Mortgage-related departures are underway at major banks. Brett Ackerman left his post as an Alt-A ARM trader at Barclays Capital last Tuesday. Ackerman, 28, was part of a six-member group that specialized in those mortgages. He was recently featured in a round up of "30 Under 30" in Trader Monthly magazine. Ackerman was recruited from Bear Stearns in August 2006, where he reported to Michael Nierenberg, a senior managing director and head of ARM trading.
Also, Brad Harris, who worked in the CMO group at UBS, left the bank recently, where he worked as a structurer and trader. While the bank confirmed Harris' departure, it did not confirm word that about three others in the same group left around the same time. Previously, Harris worked at JPMorgan Securities and Credit Suisse.
Prompted by news reports last week, word circulated throughout the market that David Sherr, head of global securitized products at Lehman Brothers, was planning to leave the firm and launch a hedge fund. Industry sources also said that Ken Margolis, co-head of Merrill Lynch's global cash CDO business, left the firm to join Harding Advisory. Lehman Brothers, however, declined to comment about Sherr's plans at press time. Also, Harding Advisory did not return calls about Margolis.
GE Asset Management promoted Mark Johnson, a member of its fixed-income investment team, to senior vice president and head of structured products. In his new position, Johnson will report directly to Paul Colonna, president and CIO, fixed income. Previously, Johnson was a vice president and portfolio manager at GEAM within fixed-income insurance, with responsibility for insurance clients' portfolio strategy, optimization and implementation. Earlier in his career, Johnson managed credit sector exposures for GE Asset's $45 billion corporate insurance portfolio and was a portfolio manager for GE ERC responsible for its taxable fixed- income portfolios.
The asset management arm of AXA appointed Martin McGuire as European fund manager to the insurance corporation's Real Estate Investment Managers (AXA REIM), headquartered in London. Previously, McGuire served as a director at the Edinburgh-based Standard Life Investments. He will manage the AXA REIM core as well as the European Added Value Fund, which was launched in April 2006 and recently announced its final closure with 422 million ($584 million) of equity from more than 20 investors across Europe. With purchasing power up to 1.05 billion, AXA REIM has an extensive pan-European real estate infrastructure with around 42 billion worth of mainly real estate assets under management. McGuire will also develop and implement the fund strategy through acquisition and management. He will report to Christian Delaire, AXA's global head of fund management.
DebtX named Will Mercer as vice president, trading. Including Mercer, DebtX's U.S. trading team now includes six professionals led by Managing Director Dave LeBlanc. Before joining DebtX, Mercer spent five years at Sun Capital Advisers in Boston, most recently as vice president, U.S. public fund income. At Sun Capital, Mercer was responsible for the management of investment-grade CMBS and REIT portfolios. He was also vice president of several different divisions, including U.S. private placements and U.S. mortgages.
Carolyn Joy Lee joined Jones Day as a partner in the firm's New York office. Lee was previously a partner at Roberts & Holland. Lee has extensive experience in state and local taxation. Her transactional practice encompasses a broad variety of planning, including in the contexts of corporate mergers and acquisitions, structured finance, asset sales and acquisitions, and workouts and bankruptcies.
Wachovia Securities last week named four managing directors to its newly integrated real estate platform. In April, Wachovia said it would move its real estate financial services group from the general bank to the corporate and investment bank to combine its real estate capital markets, real estate financial services and real estate investment banking groups. The newly appointed leaders of these groups will report to Tom Wickwire, managing director and head of structured products within the fixed-income division of the corporate and investment bank. Lawrence Gray and Robert Verrone have been named co-heads of real estate in the Americas, which includes coverage teams for all domestic real estate clients of CMBS, structured finance, real estate corporate banking, tax credit and agency finance, real estate syndications and real estate CDO sales and trading. Gray, who joined Wachovia in 1997, is a managing director and former head of the firm's real estate investment banking group. Verrone, who joined Wachovia in 1995, is a managing director and former head of real estate capital markets Americas.
Leonard Reid, director of the office of supervision at the Office of Federal Housing Enterprise Oversight, will retire at the end of this year. Reid has played a key role in helping Freddie Mac and Fannie Mae correct their accounting problems. James Lockhart, director of Ofheo, said Tuesday that Reid will retire after six years with the federal agency.
