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Mortgage Backed Securities Related News
 in chronological order

 See also: Mortgage Backed Securities Related Books, Mortgage Backed Securities Related Scholarly Papers, or Mortgage Backed Securities Home Page.

Table of Contents:
 

Lehman's Fuld Confident in Prospects as Firm Slashes Mortgages

June 16, 2006
From Bloomberg:
Lehman Brothers Holdings Inc. Chief Executive Officer Richard Fuld declared his "confidence'' in the firm's prospects after the bank slashed mortgage holdings 20 percent in the second quarter to curb further damage from the credit-market collapse.

Lehman, the fourth-largest U.S. securities firm, rose in New York trading after reporting a loss of $2.8 billion, or $5.14 per share, in line with preliminary figures the company released last week, the New York-based firm said today in a statement. Leveraged buyout loans were cut 37 percent to $18 billion.

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Thornburg swings to $3.3 bln loss
June 12, 2006
From MarketWatch:
Thornburg Mortgage Inc. on Thursday reported a quarterly loss of more than $3 billion as the company was hit hard by falling market values in its mortgage and loan portfolios.

The embattled company said it swung to a fiscal first-quarter loss of $3.31 billion, or $20.64 a share, compared with net income of $75 million, or 62 cents a share, in the year-ago period.

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American Capital Goes For Mortgage Paper
April 28, 2006
From Forbes:
While many on Wall Street and Main Street are suffering from subprime woes, the smart money is gearing up to capitalize on cheap debt.

Newly formed investment outfit American Capital Agency said Monday that it plans to go public offering 12.5 million shares at $20 per share raising a projected $250.0 million. The Delaware-based company plan to use the raised funds to invest in mortgage-backed securities directly or implicitly guaranteed by the U.S. government.

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Citigroup, RAMS eye A$ mortgage-backed debt: sources
April 27, 2006
From Reuters:
Citigroup (C.N: Quote, Profile, Research) and RAMS Home Loans Group Ltd (RHG.AX: Quote, Profile, Research) are in discussions with investors about selling residential mortgage-backed securities (RMBS), sources said on Monday, in what would be the first such issues this year.

The RMBS market has been hit worldwide by the U.S. subprime mortgage crisis, which has sent borrowing costs sharply higher. Issuance of RMBS in Australia has completely dried up in 2008, from A$57 billion in 2007.
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Allstate feels mortgage-backed securities pain
April 23, 2006
From The Chicago Tribune:
Allstate Corp., hurt by big writedowns of mortgage-backed securities and by hefty tornado-related damage payouts, said late Wednesday that first-quarter earnings dropped 77 percent.

Net income for the Northbrook-based insurance giant tumbled to $348 million, or 62 cents a share, from the year-ago net of $1.5 billion, or $2.41 a share.
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Australia's Central Bank Buys Mortgage-Backed Bonds (Update1)
April 21, 2006
From Bloomberg:
Australia's central bank bought A$780 million ($730 million) of mortgage-backed bonds in its biggest purchase of this debt to support the nation's dormant home-loan securities market. Bank shares rallied in Sydney trading.

The Reserve Bank of Australia today purchased A$600 million of home-loan bonds in a lending agreement lasting 353 days at 7.85 percent; A$80 million for 346 days at 7.78 percent; and A$100 million for 22 days at 7.45 percent, it said in a market report.

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The future for investing in mortgage-backed securities 2008
March 20, 2006
From Banking Business Review:
This brief assesses the extent of the current problems and the future for investing in these securities. Please note: This brief does NOT discuss MBS pricing or estimate future MBS asset values.

Sizes the historic MBS market by issuance through 2006 in the US, Europe, the UK and Australia, and presents the size of worldwide exposure to US MBS
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RBS mortgage-backed exposure doubles to £68bn
March 19, 2006
From Financial Times:
Royal Bank of Scotland's portfolio of mortgage-backed securities has more than doubled to about £68.3bn last year after it led the consortium that bought the Dutch bank ABN Amro.

The UK bank, whose shares have lost more than 40 per cent of their value in the past year amid concerns about the credit squeeze, gave further details of the credit portfolio in its annual report.
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Asia Day Ahead: Fed to Take on Mortgage-Backed Debt (Update1)
March 12, 2006
From Bloomberg:
U.S. stocks rallied the most in five years after the Federal Reserve said it will pump $200 billion into the financial system to shore up banks battered by mortgage-related losses. Crude rose to a record for a fifth day after the weak dollar prompted traders to invest in commodities.
Source                                                                                                 ▲ top
 

Carlyle founders in talks with banks to prevent fire sale of fund's mortgage-backed securities
March 11, 2006
From StarTribune.com:
The Carlyle Group's founders are talking to creditors about how to prevent liquidation of a distressed London-based affiliate invested in mortgage-backed securities, a spokesman said Tuesday.

Top Carlyle executives are negotiating with major U.S. banks in an effort to prevent the fire sale of $16 billion in securities held by the Carlyle Capital Corp. Ltd., a publicly traded fund.
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Reviving the mortgage market
March 5, 2006
From BBC news:
It wasn’t just Northern Rock that flogged off its mortgages to international investors in the form of asset-backed securities.

More or less every British bank used this global market as a source of cheap funding: something like a quarter of all British mortgages are financed by the sale of mortgage-backed bonds.
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U.S. Commercial property bonds have worst month in Feb
March 4, 2006
From Reuters:
Bonds backed by U.S. office buildings and hotels suffered their worst month ever in February as investors girded for falling property prices and rising defaults, according to Lehman Brothers.

Commercial mortgage-backed securities lagged benchmark U.S. Treasuries by a record amount in February, even underperforming the asset class that includes bonds backed by risky subprime mortgages, according to indexes compiled by Lehman Brothers Holdings Inc.
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Mortgage Backed Securities Fight Inflation
February 26, 2006
From MortgageNewsDaily:
Perhaps it's due to yesterday's sell off, or perhaps there is support from weak economic data, but even in the face of dismal inflation data, MBS are holding steady on the day.

the 5.5% coupon is actually trading up right now by 6/32nds. This is truly amazing considering we've received some of the worst inflation numbers in over 20 years. The core Producer Price Index came in at .4%, double the expectation of 2%. This should have destroyed rates this morning, but it hasn't. There are a couple mitigating factors.
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UK mortgage-backed securities prices 'irrationally pessimistic' - economist
February 21, 2006
From CNNMoney.com:
The potential for UK mortgage costs to increase because of 'irrationally pessimistic' prices on mortgage-backed securities markets is one of the key risks currently facing the housing market, an economist warned.

