Securitization

The lowering of CMBS tenant credit that started in April has continued to worsen with the Standard & Poor’s downgrade of J.C. Penney, according to the rating agency’s structured finance credit review emailed this morning. S&P said that the weighted average tenant rating is now close to ‘BB-‘.

Among the many concerns San Bernardino County’s recent eminent domain proposal highlighted, one that stood out to me was the larger problem with second liens.

Wells Fargo & Co hired 2,000 full time employees in the second quarter to keep up with its growing pipeline of mortgage applications.

Merscorp Holdings will provide the state of Delaware's Department of Justice Consumer Protection Unit a semi-annual report detailing results of its internal audits, according to the terms of a settlement agreement that resolves the state attorney general's October 2011 lawsuit against the private loan registry.

The June prepayment reports were released late July 6 with speeds faster than expected on 3.5s and 4.0s as the underlying credit-eligible borrowers responded to the successive record lows in mortgage rates that began in early May. At the same time, they were slower than expected in the higher Home Affordable Refinance Progam or HARP-eligible coupons.

Two student loan ABS transactions are currently in the market with a deal from the Iowa Student Loan Liquidity Corp., which is issuing its Series 2012-1 offering.

Impac Mortgage, Irvine, Calif., is entering the reverse mortgage lending business on a retail basis in the Southwest with plans to expand it later on, said company president Bill Ashmore.

A recent Fannie Mae multifamily DUS REMIC that had two additional types of tranches not normally included in past deals brought in a slightly higher percentage of new investors than usual.

The American Securitization Forum (ASF) wrote a letter to the San Bernardino County Board of Supervisors that stated that the proposed plan to use eminent domain to seize residential mortgages would be “poor public policy and unconstitutional.”

The Royal Bank of Scotland (RBS) did a comparative analysis of the CMBS 3.0 super senior bonds and CLO 2.0 ‘AAA’ spreads to find where the similarities are in terms of relative value.

Two Harbors Investment Corp. plans to offer 35,000,000 shares of its common stock in an underwritten public offering to buy more RMBS. The sale is subject to market and other conditions.

Wells Fargo Bank on Thursday agreed to pay $175 million to settle allegations by the Department of Justice (DOJ) that it targeted black and Hispanic neighborhoods in cities such as Baltimore and Chicago and steered those borrowers into high-cost subprime loans.

The Federal Reserve Bank of New York is planning on selling more assets from 20 CDOs forming part of its Maiden Lane III (ML III) portfolio. Offering circulars were released today.

Although “sloppier” Alt-A fixed-rate bonds are attractively priced versus their prime counterparts, Amherst Securities Group (ASG) analysts said in a recent report that the collateral is converging.

Harley Davidson Credit Corp. is planning to sell a $519 million securitization under its Harley-Davidson Motorcycle Trust 2012-1. The transaction is collateralized by motorcycle contract backed notes.

Nearly three-quarters of senior tranches of the tobacco settlement bonds will default should cigarette consumption in the U.S. continue on its current rate of annual decline, said Moody's Investors Service in a report.Specifically, the rating agency finds that if the decline in consumption continues at a 3% to 4% pace, as Moody's projects, bonds constituting 74% of the aggregate outstanding balance of all the tobacco settlement bonds will default.

Moody’s Investors Service said that the CMBS conduit transactions that it expects to rate in 3Q12 suggest that the average Moody’s Loan- to-Value (MLTV) ratio, which is the rating agency’s main measure of balloon refinance risk, will increase to 102.1% from 97.8% in the third quarter. Given this expected 4.3% jump, the MLTV in the third quarter will average above 100% for the first time in CMBS 2.0.

Last summer rumors were spreading that a private equity firm had amassed $1 billion in cash and was eyeing investments in mortgage banking firms. A year later it appears that no such deals were struck by the unnamed fund, but that hasn’t stopped the talk about PE firms still looking at the sector.

In a Bank of America Merrill Lynch conference call held yesterday, Theresa O’Neill, an asset-backed strategist from the firm, said that participants in the consumer ABS market need to keep a careful eye on certain regulatory developments related to securitization, namely the bank capital rules, risk retention, as well as any new rules from the Consumer Financial Protection Bureau (CFPB).