ABS

With the slew of Federal initiatives aimed at restoring stability in the capital markets, attention has finally been paid to the struggling mortgage industry - which might now be gaining some traction in the loan modification space, market participants said.

In the time since the crisis unfolded, the U.K. government has been under criticism for not doing enough to stimulate a mortgage market revival.

ABS market participants across the globe gathered together on Wednesday for a joint meeting of industry organizations including the American Securitization Forum (ASF), the Securities Industry and Financial Markets Association (SIFMA), the Australian Securitisation Forum and the European Securitisation Forum. The hot topic on the agenda was the pressing need to restore confidence in securitization.

Freddie Mac reported 30-year fixed mortgage rates averaged 5.53%, down 44 basis points from last week's level.

Republicans signaled Wednesday they may try to block the release of the remaining $350 billion of funds for the Troubled Asset Relief Program (TARP), criticizing Treasury Secretary Henry Paulson's failure to establish clear goals and accountability for the funds spent to date.

Fitch Ratings said it will now seek and evaluate third-party loan-level reviews on all residential mortgage pools it is asked to rate in order to better identify poor underwriting practices.

Mortgage Network, Danvers, Mass., has temporarily suspended its wholesale and correspondent originations in order to cope with a federal policy-driven spike in refinance applications that an executive at the company said has strained market-wide warehouse line capacity in the channels.

In response to additional investor feedback, Moody's Investors Service is modifying the two supplemental measures to its structured finance ratings that it introduced earlier this year.

With no end in sight for the financial crisis, the Federal Reserve said Tuesday it will extend three of its liquidity programs through April 30.

Nearly four years after turning in its thrift charter, Ocwen Financial Corp. has reconsidered the merits of federal regulation and has applied to convert to a bank holding company and buy a tiny Texas bank.

The Treasury Department, to date, has spent $150 billion of taxpayer money investing in preferred shares of 52 different institutions, outgoing secretary Henry Paulson said Monday afternoon.

In its 2009 MBS outlook, JPMorgan Securities analysts recommended an overweight to MBS versus Treasurys heading into the new year.

In the first major legal challenge to mass loan modification programs, bondholders have filed a lawsuit claiming Countrywide Financial Corp. cannot change mortgage terms without their permission.

In a report relased today, Merrill Lynch analysts noted DBSI's CMBS exposure. DBSI is a real estate company specializing in TIC transactions. The firm filed for Chapter 11 bankruptcy protection on Nov. 10.

Fannie Mae's use of HomeSaver advances to cure delinquent loans in securitized pools peaked in June and July and two-thirds of the personal loans went to nonprime borrowers, according to a report by the Federal Housing Finance Agency.

The Treasury Department has provided Freddie Mac with a $13.8 billion infusion to wipe out a capital deficit and keep the government sponsored enterprise afloat.

Manager Activity: AutosFull Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market

Morgan Joseph & Co., a full-service investment bank, expanded the firm’s analytics and trading group that operate in the secondary market for fixed-income structured products by hiring two new members to the team, as announced today by Matthew Stedman, the firm's head of sales and trading.

"Since the beginning of 2007, we have seen a tightening of lending standards and a reduction of introductory offers to new borrowers, which has set the ground for improvement in performance and better positioned these structures to weather a downturn," said Anca Gagea, ABS research analyst at Barclays Capital. "That said, the biggest driver for consumer asset performance is unemployment, and we are seeing that go up in the U.K., which has begun to have an impact on performance."

Northern Rock's Granite Master Trust breached its non-asset trigger, because the current-seller share fell below the minimum on two consecutive distribution dates. The breach is the result of a strategic decision by Northern Rock's management.