Securitization

Jefferies made eight appointments within the investment bank’s MBS and ABS group, which is part of the fixed income division at the firm.

The index showed that delinquencies have receded in recent months. This indicates that moderate improvement in default activity is possible for the rest of this year. Fitch director Brad Sohl said that while delinquency and default performance of timeshare receivables is weak relative to the past — and up 37% year-over-year — credit enhancement should result in limited negative rating actions. Total delinquencies decreased from February’s all time high of 5.58% to 4.89% in 2Q09. Monthly defaults of .88% for June — the highest observed level for the index — are up nearly 48% from last year’s .52%. Also, default reached 8.75% for the index in June. However, Fitch expects default levels to moderate slightly in the coming months, in light of recent downward delinquency trends.Fitch’s outlook for asset performance is that it will likely deteriorate, although the ratings will remain stable. The Fitch timeshare performance index, which summarizes average monthly delinquency and gross default trends tracked in Fitch’s database of timeshare ABS, is available on a quarterly basis.Total defaults on U.S. timeshare ABS hit another peak in the second quarter, according to Fitch Ratings timeshare ABS index.Total defualts on U.S. timeshare ABS hit another peak in the second quarter, according to Fitch Ratings timeshare ABS index.

Catastrophe bond issuance has jumped this year, after a complete standstill during the second half of 2008.

Ocwen Loan Servicing has inked a deal to be the interim servicer for Freddie Mac on 24,000 nonperforming single-family loans with a principal balance of $4.4 billion.

Freddie Mac forced its seller/servicers to buy back $951 million of bad mortgages during the second quarter, a 21% increase from the first quarter.

Rising interest rates contributed to a declining Mortgage Bankers Association (MBA) Market Composite Index for the week ended Aug. 7 when compared with the previous week, but continued increases in purchase activity suggest a housing recovery could help bolster volumes going forward.

Barclays Capital analysts said that a new German law designed to give bondholders more rights and flexibility missed a chance to provide some much needed clarity on the future of securitizations.

RMBS broker-dealer Amherst Securities Group hired Jim Regan as the head of ABS trading.

Two years after it abruptly stopped funding loans, Impac Mortgage Holdings Inc., once a leader in the now-defunct alternative-A market, is coming out of hibernation.The Irvine company has outlived other once high-flying Southern California home lenders like New Century, IndyMac and Countrywide. "We are the last guys standing," said Joseph Tomkinson, Impac's chairman and chief executive.Since August 2007, Impac has confined its activities to reducing debt, servicing the loans it made and starting a handful of side businesses. It is down to 300 employees, one-quarter of its work force at the height of the housing boom in 2006.But Tomkinson said Impac "is getting ready to enter the retail [lending] market in a big way." The company is negotiating a $500 million warehouse line it expects to get by yearend and says it expects to start originating loans next year.Unlike the reduced-documentation mortgages that Impac specialized in during the fat years, it intends to write plain-vanilla loans this time around."The product that is being originated today is some of the best product that's been originated in years," Tomkinson said. "You're underwriting with property values back to 2002, and everything is fully documented."In 2006 Impac wrote $2 billion of loans. But the liquidity crisis began late that year, forcing it to retrench. By mid-2007 it was on pace to originate just $300 million for the year. A few months later it halted lending altogether.Todd Taylor, Impac's chief financial officer, said it survived largely because it managed to negotiate out of its five warehouse lines and sell most of its loans at a loss in 2007, while margin calls were crippling other lenders. The company still owes $171.7 million to UBS AG on a warehouse line that was converted to a term loan. This is the last of Impac's significant liabilities, Taylor said.Impac's stock was delisted from the New York Stock Exchange last year and now trades on the Pink Sheets.During the interim Impac has set up five fee-based businesses: a real estate brokerage, an escrow business, a loan-modification service, a company that looks after repossessed homes and one that disposes of them. Tomkinson said these businesses "are all earning money."The company is also looking to buy a title insurer. Such an acquisition, along with the five fee businesses and a revived lending business, "will all feed off each other," Tomkinson said."If I prequalify somebody for a loan, I send them to a broker, sell them a house, send them to our title insurer and fund the loan," he said. "All of these things interplay with one another."To be sure, Impac has tried to reinvent itself before. Last year it talked about buying distressed loans, and it acquired a platform from UBS for servicing them. But Impac later sold the operation to York Capital Management LLC."If you're considering getting back into the mortgage business, you have to fashion a long enough runway and have plenty of capital because it's not going to be as fast a takeoff as most people think," said Bill Dallas, whose Ownit Mortgage Solutions Inc. was among the first high-profile casualties of the mortgage crisis. "They're trying to figure out how to build a profitable business in this environment, and it's not that easy."In particular, Dallas cited the current difficulty in obtaining warehouse lines, particularly from banks that are also competitors in originating mortgages. "They have to sell their loans and warehouse their loans, and the competitor is a bank that is turning the spigot off," he said.It probably does not help matters that two of the few remaining warehouse lenders — Colonial BancGroup Inc. and Guaranty Financial Group — have warned in recent weeks that they may fail.Taylor acknowledged that warehouse lines (which Impac itself once offered to its correspondents) are "very hard to come by because there's no liquidity."Impac services 57,000 loans, totaling $6.5 billion. It has modified roughly 5,000 of them since January. But it is not participating in the Obama administration's loan-mod program, which Tomkinson said is "exacerbating the situation," because it encourages servicers to modify loans for borrowers "who don't have any skin in the game."To make sure only borrowers intent on paying get a break, Impac charges a fee of up to $2,000 for a completed loan modification. Tomkinson noted that many "other groups" charge fees up-front before determining whether the borrower qualifies for a modification."The borrower has to take some responsibility," he said. "We charge a fee if the borrower is qualified, and it's on a sliding scale, so there's no up-front money, and only if they are successful in getting the modification after reunderwriting the loan. Any borrower willing to put more cash up is sincere."Two years after it abruptly stopped funding loans, Impac Mortgage Holdings, once a leader in the now-defunct Alt-A market, is coming out of hibernation.