David Miles, chief UK economist at Morgan Stanley (NYSE:MS) , said that fears in the market for mortgage-backed securities may have been overdone, and prices have climbed too high as a reaction to years of exuberant risk-taking.
Source                                                                                                 ▲ top
 

Credit Suisse profits plunge on subprime losses
February 12, 2006
From Telegraph.co.uk:
Credit Suisse has revealed that profits plummeted by 72pc in the final quarter of 2007, as the investment bank battled the crisis in the global credit markets.

Switzerland's second biggest bank said today that it suffered writedowns of SFr1.3bn (£603m) on debt and leveraged loans - helping to push net profits for the quarter back to SFr1.33bn, missing average analysts expectations of SFr1.43bn.
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S&P cuts $7.65 bln in CDOs backed by mortgages
February 11, 2006
From Reuters:
Standard & Poor's on Monday cut ratings on $7.65 billion in collateralized debt obligations backed by residential mortgage-backed securities, following credit deterioration and downgrades of the mortgage securities underlying the deals.

The downgrades affect 67 tranches from 10 CDOs, S&P said in a statement. Including the new downgrades, S&P has cut its ratings on 1,509 tranches from 430 deals, and an additional 2,441 pieces from 608 deals remain on review for downgrade. In total, the actions affect $343.9 billion in debt, S&P said.
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Freddie Looks to Grow in Apartment Financing
February 4, 2006
From The Wall Street Journal Online:
Freddie Mac, looking to expand its role in financing apartment buildings, is working on a proposal that would allow it to create and sell bonds backed by multifamily mortgages.

The move, if approved by Freddie's management and regulators, would allow the government-sponsored provider of home funding to be more competitive with Wall Street.
Source                                                                                                 ▲ top
 

Moody's To Review Australian Mortgage-Backed Securities
February 4, 2006
From Forbes:
Moody's said on Monday that it may cut the ratings on 83 billon Australian dollars (U.S.$75.1 billion) worth of mortgage-backed debt, following the rating agency's latest action to place U.S. bond issuer PMI Mortgage Insurance on watch for a possible downgrade.

PMI's subsidiary in Australia provides a range of mortgage insurance products to bank and nonbank lending institutions in that country and New Zealand. Moody's placed 325 tranches from 144 Australian residential mortgage-backed securities transactions on review for a possible downgrade.
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E-Trade sells $3B mgte-backed securities
January 9, 2006
From BusinessWeek:
 Troubled discount brokerage E-Trade Financial Corp., which Tuesday saw shares dip to an all-time low on growing mortgage segment losses, said Wednesday it sold about $3 billion of mortgage-backed securities and municipal bonds in addition to the November sale of its $3 billion asset-backed portfolio.

E-Trade also said it will exit its institutional trading business, impacting about 30 employees. The company in September said it would terminate its international institutional business based on poor financial performance.
Source                                                                                                 ▲ top
 

New Zealand residential mortgage-backed securities arrears fall again - S&P
January 9, 2006
From CNNMoney.com:
 Standard & Poor's (NYSE:MHP) Ratings Services said the proportion of loans underlying New Zealand's residential mortgage-backed securities (RMBS), that are in arrears by more than 30 days, fell again over the quarter ending Sept 30.

The arrears, as measured by the ratings agency's New Zealand Prime Mortgage Performance Index, dropped to one of its lowest levels in over three years during the quarter, S&P credit analyst Alastair Ingram said.
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Agency MBS to struggle in '08 as risks abound
December 28, 2006
From Reuters:
 U.S. mortgage-backed securities issued by Fannie Mae and Freddie Mac should underperform U.S. Treasuries again in 2008 as a supply overhang and listless demand threaten the sector's performance.

A confluence of negative conditions as the housing market crumpled severely impacted valuations of "agency" MBS in 2007, with the $4.3 trillion sector set to end the year with the worst performance since 1998.
Source                                                                                                 ▲ top
 

Darker Clouds Over Commercial Real Estate
December 28, 2006
From Minyanville:
 Prof. Shedlock's bearish read of the commercial real estate market is proving increasingly correct. Yesterday in his blog he noted that deals simply are not getting done, which creates a valuation vacuum if a company needs to refinance. We have seen this first hand as a deal with a AA rated buyer cratered on us when the financing entity (a major investment bank) backed off. If you find my experience too anecdotal, the current spreads on Commercial Mortgage Backed Securities should convince you, since AA credit rates are now in the mid 7% range, and for BBB buyers... well “sorry folks, park closed!”

So the question now is whether commercial real estate, or CRE, is getting hit by a credit squeeze unrelated to the underlying cash flows, which may create some defaults but not a systemic problem. Or whether, as is the case in the residential loans area, the debtors are actually on the verge of defaulting. I won’t venture a direct answer because there are too many exogenous factors that can swing the outcome either way, but I think it is worthwhile noting that despite the drying up of financing for arguably still too-generous deals, the bonds of most public REITs still trade at historically tight spreads. On the other hand, Boo would argue that for the most part public REITs avoided the buy-at-any-price feeding frenzy of the last couple of years, and the real rot sits on the financial statements of private REITs and private equity firms.
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Bass Shorted `God I Hope You're Wrong' Wall Street (Update1)
December 19, 2006
From Bloomberg:
 J. Kyle Bass, a hedge fund manager from Dallas, strode into a New York conference room in August 2006 to pitch his theory about a looming housing market meltdown to senior executives of a Wall Street investment bank.

Home prices had been on a five-year tear, rising more than 10 percent annually. Bass conceived a hedge fund that bet on a crash for residential real estate by trading securities based on subprime mortgages to the least credit-worthy borrowers. The investment bank, which Bass declines to identify, owned billions of dollars in mortgage-backed securities.

