Securitization

Formerly of Clayton Fixed Income Services, Kevin Kanouff has started a new Denver-based company called Statebridge.

In the last 100 basis point move in mortgage rates, servicer hedging needs have actually been rather muted, according to Barclays Capital.

Freddie Mac reported a sharp decline in both fixed and adjustable mortgage rates this week.

American International Group's life insurance companies have followed through with a Federal Reserve Bank of New York (FRBNY)-assisted plan to sell their interests in a $39 billion pool of residential MBS to a newly-formed limited liability company in a move that AIG said will address liquidity issues associated with its U.S. securities lending program.

The Federal Deposit Insurance Corp. (FDIC) board of directors has approved a seven-basis point hike in deposit insurance premiums for 2009 to address the high cost of bank failures and a declining reserve ratio.

Loan modifications will grow to 15% of 2005-2007 vintage securitized mortgages over the next twelve months from zero, Fitch Ratings said today.

Ocwen Financial Corp., a servicer of subprime mortgages, said the 60-day delinquency rate on its modified mortgages after six months is 24.6%, a figure considerably below industry averages.

The National Association of Home Builders (NAHB) has trimmed 52 positions from its workforce as the housing and mortgage crisis shows no signs of abating any time soon.

Fitch Ratings, New York, reviewed the ratings of 12 homebuilders and downgraded eight, while affirming four.

GMAC Financial Services — which is trying to become a bank holding company and tap the Treasury's TARP program — has extended the deadline for its $38 billion note exchange program until Dec. 26.

The Spanish treasury held its second auction for MBS structured deals on Dec 11.

Fitch Ratings said it is reviewing RMBS backed by the Dutch National Mortgage Guaranty (nationale hypotheek garantie or NHG) as part of its criteria update for residential mortgage loans with this type of guaranty.

The securitization of mortgages and construction loans has slowed down to a listless sputter over the last few months in Mexico, a victim of blown-out spreads and investor aversion to debt from nonbank companies known as Sofols and Sofoms.

The number of European structured deals has increased as the end of the year approaches and banks seek to finance their positions for the turn of the new year. But transactions remain either privately placed or retained for central bank liquidity purposes.

The U.K. government has finally succumbed to calls for it to step in and ease the growing repossession rates.

The Securities Industry and Financial Markets Association (SIFMA) and the American Securitization Forum (ASF) last week created a U.S. Covered Bonds Council.

In recent months, it has become readily apparent that the credit crisis that began in the summer of 2007 has been particularly unkind to the structured investment vehicle ("SIV") market. SIVs typically operate by purchasing rated long-term assets, and funding the purchases by issuing short term liabilities, customarily in the form of highly-rated commercial paper and medium-term notes. Unlike most CDO vehicles, which focus on cash flows, SIVs are market value driven. Due to an unprecedented strain on the commercial paper market, numerous SIVs have been unable to meet their short-term debt obligations while simultaneously experiencing significant drops in their portfolio market values. As a consequence, participants in the SIV market - a market valued at $400 billion at its peak in July 2007 - have been scrambling to find viable restructuring or refinancing alternatives.

Mortgage performance was improving through midweek, and a major factor for this was the decline in supply compared with the previous week. Originator selling averaged $1.5 billion, down from the daily drops of $3 to $4 billion from the previous week. Supply has been around 75% on 5% coupons and 25% on 4.5s.

As access to the securitization market remains nearly impossible, lenders are looking for other ways to shore up capital.

The continuing spike in delinquencies and foreclosures has caused the topic of loan modifications to receive renewed attention and focus. In testimony before Congress, Federal Deposit Insurance Corp. (FDIC) Chairwoman Sheila Bair recently unveiled a plan designed to entice servicers to reduce the monthly mortgage payments and debt-to-income ratios of numerous delinquent borrowers.