Babcock & Brown Air, is being spun off from Sydney-based advisory and investment company Babcock & Brown, and will raise up to $516 million through an IPO. Proceeds from the listing of 21.5 million shares, which includes 2.8 million for overallotments, will be used to purchase 47 planes, 44 of which will be from its predecessor company, JET-i Leasing. B&B Air plans to raise an additional $846.3 million via a related securitization and a $342.9 million private placement of 14.9 million shares to Babcock & Brown and other former shareholders of JET-i. B&B Air expects the purchase of the aircraft portfolio to cost about $1.45 billion, although the firm said that the price may change, depending on the shares' issue price.
Morgan Stanley Mortgage Capital Holdings filed a federal lawsuit last Tuesday against Fieldstone Mortgage Co. seeking to recover millions from defaulted mortgages Morgan Stanley bought from the beleaguered subprime lender, published reports said. In documents filed in the U.S. District Court in Baltimore, Morgan Stanley stated that it started buying loans from Fieldstone in 2003. Under the agreement, Fieldstone was required to keep the loans current or to buy them back, which Morgan Stanley, in its suit, said Fieldstone failed to do. Morgan Stanley included in its suit a list of 72 mortgages purchased in 2006 and 2007 with no, or late, payments. The balances on these loans ranged from $44,582 to $1.29 million, totaling $26.5 million.
Washington Mutual will lay off roughly 1,000 of its employees, removing a sales force that caters to borrowers with questionable credit, and taking away a part of its whole wholesale banking operations. However, the firm also plans to hire 1,000 loan officers in the next few months for its mortgage and bank branches. Also, WaMu's shares wavered Monday after WaMu Chief Executive Kerry Killinger said at a Lehman Brothers conference that his bank would increase its 2007 loss provision by $500 million, to between $2 billion and $2.2 billion from the $1.5 billion to $1.7 billion it had estimated in July.
SunTrust Banks anticipates that the repricing of certain mortgage-related assets will reduce its third-quarter earnings by 20 cents per share, according to a Securities and Exchange Commission filing last Tuesday. In the filing, Suntrust disclosed that the value of its Alt-A, jumbo and securitization warehouse lines of credit might dip, when adjusted to current market conditions.
H&R Block last Tuesday said it will eliminate 575 jobs at subprime lending unit Option One Mortgage Corp, adding to the 615 job cuts announced in May. H&R Block might incur a $19 million pretax restructuring charge related to these latest cuts in the year ending next April. The firm stated that Option One expects to complete the expanded restructuring by Dec. 31. Last April, H&R Block had agreed to sell Irvine, Calif.-based Option One for roughly $1 billion to private equity firm Cerberus Capital Management. Last month, however, Cerberus announced that the sale might fall through and that it might purchase just Option One's loan servicing business. The job cuts were announced in time for H&R Block's attempts to salvage the sale of this portion of Option One's business to Cerberus.
NovaStar Financial was granted some reprieve when Wachovia Bank National Assoc. and its affiliates loosened certain lending requirements for the subprime lender. In a filing with the Securities and Exchange Commission after last Wednesday's market close, Kansas City-based NovaStar said that on Sept. 7, Wachovia, NovaStar's primary lender, and its affiliates removed a requirement specifying a certain ratio for NovaStar's adjusted tangible net worth to equity. The Wachovia group also cut NovaStar's required sustained net worth to $150 million from $517 million, a 71% drop. According to the filing, further amendments to lending agreements now allow Wachovia to name a backup servicer for some or all of the securitization transactions and mortgages NovaStar currently handles.
First Horizon National Corp. plans lay off at least 1,500 of its employees by mid-2008. The bank said that it anticipates mortgage originations to drop considerably as it cuts up to 50% of its mortgage sales force, reduces its support staff and shutters mortgage branches that are underperforming.
FSA Mexico, a subsidiary of triple-A bond insurer Financial Security Assurance, became the first licensed financial guaranty insurance company authorized to do business in Mexico. Insurance regulator Comision Nacional de Seguros y Fianzas issued the license to write financial guaranty insurance under the regulations for financial guarantors adopted in the country in 2006. In its May 22 issue, ASR reported that FSA expects to wrap at least two securitizations in Mexico's domestic market this year, according to Eduardo Ramos, the managing director of FSA's new Mexican subsidiary. According to Ramos, although FSA will probably be in the mortgage sector, the monoline insurer is also looking at other asset classes as well like consumer loans, auto loans, infrastructure and state.
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