Securitization

The Department of Housing and Urban Development (HUD) recently issued guidelines for the Home for Homeowner (H4H) program. This was part of the Housing Bill that was signed into law in July that authorized $300 billion for the FHA to use to insure and refinance delinquent mortgage loans.

The Securities and Exchange Commission (SEC) added details on the process and initial steps that the SEC has undertaken to conduct a study on "mark-to-market" accounting, as authorized by Sec. 133 of the Emergency Economic Stabilization Act of 2008, signed into law by President George Bush last Friday.

The U.K. government said today that it will take action to protect the retail depositors in two Icelandic owned banks: Icesave, a U.K.-based branch of Landsbanki and Heritable, a U.K.-based banking subsidiary of Landsbanki.

Asset managers interested in working for the Treasury Department will have to submit a proposal to handle either whole loans or mortgage-backed securities by 5 p.m. EST Oct. 8.

The Federal Reserve Board has created the Commercial Paper Funding Facility (CPFF), which is a facility that will complement the Fed's existing credit facilities to help provide liquidity to term funding markets.

The more interesting story about September prepayments was it was in GNMAs where speeds increased more than expected : 8% versus 1%. 2007 vintages were sharply higher in 5.5s, 6s and 6.5s surging a respective 80%, 63% and 28% from August's average.

O’Melveny & Myers hired two transactions lawyers, Kenneth Yellen and Demetrios Xistris in the firm’s investment funds and securitization practice. Yellen joins the firm’s Washington, DC office as partner, and Xistris join the firm’s New York office as senior counsel.

The Canadian Securities Administrators (CSA) issued a consultation paper today outlining several securities regulatory proposals related to the Canadian nonbank sponsored ABCP market. This paper comes out of an ABCP working group set up to address regulatory issues relating to the current credit crisis.

Markit announced that the following indices have rolled into new series:

Friedman, Billings, Ramsey Group (FBR Group) said that various articles have been published recently regarding the attempt by FBR Group to have an agency mortgage security with a face amount of $250 million returned to it under a repurchase agreement with Lehman Brothers.

Fraudulent practices and false representations made by units at Countrywide Financial Corp. led MBIA Insurance Corp. to guarantee mortgage-backed securities that have already cost the insurer $459 million in policy claims and exposed it to several hundred millions more, MBIA said in a lawsuit filed earlier this week.

The House of Representatives, by a vote of 263-171 early Friday afternoon, approved a $700 billion rescue package of the credit and mortgage markets, paving the way for the bill to be sent to President George Bush.

The markets were set for positive news on Monday with the expected passage of the government's Emergency Economic Stabilization Act of 2008, which includes the Troubled Asset Relief Program (TARP).

The far-reaching effects of the U.S. subprime crisis have brought into focus the efficacy of information flows in the securitization industry - and found them wanting. The chickens came home to roost when the shock waves of an essentially U.S. home loans problem were widely felt in Europe and beyond. The trend has been toward ever more complex products backed by opaque and fluctuating asset pools leading to increased reliance on the ratings of credit rating agencies rather than on an investor's own analysis.

Lehman Brothers' overnight collapse has left a heap of trouble in Europe, setting off an alarming domino effect.

The dramatic fall in RMBS activity is clearly demonstrated by the numbers. According to Thomson Reuters, industry totals for the period covering the first quarter to the third quarter of 2008 only reached $176.3 billion compared with $829.5 billion over the same period last year.

Prospects for CDO issuance is slim. As JPMorgan Securities analysts said in a recent report, "supply has yet to come into the market, with many prospective sellers waiting for market stability."

The ABS market was especially quiet last week as participants waited anxiously to see if Congress would pass its second attempt at an Emergency Economic Stabilization Act. This, in addition to the Rosh Hashanah holiday, kept new issuance and secondary trading at bay.

The acquisition of Washington Mutual by JPMorgan Chase and Wachovia by Citigroup, which is currently being challenged by Wells Fargo's attempting to buy Wachovia, have created mortgage and credit card powerhouses. As of today

With the year 2008 in its home stretch, consumer ABS has managed to hold up relatively well, despite increasingly deteriorating economic conditions.