Securitization

The most recent bankruptcy court ruling on May 13 for General Growth Properties' (GGP) Chapter 11 filing have upheld the separate legal structure of U.S. CMBS loan special purpose entities (SPEs).

The CEO of Kazakhstan's Alliance Bank, Makshat Kabashev, said in a conference call on May 29 that the originator's three DPR bonds, totaling $275 million at issuance, could fall into the scope of any of the proposed restructurings of the ailing bank's debt.

As the year got underway, expectations were for refinancing activity to surge as the Federal Reserve began its program to buy $750 billion worth of MBS with the aim to force mortgage rates lower.

This is the second of two parts of an article examining the dilemma confronting CLO mangers who wish to improve their portfolios by trading rapidly deteriorating loans for better-performing so-called "deep discount" loans. This portion focuses on the industry's call for reform and suggests solutions to this problem.

As 2009 approaches the halfway hurdle, the consumer confidence outlook looks a bit more optimistic, home sales have picked up and rates remain low, fueling refinancing opportunities. This has raised speculation across the U.S. over whether a housing market recovery is in sight.

Credit organizations, including Moody's, have been increasing measures aimed at diligently and continually evaluating the limitations of financial models and the assumptions and data behind them, especially with regard to structured securities. These steps can bolster the assessment of analytical uncertainties.

During the fall of 2008, circumstances surrounding the collapse of significant financial institutions and headline events such as the Reserve Fund's "breaking the buck" prompted governments around the world to take action and ushered in the current theme of proactive sovereign intervention. As part of this initiative, various government-sponsored programs were introduced, including U.S. CP-related initiatives such as the ABCP Money Market Mutual Fund Liquidity Facility (AMLF), the Commercial Paper Funding Facility (CPFF), the Money Market Investor Funding Facility (MMIFF), and the Straight-A Funding, LLC (Straight-A) programs.

ABS players are getting mixed signals.

Mortgage companies are scrambling to implement an over-looked Truth-in-Lending Act rule that goes into effect July 30 requiring timely delivery of the good faith estimate (GFE) on home purchases, refinancings, and home equity loans.

Freddie Mac announced that it is changing its program for “relief refinancing mortgages”

Fannie Mae intends to securitize $256 billion of single family loans and $108 billion of multifamily loans to safeguard against major market interruptions and as part of the Liquidity Contingency Plan.

The Securities and Exchange Commission (SEC) charged Boston-based Evergreen Investment Management Co. and an affiliate with securities law violations.

Aside from Capital One Multi-asset Execution Trust Class A (2009-1), Capital One has a $500 million card deal in the market.

Franklin Credit Management Corp., the Jersey City third-party mortgage servicer, has expanded its operations to include Face-to-Face Home Solutions, a door knocking division that tries to reach delinquent borrowers.

In charging former Countrywide CEO Angelo Mozilo with fraud, the Securities and Exchange Commission (SEC) is zeroing in on the lender's payment option ARM business, a controversial product that Mozilo initially embraced and then later cursed.

A Republican Congressman from New Jersey is working on legislation to facilitate the issuance of covered bonds in this country and create a market for these bonds that are collateralized by mortgages which remain in the issuing bank's portfolio.

Manager Activity: AutosFull Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market

Capital One priced a $550 million credit card deal, which was upsized from $500 million.

The Securities and Exchange Commission (SEC) announced fraud charges Thursday against Angelo Mozilo and two other former Countrywide Financial Corp. executives, alleging they hid from investors the severe credit risks the lender was taking.

William Dudley, the president of the Federal Reserve Bank of New York, predicted the securitization market will shrink.