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UPDATE 2-BBVA Mexico unit to place first mortgage-backed debt
December 17, 2006
From Reuters:
 The Mexican arm of Spain's BBVA bank plans to place $250 million worth of home loans with investors within the next few days, its first mortgage-backed debt issue in the country's fast-growing housing industry.

BBVA will sell about 3,500 mortgages in the 2.7 billion pesos issue, rated at AAA by ratings agencies, Isidoro Sanchez, the bank's head of mortgage lending, told Reuters on Monday.
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E*Trade Bailout Signals Trouble Ahead
December 12, 2006
From The Motley Fool:
 Several weeks back, shares in E*Trade Financial (Nasdaq: ETFC) fell more than 50% in a single day on rumors that mortgage exposure could lead the company to seek bankruptcy.

E*Trade sidestepped that outcome when hedge fund Citadel Investment Group purchased some $3 billion of E*Trade's debt. Yet a closer look at the deal reveals some useful insights into the likely future state of the mortgage-backed-securities market.

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UPDATE 1-Mexico sees private mortgage-backed debt surging
December 11, 2006
From Reuters:
 Mexico expects private-sector issues of mortgage-backed securities to double in 2008 amid an ongoing boom in the housing industry and increased demand from local and foreign investors.

Javier Gavito, head of the government's Federal Mortgage Society, told reporters on Tuesday private issues should total 50 billion pesos ($4.6 billion) next year.

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Subprime Seizure Solution May Be in Hospital Bills (Update1)

December 4, 2006
From Bloomberg:
 The solution for the subprime-infected credit market seizure that wiped out $66 billion of securities industry capital this year may be found in a bunch of hospital bills.

Day trader Richard Field in Needham, Massachusetts, says his patent for tracking medical invoices can be adapted for mortgage interest payments, helping banks better value securities derived from home loans and other receivables. From its headquarters in New York, accounting firm Deloitte & Touche LLP says it's developing computer models that will do the same.

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Foreclosure-proof homes?
December 3, 2006
From The Los Angeles Times:
 Who owns your home? That seems like a pretty straightforward question. But the answer might not be as clear-cut as you think.

A U.S. District Court judge in Cleveland tossed out 14 foreclosure cases Oct. 31 on the grounds that the bank suing to repossess the properties, Deutsche Bank National Trust Co., didn't actually own them. Deutsche Bank held debt securities that were linked to the mortgage loans on the properties, not the mortgages themselves. And the judge ruled that a security backed by a mortgage is not the same as a mortgage.
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Australian Central Bank Buys Record Mortgage Bonds (Update2)

November 23, 2006
From Bloomberg:
 Australia's central bank bought A$500 million ($435 million) of bonds backed by home loans this week, its biggest purchase since announcing it would buy the securities to support the nation's asset-backed debt market.

The Reserve Bank of Australia today bought A$100 million of debt maturing in 96 days under repurchase agreements, adding to A$400 million of securities it purchased yesterday, according to its Web site.

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Federated Investors bails out ailing fund
November 22, 2006
From The International Herald Tribune:
 Federated Investors, a leading manager of money-market accounts in the United States, has bailed out its Enhanced Reserve cash fund as declines in mortgage-backed securities caused the credit markets to seize up.

Federated allowed clients to withdraw their money without losses, Lindsy Kollar, a spokeswoman for the company, which is based in Pittsburgh, said last week. She would not disclose the size of the fund, a private partnership open only to accredited investors, or the amount or cause of the losses.
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PMI Canada to Enter Canada's Mortgage-Backed Securities Market
November 15, 2006
From CNNMoney.com:
 PMI Mortgage Insurance Company Canada (PMI Canada), a subsidiary of The PMI Group, Inc. , has received approval from Canada Mortgage and Housing Corporation (CMHC) to participate in Canada's mortgage-backed securities market.

"Approval into this program allows PMI Canada to offer another dimension of value to our lender customers," said Janet Martin, President and CEO of PMI Canada. "Through PMI Canada lenders can access the largest securitization program in the country."
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Subprime test: Did securitization work?
November 15, 2006
From MarketWatch:
 Securitization, hailed as the greatest financial innovation of the 20th century, isn't getting such rave reviews anymore after this summer's subprime mortgage crisis exposed some weaknesses.

With global credit markets still in crisis, experts have already begun debating the benefits and the drawbacks of the process.
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TEFLON TRADERS
November 6, 2006
From The New York Post:
 As Citigroup attempts to come clean over its problems due to failed mortgage-backed securities, the financial titan's woes have had the unintended effect of putting the spotlight back on the risk management strategy of Goldman Sachs, its biggest rival.

During a conference call yesterday, Citigroup officials laid out details of what was expected to be a write-down of between $8 billion and $11 billion.

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UPDATE 1-S&P cuts Merrill Lynch mortgage-backed deals
November 5, 2006
From Reuters:
 Standard & Poor's on Monday cut its ratings on 20 classes of certificates from 14 deals sold by Merrill Lynch Mortgage Investors Trust, citing a steady increase in delinquencies of residential loans backing the securities.

"The lowered ratings reflect a steady increase in the delinquency pipeline -- particularly severe delinquencies -- combined with projected credit support percentages that are insufficient to maintain the ratings at their previous levels," S&P said in a statement.

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UBS warns more write-downs may be on the way
October 29, 2006
From MarketWatch:
 Swiss banking giant UBS warned Monday that it may have to take further charges from its exposure to the U.S. housing and mortgage markets, though the group added its third-quarter loss will match earlier guidance.

UBS said the fourth quarter has started with good results from all divisions, including investment banking, but further deterioration in U.S. housing markets or rating downgrades for mortgage-related securities could lead to more write-downs.

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Vultures eyeing mortgage corpse
October 29, 2006
From CNNMoney.com:
 Since the subprime crisis erupted earlier this year, vulture investors looking for bargains have been circling battered securities backed by mortgages.

But the feeding has not yet begun in earnest - and that's not a good sign for the housing and credit markets.
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RBS in exclusive talks on Cheyne SIV assets: sources
October 22, 2006
From MarketWatch:
 Royal Bank of Scotland (RBS.LN) is in exclusive talks to purchase the assets of Cheyne Finance, a structured investment vehicle, or SIV, that entered receivership last month, people familiar with the matter said Monday.

