Securitization

The regulatory decision to block bond insurer Financial Guaranty Insurance Corp. (FGIC) from paying claims has resulted in “a failure to pay credit event,” according to the International Swaps and Derivatives Association (ISDA).

Fitch Ratings published its surveillance criteria for rating CDOs exposed to corporate debt.

Bingham McCutchen added Sarah Smith, former co-head of Sidley Austin London’s international finance group, as a partner in the London office.

Lend America, which was banned from Federal Housing Administration lending on Monday, was refinancing certain customers without paying off their prior existing lien, according to veteran mortgage banking attorney Robert Lotstein.

The bankruptcy court overseeing the liquidation of mortgage lender Taylor Bean & Whitaker has approved a "stalking horse" bid on the nonbank's real estate-owned portfolio which includes almost 2,000 properties, according to a memo obtained by National Mortgage News.

Willie Newman, the former executive vice president of ABN Amro Mortgage Group, has been hired to head up the newly created residential mortgage origination unit at Cole Taylor Bank, Rosemont, Ill.

Highland Capital Management is working on an array of loan-focused funds that it hopes to launch at the beginning of 2010.

Fannie Mae and Freddie Mac are required to reduce their mortgage portfolios by 10% every year beginning next year, until each of the two mortgage portfolios reaches $250 billion.

Manager Activity: Autos Book Runner Amount (US$ Mil) Rank Mkt.

The House of Representatives is set to debate and vote on its regulatory reform package this week. The proposed legislation includes several bills that address issues important to securitization, including the risk retention on sales and securitizations of mortgages.

The destabilizing news out of Dubai is inarguably a negative for issuers out of the region - what many investors effectively saw as implicit sovereign support has now vanished.

Overview

The financial crisis has brought a renewed consciousness to ABS investors - they need to get to the nitty-gritty of what they own. Nora Colomer's article this month focuses on this very issue.

The recent uptick in primary, non-retained issuance in Europe could be more than just a one-off event.

Highland Capital Management is working on an array of loan-focused funds that it hopes to launch at the beginning of 2010.

Fears are growing of a renewed surge in defaults on option ARMs (OAs). Investors have increasingly expressed concern that a spike in defaults driven by mandatory payment recalculations (the recast "time bomb") is building for the roughly $100 billion unpaid balance of 2006-issue loans, and question whether modifications under the Home Affordable Modification Program (HAMP) can be used to help significant numbers of troubled OA borrowers.

Issuance of top-rated credit card ABS has picked up this year, but investors have faced a dearth of subordinated tranches until GE Capital's $76 million Class B five-year tranche priced Nov. 25 at 285 basis points over mid-swaps, setting a benchmark for more issues.

This year, mortgages have done very well courtesy of the substantial buying from the Federal Reserve.

Investment firms are also increasingly unwilling to trust the work of others. This is coupled with the need for more granular information down to the borrower level. These have driven market participants to build their own models using more detailed data from various sources and are closely tied to increased transparency in transactions.

The renomination of Federal Reserve Board Chairman Ben Bernanke wasn't supposed to be a nail-biter, but the prospect of another four-year term has lawmakers from both sides throwing up roadblocks.