taking with MBIA is consistent with the approach we have taken in other similar situations. On March 7, MBIA publicly announced its request that Fitch withdraw its IFS ratings. That request was communicated in a letter to Fitch and received just Before MBIA's public announcement.
Fremont Investment & Loan Bank is selling the mortgage servicing rights to mortgage loans currently held in certain securitization trusts sponsored by its unit Carrington Capital Management (CCM) to CCM's wholly owned subsidiary, Carrington Mortgage Services (CMS). An affiliate of Carrington Capital Management previously acquired these mortgage loans from the bank before the securitizations were completed. The mortgage servicing rights to be sold are associated with underlying mortgages with a total remaining principal balance of roughly $1.9 billion, which represents about 13% of the total remaining mortgage loan principal balance currently serviced by the bank. The deal is expected to close on April 1. CMS is not acquiring Fremont's servicing platform or any other asset, nor is it assuming any of the bank's pre-closing liabilities. The sale of these mortgage servicing rights to CMS means the collection, customer service and loss mitigation activities on the related loans that the bank currently services will transition to CMS upon closing.
PMI Mortgage Insurance Co., a subsidiary of The PMI Group, has formed a home ownership preservation team led by John Jelavich, PMI's newly appointed vice president of home ownership preservation initiatives. Under Jelavich's leadership, PMI will expand its national accounts servicing team. The primary focus will be to partner with lenders in developing creative solutions to help U.S. borrowers avoid foreclosure.
Ginnie Mae announced that reverse mortgage lender Financial Freedom, a subsidiary of IndyMac Bank, is a new issuer under Ginnie's Home Equity Conversion Mortgage Mortgage-Backed Securities program or HMBS. The HMBS offers the MBS marketplace the only full faith and credit vehicle and the only standardized structure for the securitization of FHA-insured reverse mortgages. The HMBS, which is an accrual coupon passthrough bond, simplifies the current structure of reverse mortgage securitizations and maximizes value for reverse mortgage lenders and borrowers. The HMBS allows issuers to securitize the initial loan draw, subsequent loan draws, the mortgage insurance premium, servicing fees and guaranty fees, and to receive market pricing on the whole loan amount. Issuers need only to pass through payments to buyers while the home owner is paying off the loan.
Milwaukee-based MGIC Investment Corp. said last week that it plans to raise roughly $420 million -which is 20% more than originally planned - in a public offering of 37.3 million shares of common stock at a price of $11.25 apiece. MGIC originally said it wanted to sell $350 million of common stock. The insurance firm also gave the underwriters the option to purchase up to 5.6 million more shares to cover any overallotments. The proceeds from the IPO will help expand the volume of new business at MGIC's main insurance unit, Mortgage Guaranty Insurance Corp., as well as go toward general corporate uses, the company said. Banc of America Securities is underwriting the offering.
Thornburg Mortgage has disclosed a new plan to raise the cash that it needs after the failure of a first effort. The mortgage firm said March 19 that it faced a seven-day deadline to raise $948 million. The initial plan would have raised $1 billion in convertible notes at a 12% interest rate, but with lackluster response to its deal, the company has now decided to do a $1.35 billion private placement deal at 18% interest rate instead. The $1.35 billion in senior subordinated notes could move to a 12% interest rate if certain requirements are met. The cash will be used for several lenders who have agreed to hold off on margin calls for a year if the money is forthcoming.
The Federal Home Loan Banks can now double the amount of capital they spend to buy MBS. The banks' regulator, the Federal Housing Finance Board, approved a plan that would allow the 12 FHLBs to buy roughly $100 billion in mortgage bonds in the next two years. According to UBS, because of the board mandate the banks under the FHLB system can theoretically increase purchases of Fannie Mae and Freddie Mac bonds by about $150 billion. Analysts do not see this change as causing much of an impact.
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