The vehicle's receiver, Deloitte & Touche, is expected to announce the development later Monday.

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Yields drive bond sales
October 21, 2006
From The International Herald Tribune:
 St. George Bank and eight other companies sold 2.02 billion Australian dollars, or $1.8 billion, of bonds in Australia last week, the most since June, as higher yields enticed investors to set aside concerns about further losses from the U.S. housing slump.

Lenders including Calibre Financial and FirstMac sold mortgage-backed bonds at yields more than double the rate of previous sales, according to data compiled by Bloomberg. Another three groups announced asset-backed sales and St. George, the fifth-biggest Australian bank, sold 500 million dollars of debt.
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Bank of America to help start fund for mortgage-backed securities
October 15, 2006
From Triangle Business Journal:
 Bank of America and several other financial institutions have agreed to launch a fund in an effort to boost the market for mortgage-backed securities and similar investments.

Charlotte-based BofA (NYSE: BAC), Citigroup (NYSE: C), JPMorgan Chase & Co. (NYSE: JPM) and other banks said Monday that they're creating the fund to buy assets from structured investment vehicles, or SIVs.

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Japan's Nomura Holdings to exit US residential mortgage-backed securities market
October 15, 2006
From Forbes:
 Japan's Nomura Holdings Inc said Monday it will exit the residential mortgage-backed securities market in the US.

The largest Japanese brokerage also said it will slash its staff in the US to 900 from 1,300.

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Fund manager loads up on mortgage-backed bonds
October 5, 2006
From The International Herald Tribune:
 Joseph Balestrino, manager of the Federated Total Return Bond Fund, loaded up on government-backed mortgage debt when credit markets slumped in July and August and other investors sold bonds linked to the housing market.

The fund, Federated Investors' biggest bond mutual fund, has half of its $2.1 billion in the highest-rated mortgage securities, up from 43 percent in September 2006, according to data compiled by Bloomberg News.

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HSBC Mexico Sells Mortgage-Backed Bonds After Drought (Update2)

October 3, 2006
From Bloomberg:
 HSBC Mexico SA became the first non- government issuer to sell bonds backed by mortgage loans in Mexico after a two-month drought brought on by the collapse of the U.S. subprime mortgage market.

The Mexican unit of HSBC Holdings Plc raised 3.5 billion pesos ($321 million) in a sale of bonds due in 2025 that are secured by almost 4,000 mortgage loans. About 3.22 billion pesos of the bonds were sold to yield 8.8 percent, while a second tranche for 280 million pesos was sold to yield 10.11 percent.

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Asset-backed debt sales may halve in `08: Lehman
October 1, 2006
From Business Standard:
 Sales of securities backed by assets, including mortgages, may shrink by as much as 50 per cent in Europe next year because the yields investors demand to buy the debt are too high, according to Lehman Brothers Holdings.

Banks sold $680 billion of asset-backed bonds last year, more than half secured on European home loans, according to Lehman Brothers.

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Credit Suisse sheds 150 staff from mortgage-backed securities work
September 27, 2006
From Times Online:
 Credit Suisse yesterday became the latest bank to cut jobs in the wake of the global credit crunch when the Swiss bank shed 150 employees working on mortgage-backed securities.

The jobs to go are mainly in New York, with a few lost in London, according to Credit Suisse insiders. In a statement, the bank said: “In line with the current environment and outlook, we have made targeted reductions.”

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Crisis sparks CDO asset sales as contagion spreads
September 24, 2006
From FinancialNews-US.com:
 Vehicles that invest in complex mortgage-backed securities have started offloading billions of dollars in assets after the value of their portfolios fell to levels that triggered a liquidation clause.

Troubles with these vehicles, known as market value collateralised debt obligations, which package together bonds and divide them into different levels of risk, is the latest sign of contagion from the US sub-prime mortgages debacle.

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Macquarie to offer mortgage-backed bonds in Australia
September 20, 2006
From The International Herald Tribune:
 Macquarie Bank plans to sell the first mortgage-backed bonds in Australia in two months, offering increased returns to revive a market shut down by the U.S. subprime mortgage rout.

Macquarie will offer 300 million Australian dollars, or $258 million, of bonds backed by home loans to people with good credit histories, two people with direct knowledge of the deal said.

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Mortgage backed finance to experience slowdown : Kamath
September 17, 2006
From The Economic Times:
 Owing to high interest rates prevailing in the country, mortgage backed finance was set to experience a slowdown, MD and CEO of ICICI Bank K V Kamath said.

Kamath told reporters on the sidelines of a CII meet here today that high interest rates were impeding growth of the industrial sector and the light engineering and transportation sectors had been already hit due to this. 

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No immediate ratings impact for Victoria Mortgage-backed RMBS deals - Fitch
September 14, 2006
From Forbes:
 Fitch Ratings said it foresees no immediate impact on the ratings of residential mortgage-backed securities (RMBS) transactions backed by loans originated by Victoria Mortgage Funding Ltd (Victoria) in light of the British subprime mortgage lender going into administration.

The two Fitch-rated UK non-conforming RMBS transactions in question are EuroMASTR Series 2007-1V PLC (EuroMASTR 07-1) and ResLoC UK 2007-1 PLC which are fully and partially backed by loans originated by Victoria, respectively, the ratings agency said.

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Bond fund investors could be next to feel subprime woes
September 10, 2006
From International Herald Tribune:
 Could the housing market's problems in the United States spread to bonds held in mutual funds by millions of ordinary investors?

Some experts - and hedge fund investors who have made big bets that the mortgage crisis will worsen - are saying that this is exactly what will happen. Some bond funds that invest in riskier short-term debt have already been hit by soaring default rates on bonds backed by subprime loans made to borrowers with weak credit.

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Schumer Proposes Lifting Mortgage Caps
September 10, 2006
From Forbes:
 Sen. Charles Schumer on Monday proposed two government-sponsored mortgage giants be allowed to increase their role in the home loan market as a stabilizing force for the troubled mortgage industry.

The New York Democrat wants Congress to allow Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) to increase their holdings of securities backed by mortgages by $145 billion or 10 percent of total holdings.