Trepp expanded its commercial real estate platform to include daily commentary and market observations under the TreppWire banner.

A legal reserve created by State Street Corp., Boston, to deal with law suits filed against the company over subprime mortgage investments by one of its subsidiaries may not be large enough to cover what the company might eventually have to pay out.

Citigroup, which has not been an active warehouse lender in recent years, said Tuesday it has earmarked $2 billion in funds for warehouse lending commitments to non-bank mortgage lenders.

Fitch Ratings believes it is likely that iStar Financial — a large player in structured financing for commercial real estate — will go into default on its obligations given its weakened financial position.

Standard & Poor's is requesting comments on its proposed stressed recovery ratings for all senior tranches of U.S. prime, Alt-A, and subprime RMBS that it originally rated at 'AAA' but has downgraded to 'BB+' or below.

Cantor Fitzgerald & Co. promoted Carmine Urciouli and Martin Teevan to co-heads of global credit.

The government's moves have been a key driver in the month-long CMBS credit rally, although it has also been sustained beyond technical factors such as the existence of Public-Private Investment Program and TALF (Term ABS Loan Facility), Barclays Capital analysts said.

Lloyds TSB's deal has £3 billion ($4.9 billion) of Class A notes backed by senior secured loans to registered U.K. social landlords (RSL). The deal, dubbed Chepstow Blue Plc, has been assigned a ‘AAA' by Fitch Ratings.

Weak house prices are likely to continue in the Netherlands due to a high degree of leverage in households and a continuing economic recession, according to a Moody's Investors Service report on Dutch RMBS trends.

