ABS

Barclays has arranged a $350 million term loan backing Ocwen Loan Servicing’s acquisition of HomEq Servicing, according to Bloomberg.

CIT Group has hired a new credit chief along with a new head of administrative affairs, the New York-based middle-market lender announced Tuesday.

European CMBS loans saw a slight decrease in repayments during the month of May, according to figures reported by Fitch Ratings Maturity Repayment Index.

Any examination of the causes of the financial crisis is exceedingly complex, with a variety of causes that include bad lending, monetary policy mistakes, a bubble in real estate prices, bank capitalization, etc. In this light, the recent congressional hearings on Goldman Sachs should not be dismissed as mere theatrics, as they highlighted the industry's willingness and ability to unload defective transactions into the market. A candid assessment of the causes of the crisis and the future of securitized lending forces us to address why the "market forces" that had protected investors in prior years failed to prevent the market from being flooded with flawed securities. It is imperative that we understand and identify market functions, determine why they broke down and devise both market- and regulation-based remedies.

Held in May, the Securitization and Structured Finance in Latin America (SiLAS) conference hosted by Euromoney Seminars and LatinFinance turned out to be a postmortem of sorts, except that the event being taken apart - the crisis and its aftermath - is not entirely over, especially in Mexico.

One of the recurring themes at the SiLAS 2010 conference was the need for investors to get to know the collateral behind deals like never before.

The enthusiasm for covered bonds in Latin America was palpable at SiLAS 2010, but challenges, both big and small, still remain for the birth of this product in the major markets of the region.

On the sidelines of the SiLAS 2010, ASR's Felipe Ossa had a conversation with Ignacio Farias, CEO of Patrimonio, a housing finance company in Mexico. Belonging to the group of recently beleaguredbeleaguered nonbank entities known as Sofols, Patrimonio has seen its mortgage originations fall by half so far this year, and that was from an already dismal 2009.

The SiLAS 2010 conference featured lively discussion of the role of trustees in Latin American transactions. In Mexico, especially, it almost seemed as if trustees were out to lunch while flows were diverted from Metrofinanciera's bridge loans deals, which inevitably led to distress.

The current crisis has drawn into sharp focus concerns that structural features in some securitization transactions may need to be re-assessed to ensure they are adequate in mitigating the impact arising from possible failures of servicers or other transaction parties. Moody's believes that the performance of a securitization transaction depends not only on the underlying collateral performance but also on the effective performance by such transaction parties of their responsibilities. Our November 2009 publication on this topic, Operational Risks in Securitizations to be Revisited, cites several occurrences where nonperformance of a transaction party may have detrimental effects on a transaction's performance regardless of the underlying pool's performance. We refer to this risk as "operational risk,"

Securitization Focus

When the European Central Bank (ECB) unveiled its €750 billion ($952 billion) bailout package to help stabilize the euro against the U.S. dollar, it addressed the crisis of confi dence created by fears of contagion over Greece’s sovereign risk.

ABS players are closely monitoring the Greek government's struggles and assessing how they'll impact European securitizations.

Recently the Securities and Exchange Commission (SEC) granted a temporary exemption from Rule 17g-5(a)(3) for credit ratings provided to most ABS, MBS and other structured finance securities of non-U.S. issuers. This reprieve expires on Dec. 2 and extends from June 2, which is the rule's effective date for domestic firms.

After two years of hibernation, the non-agency RMBS may be re-emerging.

The credit crisis has forced MBS investors to adopt new tactics. Notably, they have to take a closer look at the collateral backing mortgage bonds. But the analysis goes beyond that. Investors now need to look at home prices in a geographic region and consider the health of local economies where the homes are actually located. Ahead of the crisis, little attention was paid to whether a property was owner-occupied or if there were multiple liens on a single property. Now, issues like these make a world of a difference. Then there is the question of what actually makes a borrower walk away from a loan? Some observers believe geographic location has much to do with a homeowner's decision to default on their mortgage. Having clues to the roots of a default can help market participants better size up the value of a pool of whole loans or securities out for bid. ASR recently met with some of the market's leading analysts and observers to learn about the leading indicators of a default in a mortgage-backed bond. That discussion, which was moderated by ASR's contributing editor Aleksandrs Rozens, was sponsored by 1010data - a provider of tools and analytics used by many mortgage bond investors today. Interestingly, the panelists agreed that even if the data to look deep in the mortgage bonds were available ahead of this credit crisis, few investors would have held off from snapping up the riskiest mortgage securities. Why? The appetite for risk was just too great.

The current crisis has drawn into sharp focus concerns that structural features in some securitization transactions may need to be re-assessed to ensure they are adequate in mitigating the impact arising from possible failures of servicers or other transaction parties. Moody's believes that the performance of a securitization transaction depends not only on the underlying collateral performance but also on the effective performance by such transaction parties of their responsibilities. Our November 2009 publication on this topic, Operational Risks in Securitizations to be Revisited, cites several occurrences where nonperformance of a transaction party may have detrimental effects on a transaction's performance regardless of the underlying pool's performance. We refer to this risk as "operational risk,"

Securitization Focus

Recently the Securities and Exchange Commission (SEC) granted a temporary exemption from Rule 17g-5(a)(3) for credit ratings provided to most ABS, MBS and other structured finance securities of non-U.S. issuers. This reprieve expires on Dec. 2 and extends from June 2, which is the rule's effective date for domestic firms.

After two years of hibernation, the non-agency RMBS may be re-emerging.