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Thornburg Completes $1.4 Billion Financing of Loans (Update2)
September 4, 2006
From Bloomberg:
 Thornburg Mortgage Inc., the jumbo home-loan specialist, sold bonds backed by $1.44 billion of mortgages to pay down credit lines and free up financing to accelerate new lending.

The transaction was collateralized by ``prime'' loans, or those to borrowers with high credit scores, Santa Fe, New Mexico- based Thornburg said today in a statement. The loans carried adjustable interest rates.

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Still Want Mortgage-Backed Bonds? Go Dutch
August 28, 2006
From Forbes:
 Investing in mortgage-backed securities may not seem like the smartest move at the moment, but on Thursday the ratings agency Moody's said that rigorous underwriting criteria and improved credit quality made Dutch securities among the best-performing in Europe.

During the first quarter of 2007, Moody's upgraded 17 classes of Dutch notes, linked to 408.5 million euros ($557.3 million) worth of securities, due to better-than-expected performance. It said that these securities benefited from "low delinquencies and negligible losses," qualities that characterized the Netherlands asset-backed securities market as a whole.

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Aftershocks From The Subprime Quake
August 28, 2006
From Forbes:
 In the wake of the subprime mortgage mess, Washington politicians and policy wonks are playing the blame game and arguing over what, if any, relief to provide to the victims. But they're paying less attention to another, potentially more important question for the economy and investors: Where will the aftershocks be felt next?

One place, it appears, is in the airline industry. Airlines and aircraft leasing companies have been quietly grounding plans to sell securities backed by airplane assets.

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Mortgage-Backed Sinology
August 28, 2006
From The Wall Street Journal Online:
 Markets have been surprised by the scale of the subprime exposure some of China's biggest banks recently disclosed, but we're left saying "Tell us more, please." Many other institutions have been forced to face up to the bright glare of bad publicity and stiff market discipline, but perhaps nowhere are both more needed than in China's banks.

Bank of China, one of the country's largest, last week announced that it is holding nearly $10 billion in various assets backed by subprime mortgages. Industrial and Commercial Bank of China followed suit by announcing $1.22 billion in exposure. China Construction Bank yesterday disclosed about $1.06 billion of subprime holdings.

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FOCUS Credit ratings face credibility gap, inquiries in wake of sub-prime woes
August 21, 2006
From Forbes:
 The agencies that put investment-grade ratings on mortgage-backed securities are now facing a credibility gap and congressional investigation as the mortgages go into default and investors complain they weren't warned of the risks they were taking on.

The ratings were 'far off the mark,' said Senate Banking Committee Chairman Christopher Dodd.

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Thornburg says sells 20.5 bln usd worth of mortgage-backed securities
August 20, 2006
From CNNMoney.com:
 Troubled US mortgage firm Thornburg Mortgage Inc (NYSE:TMA) said it has sold 20.5 bln usd of its mortgage-backed securities to improve its financial position. Thornburg said it had sold the assets amid 'unprecedented conditions in the mortgage financing market'.

The company, which has seen its finances hit by credit problems sweeping the US mortgage industry, did not name the buyer.

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Sales of Commercial Mortgage Debt to Reach Record, Moody's Says

August 14, 2006
From Bloomberg:
 Sales of bonds backed by European commercial property loans may reach a record this year, even if turmoil in global credit markets curbs the pace of issuance in the second half, Moody's Investors Service said.

Sales of the securities in Europe, the Middle East and Africa will climb to as much as 86 billion euros ($117 billion) this year from 69.1 billion euros in 2006, Moody's said in a report released today. Sales in the first six months reached 35 billion euros, almost double the total for the same period in 2006.

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Mortgage-backed securities 101
August 13, 2006
From Marketplace:
 Kai Ryssdal: We'll grant you that this stuff is all mind-numbingly complicated. From however the heck a quant fund works to why some funds have had to stop allowing withdrawals because they can't do something called mark to market. And at the bottom of the whole mess is something that sounds fairly self-explanatory, but somehow isn't. The mortgage-backed security.

We've asked Mike Hatley to come in to give us a tutorial. He's the president of WestGate Horizons Advisors. Mike, good to see you.

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Freddie, Fannie on the hunt for cheap mortgage debt
August 7, 2006
From Reuters:
 The two largest U.S. home financing companies are swooping in to the battered mortgage securities market to buy cheap debt, but their stabilizing influence can only reach so far under regulatory growth caps.

Shares of Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) have surged this week amid talk that regulatory restrictions limiting the size of their portfolios might be lifted.

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UPDATE: Alt-A Mortgage-backed Securities In Firing Line
August 7, 2006
From CNNMoney.com:
 So-called Alt-A mortgages, which were considered higher quality than subprime home loans, are also suffering from rising delinquencies and the harsh scrutiny of rating agencies such as Standard & Poor's and Moody's Investors Service.

Alt-A loans are considered less risky than subprime mortgages, but usually have lower credit quality than "prime" loans. Companies such as IndyMac Bancorp, American Home Mortgage (AHMIQ) , Impac Mortgage Holdings (IMH) and Countrywide Financial (CFC) have offered them. 

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UPDATE: Bear Stearns Seizes Assets Of Its High-Grade Hedge Fund
July 26, 2006
From CNNMoney.com:
 Bear Stearns Cos. said late Thursday that it seized assets from its High-Grade Structured Credit Strategies Fund after the hedge fund suffered huge losses in mortgage-backed securities and structured- finance markets.

The bank lent $1.6 billion to the hedge fund earlier this month after the losses. On Thursday Bear said that $1.3 billion of the loan remained.  

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UPDATE 4-Nomura Q1 profit quadruples, may exit US subprime
July 25, 2006
From Reuters UK:
 Nomura Holdings (8604.T: Quote, NEWS , Research), Japan's largest brokerage, posted a surprise quadrupling of quarterly net profit on strong sales of investment trusts and a few big deals, but said it may pull out of the troubled U.S. mortgage market.

Shares of Nomura slumped to an eight-month low this week as investors worried the broker's exposure to the deteriorating subprime mortgage loan market would lead to heavy losses at its U.S. arm and limit its profit growth.  

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Managers like mortgage-backed securities
July 19, 2006
From MarketWatch:
 Don't believe the hype on the subprime mortgage crisis. Analysts say many housing-linked investments could still be good buys, so long as you discriminate.

