Securitization

National Australia Bank plans to buy Challenger Financial Services' mortgage business, along with A$4 billion ($3.2 billion) of residential mortgages held in warehousing for A$385 million.

Marc Seidner has landed at PIMCO, where he takes on the role of executive vice president and portfolio manager at the firm’s Newport, California office.

Mortgage loan delinquency, borrowers 60 or more days past due, increased for the tenth straight quarter, hitting an all-time national average high of 5.81% for the second quarter of 2009, according to the latest data from TransUnion.com.

CIT Group successfully completed a tender offer, the company said today. Bondholders representing 59.81% of CIT's $1 billion in outstanding floating-rate senior secured notes tendered their bonds by the offer’s expiration date of Aug. 14. The bonds mature today. Despite this success, analysts have strong doubts about CIT’s ability to avoid bankruptcy.

MF Global expanded its fixed-income business and introduced a new institutional sales group.

The U.K's low interest rate environment is supporting lower-than-expected levels of bank possessions. This bodes well for U.K. RMBS, said analysts at Moody’s Investors Service.

Moody’s Investors Service has softened its view on the risk of the Turkish government meddling in financial future flow deals, an unambiguous positive for transactions backed by diversified payment rights (DPR) and credit card vouchers (CCV).

The Federal Reserve Board and the Treasury Department today approved an extension to the Term Asset-Backed Securities Loan Facility (TALF).

The City of New York is in the market with a $59 million deal backed by tax liens. JPMorgan Securities is leading the offering.

Every month Fannie Mae and Freddie Mac are paying bondholders about $1 billion to cover seriously delinquent homeowners.

Almost one in three mortgaged homes in the U.S. — representing 15.2 million loans — now has negative equity, according to a new report issued by First American CoreLogic (FACL).

Chase priced two credit card transactions from its Chase Issuance Trust, Class C (2009-5) and Class B (2009-4). Both transactions are lead by JPMorgan Securities.

Freddie Mac refinanced nearly 29,000 loans under the Obama administration's Home Affordable Refinance Program (HARP), which is designed to give borrowers with loan-to-value ratios above 80% a chance to refinance and lower their mortgage payments.

The American Bankers Association (ABA) released a white paper that outlined concerns over the expansion of mark-to-market accounting and the lack of due process and divergence between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) on projects relating to financial instruments.

Moody's Investors Service launched a newsletter offering investors information and analysis about key credit issues affecting the RMBS market.

Joseph J. Murin, the president of the Ginnie Mae, is stepping down after just over a year at the federal agency.

Every month Fannie Mae and Freddie Mac are paying bondholders about $1 billion to cover seriously delinquent homeowners.

Royal Bank of Scotland hired Brian Lancaster to head securitization strategies for the Americas global banking and markets division.

Direct-to-consumer (DTC) loans carry a higher risk of borrowed funds not being used for education as well as excessive or unnecessarily expensive debt and as a result could face higher loan default rates and losses than those of more traditional school loans, Moody’s Investors Service reported.DTC loans have constituted a significant portion of transactions sold by issuers of securities backed by pools of private student loans over the past five years.But DTC loans are disbursed directly to the student borrower and/or co-signer, and unlike the more traditional school channel loans, are not school certified regarding enrollment status and the loan amount or marketed through school financial aid offices.Moody’s said DTC loan defaults and delinquencies reflect their weaker credit quality and performance across all issuers who had both types of loans in their securitizations, despite varying results across issuers.Sallie Mae’s DTC loan expected lifetime default rate is 1.3 times that of their school channel loans, and First Marblehead’s DTC loan rate is 2.9 times that of school channel loans, according to Moody’s.School channel loans depend on the assurance that borrowed funds will be used for education whereas two key safeguards of school channel loans limit the ability of a student to incur more debt than necessary, Moody’s said.First, schools provide lenders with certification before disbursement of funds that typically includes verification of borrower enrollment status, grade level, anticipated graduation date and authorized loan amount. Second, funds are disbursed directly to the schools instead of to the borrowers.Moody’s said that DTC loan risk can be mitigated by ensuring that the student displays proof of enrolling in and remaining in school.Other suggestions include capping the lifetime and academic-year loan amount limits, checking that the loan amount requested by the borrowed matches the expected attendance costs of their school, and checking with the credit bureaus to other credit requests by the borrower in order to minimize risk of over-borrowing.Also, to mitigate the risk of fraud, cross-checking the loan applicant for fraud with the credit bureaus and using the bureaus’ fraud scores to rate the application for likelihood of fraud is suggested.Direct-to-consumer (DTC) loans carry a higher risk of borrowed funds not being used for education as well as excessive or unnecessarily expensive debt and as a result could face higher loan default rates and losses than those of more traditional school loans, Moody’s Investors Service reported.

MBIA Capital Management Corp looks set to replace Vertical Capital, LLC as asset manager for Vertical CRE CDO 2006-1 Ltd.