WASHINGTON — Whether a banker wants the Federal Deposit Insurance Corp. to extend its blanket guarantee for non-interest-bearing deposits turns mainly on his view of the economy.JPMorgan Chase & Co., Wells Fargo & Co. and BB&T Corp. all oppose an extension beyond yearend, arguing the need for the Transaction Account Guarantee Program has faded."Conditions in the financial industry have improved significantly since the introduction of the" program last October, Donna Goodrich, a senior executive vice president at BB&T told the FDIC in a letter. "Financial institutions are now able to access the capital markets to issue both debt and equity. These are positive signs that public confidence in the financial services has been restored."But other institutions, particularly banks in areas hard hit by failures, warned that depositors remain nervous and TAG is still needed."The client-base sensitivity to insured deposits is extreme," Chad Bense, a vice president at $165 million-asset Minnesota National Bank, wrote in a letter. "The environment created warrants the continuation of the program beyond 2009."Chris Cole, a senior regulatory counsel for the Independent Community Bankers of America, urged the FDIC to go beyond the six-month extension it proposed."Particularly in those areas of the country like Georgia, Florida, California and the Southwest, it is very important that this program continue an additional 12 months to allow additional time for those areas to stabilize," Cole wrote.The American Bankers Association did not go that far. It supported a six-month extension, and noted that many banks will not view opting out as an option. "Many banks chose to participate originally because they were concerned that to opt out would put them at a competitive disadvantage," wrote Robert W. Strand, a senior economist with the ABA. "This pressure does not disappear, and at 25 basis points would represent a high cost for some institutions."The TAG program, launched in October 2008, provides unlimited deposit insurance for certain transaction accounts that do not bear interest. The coverage has been widely popular; as of May, only about 1,100 institutions had opted out. The benefit is intended mostly for accounts that business customers use to pay their employees and other expenses.In June, the agency proposed two options: let the program expire at yearend or extend it for six months and raise the premium rates charged for the insurance to 25 basis points from 10."Twenty-five basis points is a nonstarter for most institutions," James Chessen, the ABA's chief economist, said in an interview. "Something closer to 10 — perhaps even 15 — might draw broader participation."A related program that allows institutions to pay the FDIC to guarantee their senior debt has already been extended for four months, until Oct. 31. But it has not imposed any costs on the agency; in June the FDIC reported that it had paid out $840 million to honor the deposit guarantees, while collecting only $700 million in fees.Some banks are arguing for a longer extension than six months."I am writing to … request that the TAG Program be extended indefinitely under its current structure," wrote Ronald D. Paul, the chairman of $1.5 billion-asset EagleBank in Bethesda, Md., in a July 13 letter.SunTrust Banks Inc., meanwhile, suggested a more gradual wind-down."The concern with either of the FDIC's proposed alternatives is that they each create a potential 'cliff event' for both financial institutions and depositors of relatively large balances," Mark A. Chancy, SunTrust's chief financial officer, wrote in a July 24 letter. For those depositors, he said, "a graduated scale back is needed to provide them assurance that their deposits are safe."Chancy proposed that the amount of the guarantee drop by intervals every year starting Jan. 1. At the beginning of 2010, the FDIC would guarantee balances up to $5 million. It would then step down to $2.5 million in 2011, $1 million in 2012 and between $250,000 and $999,999 in 2013. No extra coverage would be available in 2014.But other bankers said the sooner the program ends, the better."Weaker banks that may urge extension of the TAG program in order to shore up customer deposit balances, do so at the expense of safer, more risk-averse financial institutions," wrote James E. Shreiner, senior executive vice president at Fulton Financial Corp. in Lancaster, Pa., which owns community institutions in the Middle Atlantic region and the $8 billion-asset Fulton Bank.Some opponents suggested that maintaining the program posed a competitive problem if their rivals, who may be in a weaker liquidity position, chose to stay in the program. (Under the FDIC plan, if the agency chose to extend the coverage, banks now participating in the program would have a one-time window to opt out.)"The overriding theme to our opposition is that our participation in the TAG program came, not from need, but from competitive pressure," wrote Jeff Asher, a senior vice president at $9.7 billion-asset FirstBank Holding Co. in Lakewood, Colo., which owns institutions throughout the state.The "increased fees" with an extension "are particularly distasteful in this light," he added.While the 85 comment letters filed on the question did not break down cleanly as big versus small banks, Frank Bonaventure Jr., a principal at the Ober Kaler law firm in Baltimore, said many small institutions are arguing for an extension of this program as an offset to the perception that large banks are viewed as safer because of their size."The smaller banks are feeling that they need whatever protections they can get to maintain public confidence," Bonaventure, a former senior counsel at the Office of the Comptroller of the Currency, said in an interview. "The larger banks probably feel: We're over that hump. We've gone though the stress analysis, and we're fine. … Why have extra costs, which is what this is all about?"Large banks that favor an extension include SunTrust, Regions Financial Corp. and U.S. Bancorp."We are supportive of the extension of the program to June 30, 2010, but suggest a declaration that this will be the last extension," wrote Kenneth D. Nelson, executive vice president and treasurer for U.S. Bank."It really has nothing to do with big versus small," said a large-bank source. "It more has to do with: Where are we in this crisis?"WASHINGTON — Whether a banker wants the Federal Deposit Insurance Corp. to extend its blanket guarantee for non-interest-bearing deposits turns mainly on his view of the economy.

Freddie Mac said the collapse of the lender Taylor, Bean & Whitaker Mortgage Corp. may cause it "significant" losses.