Securitization

There is no plausible manner for Bank of America Corp. (BAC) to disclaim the Countrywide Financial Corp. (CFC) bonds, according to analysts from Covenant Review.

When it comes to qualified residential mortgages (QRM), industry and consumer groups like to say they are united, arguing that too strict a QRM definition will result in disqualifying many otherwise creditworthy borrowers. But not everyone is of that mindset.

TICC Capital closed on its $225 million CLO transaction Wednesday. The senior notes of the CLO were issued by a newly formed special purpose vehicle in which a wholly-owned subsidiary of TICC owns all of the equity.

Credit-default swaps on Bank of America, the nation's largest residential servicer, this week surged to the highest level since April 2009 before paring those gains.

The debate about the viability of the super-senior structure in the current environment experiences a resurgence, Fitch Ratings said today.

Wells Fargo analysts recommended FFELP and private student loan-backed ABS as nonbenchmark asset classes that provide investors with good relative value opportunities.

Deutsche Bank has been chosen to sell Aurora Loan Services (ALS), the Colorado-based mortgage banking division of Aurora Bank, according to industry officials.

Home Loan Servicing Solutions (HLSS), a newly formed Cayman Island corporation controlled by Ocwen CEO Bill Erby, plans to sell 18.3 million shares in its IPO, raising $316.3 million from investors.

Moody's Investors Service has withdrawn its preliminary ratings on Domino's Pizza whole business securitization called Domino’s Pizza Master Issuer LLC Series 2011-1.

If there was ever any doubt that the mortgage market is in the midst of a restructuring, consider this: roughly $260 billion of mortgage servicing rights (MSRs) are currently up for grabs.

Early Friday morning the mortgage banking industry had yet to learn who exactly bought Bank of America's $73 billion mortgage servicing portfolio with the bank declining to provide much in the way of details.

An Obama Administration official and a Seattle attorney squared off at the American Association of Residential Mortgage Regulators annual meeting in San Francisco, with one claiming that "dual track" servicing has all but ended but the other saying that's not the case, at least not in the Puget Sound area.

The likelihood of the bond insurers regaining their 'AAA' status when the U.S. does not hold that title anymore is very slim.

Federal Home Loan Bank System (FHLBs) are seeking an exemption from pending risk retention rules so they can continue to provide risk-sharing mortgage programs that they claim have exhibited "superior credit performance" for more than a decade.

-----Original Message-----From: Siegel, GarySent: Thu 8/11/2011 11:07 AMTo: Sibayan, KarenSubject: RE: Rep. Waters Seeks SEC Probe, House Panel Hearings on S&P DowngradeThursday, August 11, 2011By Lynn Hume WASHINGTON - Rep. Maxine Waters, D-Calif., has asked the Securities and Exchange Commission to investigate whether Standard & Poor's disclosed its downgrade of U.S. debt to certain financial institutions before it made the information public.In a two-page letter dated Wednesday to SEC chairwoman Mary Schapiro, Waters said: "Given the historic nature of S&P's downgrade, and the tremendous market volatility experienced after that downgrade, I feel it is appropriate for the commission to conduct an investigation."She said the SEC should probe whether any institutions traded on the basis on nonpublic information about the downgrade.Waters also sent House Financial Services Committee chairman Spencer Bachus, R-Ala., a two-page letter asking that the committee conduct a hearing or a series of hearings on "the extent to which [Standard & Poor's] downgrade was based on an objective analysis of U.S. debt dynamics versus subjective political analysis," among other things.The committee also should examine: the impact of the rating agency's using an incorrect Congressional Budget Office assumption in deciding to downgrade U.S. debt; the extent to which Standard & Poor's and its parent, McGraw-Hill Cos., have firewalls to insulate their lobbying and rating activities; as well as the implications of the rating agency's action and its historical performance, she said.In line with her request to the SEC, she asked that the committee examine whether SEC disclosed its downgrade to certain financial institutions before making it public.Waters is the ranking minority member of the House Financial Services Committee's capital markets subcommittee.Rep. Maxine Waters, D-Calif., has asked the Securities and Exchange Commission (SEC) to investigate whether Standard & Poor's disclosed its downgrade of U.S. debt to certain financial institutions before it made the information public.In a two-page letter dated Wednesday to SEC chairwoman Mary Schapiro, Waters said: "Given the historic nature of S&P's downgrade, and the tremendous market volatility experienced after that downgrade, I feel it is appropriate for the commission to conduct an investigation."She said the SEC should probe whether any institutions traded on the basis on nonpublic information about the downgrade.Waters also sent House Financial Services Committee chairman Spencer Bachus, R-Ala., a two-page letter asking that the committee conduct a hearing or a series of hearings on "the extent to which S&P downgrade was based on an objective analysis of U.S. debt dynamics versus subjective political analysis," among other things.The committee also should examine: the impact of the rating agency's using an incorrect Congressional Budget Office assumption in deciding to downgrade U.S. debt; the extent to which S&P and its parent, McGraw-Hill Cos., have firewalls to insulate their lobbying and rating activities; as well as the implications of the rating agency's action and its historical performance, she said.In line with her request to the SEC, she asked that the committee examine whether SEC disclosed its downgrade to certain financial institutions before making it public.Waters is the ranking minority member of the House Financial Services Committee's capital markets subcommittee.

