Securitization

The delinquency rate for commercial real estate loans rose 42 basis points to 8.42% in May — the highest in CMBS industry history, according to a report from Trepp released today.

CIT Group Inc. is rounding out its executive suite, taking another step toward normality for the financing company — and potentially earning regulators' approval for John Thain's planned shift toward a banking model.

CitiFinancial, the Baltimore-based consumer finance subsidiary of Citi Holdings, New York, has provided some details on how it is separating its business into two segments.

Standard & Poor’s appointed Howard Esaki as managing director and head of the rating agency's new global structured finance research department.

It's no secret that the GSEs have been demanding billions of dollars in loan buybacks over the past year, but now Freddie Mac is warning that some of its seller/servicers may not meet their repurchase obligations.

Mortgage lenders that finance vacation homes on the Jersey Shore of the Garden State may have more to worry about this year than just the negative image of beach towns caused by the MTV reality series of the same name.

Ginnie Mae said a recent change it made to its Ginnie II MBS program will help mortgage bankers with their warehouse lines of credit.

Loan securitizers are bracing for an invasion of backseat drivers. By Wednesday, June 2, issuers and rating agencies must comply with a Securities and Exchange Commission (SEC) rule designed to encourage more unsolicited opinions on ABS. The regulator wants to remove the conflicts of interest in the ratings process that led to inflated ratings in the past and contributed to the financial crisis.

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.