Lehman Brothers put out a note Wednesday saying that the effect of subprime worries on the rest of the mortgage-backed-securities sector is overblown. Others are taking a similar view. 

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Taiwan Cooperative Bank plans NT$20 bln in mortgage-backed securities
July 18, 2006
From MarketWatch:
 Taiwan Cooperative Bank plans to issue NT$20 billion worth of residential mortgage-backed securities by the end of October, the bank's spokesman, Lin Tien, said Wednesday.

It will be the first time the bank taps the island's residential mortgage-backed securities market, as Taiwan banks increasingly consider securitization as an option to offload housing loans from their balance sheet.

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Mortgage financing star becomes banker
July 17, 2006
From FinancialNews-US.com:
 Sheridan Schechner, one of the fathers of the mortgage securitization market, has taken a new job as an investment banker just as sub-prime pressures lead to pessimism about mortgage financing.

Schechner, who is widely known as Shecky, has joined Lehman Brothers to lead its real estate financial sponsor advisory business starting in October. It is a new position, according to a Lehman spokeswoman. He previously headed JP Morgan’s mortgage origination.

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Pimco Favors Japan Mortgage, Inflation-Linked Bonds (Update2)
July 17, 2006
From Bloomberg:
 Japanese bonds backed by commercial property loans or protected for inflation are "attractive'' as prices may rise at a faster pace in the next three to five years, according to Pimco Japan Ltd.

Inflation-linked debt is appealing because of rising global commodity prices, said Tomoya Masanao, executive vice president at the unit of Pacific Investment Management Co., manager of the world's largest bond fund. Land prices rose for the first time in 16 years in Japan, reducing the risk that mortgages for offices, apartments and hotels will default.

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Silent culprit in mortgage mess: Wall St.
July 5, 2006
From The Denver Post:
 Longtime Boulder mortgage banker Lou Barnes remembers what happened as Wall Street investment bankers moved en masse into the mortgage industry.

"You would open up your e-mail in the morning, and you would find 10 guys wanting to buy mortgages from you," said Barnes, of Boulder West Financial Services. "They said, 'Sell us anything you've got. We've got new terms today. We've got loans for you that you didn't even think you could make."'

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Get an in-Depth Look at the Latest Innovations in Mortgage-Backed Securities
July 3, 2006
From BusinessWire:
 Research and Markets (http://www.researchandmarkets.com/reports/c61512) has announced the addition of “Mortgage-Backed Securities: Products, Structuring, and Analytical Techniques” to their offering.

The largest sector of the fixed-income market is the mortgage market. Understanding this market is critical for portfolio managers, as well as issuers who must be familiar with how these securities are structured. Mortgage-Backed Securities is a timely guide to the investment characteristics, creation, and analysis of residential real estate-backed securities.

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Freddie Mac Says Subprime Rout `Severe but Contained' (Update2)
June 26, 2006
From Bloomberg:
 Freddie Mac Treasurer Timothy Bitsberger said the subprime mortgage slump is "severe but contained.''

Subprime borrowers, people with the riskiest credit records, make up a small part of the U.S. mortgage market and are mostly in seven states, Bitsberger said today at a conference in London. The owners of bonds made up of subprime mortgages are mainly ``large institutional players who can withstand the loss,'' he said. Freddie Mac is the second-biggest U.S. mortgage finance company.

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Wall St down on subprime worries
June 25, 2006
From MSN Money:
 US stocks lost ground in late trade on Monday, as worries over the US financial sector's exposure to the troubled mortgage market sapped sentiment.

Stocks in the materials, energy and financial sectors led losses, while utilities were one of the few standouts. The rate sensitive sector was buoyed by lower bond yields, as concern over the mortgage market lingered.

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Ahead of the Bell: Mortgage Finance
June 12, 2006
From BusinessWeek:
 Keefe, Bruyette & Woods on Tuesday hosts a mortgage conference, which will cover issues including credit risk, mortgage real estate investment trusts and more.

Government-sponsored mortgage financier Fannie Mae is among the companies on the agenda.

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NHB to launch mortgage guarantee schemes for enhancing business
June 5, 2006
From The Financial Express:
 In a bid to make housing affordable to the common person and risk-free for banks, the National Housing Bank (NHB) is working on mortgage guarantee scheme, indemnity and residential mortgage backed securitisation (RMBS) instruments, for low-income mortgages, S Sridhar , chairman & managing director of National Housing Bank said.

These new instruments would mitigate risks involved in any housing finance exposure by compensating in full if there are any defaults by borrowers. Such a transaction would ensure pricing the housing loan product competitively by housing finance companies.

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Deutsche Bank expands MBS research with five hires
June 4, 2006
From Reuters:
 Deutsche Bank Securities Inc. said on Monday it expanded its mortgage-backed securities research team with five hires.

Deutsche (DBKGn.DE: Quote, Profile , Research) named Arthur Frank as director and head of agency MBS research and Ying Shen as director and head of non-agency MBS Research. Both are based in New York and report to Karen Weaver, global head of securitization research and head of research for the Americas.

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Lifting the lid: Wall Street poses subprime obstacles
June 4, 2006
From Reuters UK:
 The mortgage-backed securities market and Wall Street are becoming a roadblock for U.S. banks trying to dig out of the subprime mess.

The standard accounting practices and contractual terms used to create the securities leave little room for banks to modify portfolios with rising defaults and delinquencies.

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RBS says to issue 4.5 bln stg of mortgage backed securitised bonds
May 23, 2006
From Forbes:
 Royal Bank of Scotland Group PLC (RBS) said it plans to issue 4.5 bln stg of mortgaged backed securitised bonds along with National Westminster Home Loans Ltd.

The transaction will securitise RBS and NatWest branded mortgages, and follows the successful securitisation of two portfolios of RBS and NatWest branded mortgages totalling 11.25 bln stg in 2006, the company said.

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S&P Predicts Alt-A RMBS Slowdown
May 23, 2006
From Forbes:
 Standard & Poor's on Monday predicted banks will rein in their sales of bonds backed by pools of so-called "Alt-A" home loans, as investors begin shying away from risky mortgage debt.