Rule 17g-5 could be enhanced to offer structured finance buyers with more transparency on the rating agency selection process, according to a comment letter Fitch Ratings is submitting to the Securities and Exchange Commission. (SEC).

The flight to safety pressed mortgage rates lower with 15-year fixed, 5/1 hybrid ARMs and one-year ARMs all setting new record lows for the week ending August 11. 15-year rates slipped four basis points to 3.50 percent, hybrids averaged 3.13 percent versus 3.18 percent last week, and one-year ARMs plunged 13 basis points to 2.89 percent.Meanwhile, the 30-year fixed mortgage rate dropped to its lowest level for 2011, averaging 4.32 percent compared to 4.39 percent last week. It remains 15 basis points above its record low of 4.17 percent.Deutsche analysts said that despite the sharp drop in Treasury rates, the 30-year primary mortgage rate is likely to be sticky between 4.0 percent and 4.25 percent. That is the result of capacity constraints. They noted in their daily MBSTrader that there is nearly $1 trillion of mortgages with note rates between 4.85 percent and 5.15 percent in agency MBS pools. As rates decline through 4.20 percent, "this mostly clean set of borrowers would become refinanceable, having over 65 bps of rate incentive," they said.However, employment in the origination business is down 20,000 from last fall, they said in their weekly research yesterday, and new guidelines from the GSEs that become effective this fall will require them to devote more resources to servicing/foreclosures versus origination. This creates an incentive for bankers to manage volume by keeping rates and MBS prices high. Indeed, Deutsche said the primary-secondary mortgage spread is at around 90 basis points compared to an average spread over the past five years of 60 basis points.With the further decline, Credit Suisse projects the MBA's Conventional Refi Index could pop up towards 4500 for the week ending August 12 from 3881. This suggests a print of 4200 on the Composite Refi Index from 3626 reported yesterday.The flight to safety pressed mortgage rates lower with 15-year fixed, 5/1 hybrid ARMs and one-year ARMs all setting new record lows for the week ending Aug. 11.The 15-year rates slipped four basis points to 3.50 %, hybrids averaged 3.13% versus 3.18% percent last week, and one-year ARMs plunged 13 basis points to 2.89%.Meanwhile, the 30-year fixed mortgage rate dropped to its lowest level for 2011, averaging 4.32% compared to 4.39%t last week. It remains 15 basis points above its record low of 4.17%.Deutsche Bank Securities analysts said that despite the sharp drop in Treasury rates, the 30-year primary mortgage rate is likely to be sticky between 4.0% and 4.25%. That is the result of capacity constraints. Analysts noted in their daily MBSTrader that there is nearly $1 trillion of mortgages with note rates between 4.85% and 5.15% in agency MBS pools. As rates decline through 4.20%, "this mostly clean set of borrowers would become refinanceable, having over 65 bps of rate incentive," they said.However, employment in the origination business is down 20,000 from last fall, Deustche analysts said in their weekly research yesterday, and new guidelines from the GSEs that become effective this fall will require them to devote more resources to servicing/foreclosures versus origination.This creates an incentive for bankers to manage volume by keeping rates and MBS prices high. They added that primary-secondary mortgage spread is at around 90 basis points compared to an average spread over the past five years of 60 basis points.With the further decline, Credit Suisse analysts projected the Mortgage Bankers Association's Conventional Refinance Index could pop up towards 4500 for the week ending Aug. 12 from 3881. This suggests a print of 4200 on the Composite Refinance Index from 3626 reported yesterday.

Federal regulators are seeking input on new options for selling foreclosure properties owned by the government sponsored enterprises and the Federal Housing Administration (FHA).

As ASR reported on Aug. 1, Kroll Bond Rating Agency (KBRA) is requesting comment for its rating approach for individual RMBS transactions.

Researchers at some firms were recommending overweighting agency MBS Wednesday morning, saying relative yield advantages and the likelihood of continued tight underwriting could outweigh negative convexity concerns as more market turbulence continued to drive rates lower.