Alt-A loans are home loans that do not require the borrower to document his or her income. These loans are generally considered riskier than the safest types of debt, but safer than "subprime" debt, or loans made to people with bad credit.

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Tighter Mortgage Standards Could Prolong Housing Slump
May 15, 2006
From CNBC:
 It’s tougher for people with spotty credit histories to get a mortgage, which could prolong the housing slump.

Prime borrowers who can document their income are still in a good position to secure a mortgage. And while subprime borrowers, or those with weak credit records, comprise a small segment of the housing market, they've driven much of the growth in housing in recent years.

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Citigroup plans A$1 bln RMBS issue-investor
May 14, 2006
From Reuters:
 Citigroup (C.N: Quote, Profile , Research) plans to sell A$1 billion worth of domestic residential mortgage backed securities, an investor said on Monday.

The issue, called Securitised Australian Mortgage Trust 2007-1, is backed by prime loans originated by Citigroup Pty Ltd.

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Fannie Mae launches $1.0 bln benchmark REMIC
May 9, 2006
From Reuters:
 Fannie Mae (FNM.N: Quote, Profile , Research), the largest U.S. home funding company, on Wednesday said it launched $1.0 billion in Real Estate Mortgage Investment Conduit (REMIC) securities with a final maturity of Dec. 28, 2020, with pricing expected on Friday.

The guaranteed maturity class will have a sequential pay structure. Underlying mortgage-backed securities used as collateral will be Fannie Mae 30-year 5.5 percent coupon MBS with a 6.003 percent gross weighted average coupon, a 338-month weighted average maturity and a 19-month weighted average loan age, Fannie Mae said.

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U.S. mortgage bond prepayments unchanged in April
May 7, 2006
From Reuters:
 Prepayments on U.S. mortgage-backed securities were unchanged in April as higher seasonal factors offset one fewer calendar day, Wall Street analysts said late Friday and early Monday.

Prepayment speeds were mostly in line with Wall Street expectations and the April figures reflected the first full month of activity since the late February start of the implosion of the subprime mortgage market.

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Mortgage loans are going global
April 30, 2006
From The Philadelphia Inquirer:
 If you get a home mortgage from Abington Community Bank in Jenkintown, chances are the money will come from deposits kept there by other residents of Philadelphia's northern suburbs.

The 140-year-old bank has been making loans this way for decades, and then keeping the loans on its books instead of selling them. "We are looking for the relationship with the customer," said Tom Wasekanes, vice president of originations.

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S&P may downgrade parts of 45 mortgage-backed securities
April 25, 2006
From MarketWatch:
 Rating agency Standard & Poor's said on Wednesday that it may downgrade the lower-rated parts of 45 residential mortgage-backed securities (RMBS) because of rising delinquencies on the underlying home loans. Ratings on 52 subordinate classes from the 45 RMBS transactions sold in 2005 have been placed on CreditWatch with negative implications, S&P said in a statement. Twenty of the classes are underpinned by subprime mortgages and 32 are tied to Alt-A home loans, S&P explained. The affected classes are currently rated A-, BBB+, BBB-, BB+, BB and B, the agency added. S&P said it made the change to reflect "early signs of poor performance of the collateral backing these transactions."

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Cypress Sharpridge files for $300 million IPO
April 19, 2006
From Reuters:
 Cypress Sharpridge Investments Inc. on Thursday said it is planning an initial public offering of as much as $300 million in common stock.

Agency residential mortgage-backed securities and subordinated tranches of asset-backed securities, including collateralized debt obligations, are the firm's two core assets, according to a preliminary offering document filed with the U.S. Securities and Exchange Commission.

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Freddie Mac to buy $20 billion in mortgages
April 19, 2006
From The Baltimore Business Journal:
 Freddie Mac will purchase $20 billion in fixed-rate and adjustable-rate mortgages to provide lenders with more choices to offer to subprime borrowers.

The products, slated to be introduced by mid-summer, will limit "payment shock" by offering reduced adjustable rate margins, longer fixed-rate terms and longer reset periods, Freddie Mac said in a statement.

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Rules to deter risky mortgage sales

April 12, 2006
From The Australian:
 US politicians are drawing up a bill that could make it less attractive for Wall Street investment banks and other financiers to repackage risky mortgages into securities and then sell them to investors around the world.

Congress hopes to force the financiers who buy mortgages and create mortgage-backed securities to share some of the liability - and thus financial cost - that might arise if mortgages were mis-sold to borrowers who proved unable to meet payments. The proposal, to be debated by the House financial services committee next week, could cut the flow of finance from the capital markets into the mortgage sector.

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Farmer Mac Announces Offering of Agricultural Mortgage-Backed Guaranteed Notes Due 2017

April 11, 2006
From PR Newswire:
 The Federal Agricultural Mortgage Corporation (Farmer Mac) (NYSE: AGM and AGM.A), announced today the offering of 10-year bullet maturity Guaranteed Notes. The Notes will be secured by an obligation of Metropolitan Life Insurance Company that will, in turn, be collateralized by Farmer Mac-eligible agricultural real estate mortgage loans. Farmer Mac will fully and unconditionally guarantee the timely payment of interest and principal on the Notes. The offering, substantially the same as the $500 million Farmer Mac Guaranteed Notes offering that closed in January 2006 and the $1 billion Farmer Mac Guaranteed Notes offering that closed in July 2006, will be AAA rated by Moody's, Fitch and Dominion.

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Investors in mortgage-backed securities fail to react to market plunge

February 18, 2006
From The International Herald Tribune:
 It's amazing how long it can take investors to see that the wheels are coming off a prized investment vehicle. Denial, after all, is a powerful thing.

But when an imperiled favorite happens to be a pool of asset-backed securities — especially those involving home mortgages — denial can be compounded by outright blindness to the real risks of that investment.

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S&P to speed mortgage warnings

February 16, 2006
From The Los Angeles Times:
 In another sign of growing concern about mortgages made to high-risk borrowers, Standard & Poor's said it would no longer wait for homes to be foreclosed on and sold at a loss before alerting investors in mortgage-backed bonds that it expects to lower ratings on the bonds.

The ratings company now will consider issuing downgrade warnings based on the amount of loans that are delinquent, in foreclosure proceedings or already backed by seized property, Robert Pollsen, an analyst at the New York-based firm, said during a conference call with investors Thursday.

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Fannie Mae will give $75,000 to help Libby housing

January 26, 2006
From Havre Daily News:
 Mortgage giant Fannie Mae will give $75,000 to boost housing in Libby, Mont., Montana Sen. Max Baucus announced Thursday. Fannie Mae CEO Daniel Mudd joined in the announcement at a news conference in Washington, saying the organization will fund a housing assistance program to help people pay for their own homes. The grant will also go toward a Web site designed to help people who have financial questions and the development of a Lincoln County growth plan, among other things. Mudd said the grant was a start. “We can’t solve all the problems but we’ll do what we can,” he said. Baucus, a Democrat, said the project is one way to help the people of Libby, many of whom have been sickened by asbestos fibers released by the now-closed W. R. Grace and Co. Vermiculite mine. The vermiculite, used in a variety of household products, contained tremolite asbestos that was released into the air and carried home on miners’ clothing. It is blamed by some health authorities for killing about 200 people and sickening one of every eight Libby residents. The mine closed in 1990. The EPA has declared the area a Superfund site, and many houses have been cleaned or destroyed because of lingering asbestos fibers.

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Tremors at the Door

January 26, 2006
From The New York Times:
 Wall Street’s big bet on risky mortgages may be souring a lot faster than had been previously thought.

The once booming market for home loans to people with weak credit — known as subprime mortgages and made largely to minorities, the poor and first-time buyers stretching to afford a home — is coming under greater pressure. The evidence can be seen in rising default rates, increasingly strained finances at mortgage lenders and growing doubts among investors. 

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Freddie Mac: Three Trends Will Impact Home Market and Financing

January 22, 2006
From Mortgage News Daily:
 The January 2007 Economic Outlook which is published last week by the Office of the Chief Economist at Freddie Mac was headlined "The Remodeled Housing Market" and was focused on economic trends.

But first it recapped the current housing market: an 11 percent November 2005 to November 2006 drop in home sales; mortgage applications for home purchases at the lowest level since mid-2003, a sudden switch from a sellers' to a buyers' market with a 7 month inventory and a drop in the pace of house-price growth.

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Feds: Mortgage giants still need close oversight

January 21, 2006
From PJStar.com:
 Fannie Mae and Freddie Mac have made progress toward correcting financial weaknesses, but tight government supervision is needed as the mortgage giants emerge from accounting scandals, a federal regulator said Thursday.

James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, also disclosed that Fannie Mae, which just last month announced a restatement of $6.3 billion in profit for 2001 through mid-2004, had a loss in the third quarter of 2006. He did not specify the amount of the loss.

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Freddie Mac boosts stock sale to $1.1B

January 11, 2006
From The Washington Business Journal:
 Mortgage financing giant Freddie Mac has more than doubled the offering of its preferred stock from $500 million to $1.1 billion.

The shares are expected to be issued Jan. 16.

The 44 million shares of preferred stock are being offered to investors at $25 a share with a dividend rate of 5.57 percent. Freddie Mac (NYSE: FRE) will have the option to redeem all or part of the shares sold on or after Dec. 31, 2011, at $25 a share plus accrued dividends.

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Australia CBA to hold international RMBS briefings

January 10, 2006
From Yahoo! Asia News:
 Commonwealth Bank of Australia (CBA) will start briefing international residential mortgage-backed securities (RMBS) investors the week of Jan. 22, a market source said on Wednesday.

The bank will visit Singapore, Europe and the U.S. and has appointed four institutions - Credit Suisse, Commonwealth Bank of Australia, Deutsche Bank and Societe Generale - to arrange the meetings.

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New Issue - Fannie Mae sells $3 billion in bills

December 27, 2006
From Reuters:
 Fannie Mae (FNM.N: Quote, Profile , Research), the largest U.S. home funding company, said on Wednesday it sold $2.0 billion of three-month benchmark bills due March 28, 2007, at a stop-out rate of 5.160 percent, and $1.0 billion of six-month bills due June 27, 2007, at a stop-out rate of 5.088 percent.

The three-month bills were priced at 98.696 and have a money market yield of 5.228 percent, and the six-month bills were priced at 97.428 and have a money market yield of 5.222 percent.

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UPDATE 2-Fannie Mae portfolio shrinks to smallest in a year

December 22, 2006
From Reuters:
 Fannie Mae, the largest provider of U.S. home loan financing, said on Friday its portfolio of mortgage investments contracted in November for a fourth consecutive month.

The portfolio shrank at a 5.7 percent annualized rate in November to $717.4 billion, the lowest level in a year, Fannie Mae said in a statement.

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Fannie Mae to sell $3.5 bln bills Wednesday

December 18, 2006
From Reuters:
 Fannie Mae (FNM.N: Quote, Profile , Research), the largest U.S. home funding company, on Monday said it plans to sell $2 billion of three-month benchmark bills due March 21, 2007, and $1.5 billion of six-month bills due June 20, 2007, on Wednesday, December 20, in a Dutch auction.

In such uniform price auctions, successful bidders pay only the price of the lowest accepted bid rather than the actual price as in a conventional multiple-price auction.

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Investec placed R2.0 bln mortgage-backed notes

December 13, 2006
From Reuters South Africa:
 South African investment banking and asset management group Investec has successfully placed a 2-billion-rand mortgage-backed notes issue, the group said on Wednesday.

Investec said the issue, the first under its new 20-billion-rand Residential Mortgage-Backed Securitisation (RMBS) programme for private residential mortgages, was oversubscribed with total bids of 2.7 billion rand.

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Fannie Mae "neutral"

November 30, 2006
From NewRatings:
 Analyst M Orenbuch of Credit Suisse reiterates his "neutral" rating on Fannie Mae (FNM.NYS). The target price is set to $55.

In a research note published yesterday, the analyst mentions that the company’s October's activity report indicates a 7.3% annualized contraction in the retained portfolio. While Fannie Mae’s outstanding MBS rose 14.4% annualized, the company’s overall book of business was up 7.6% annualized to $2.47 trillion in the month, the analyst says.

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Mexico nees bigger mortgage-debt issues

November 29, 2006
From Reuters:
 Mexico's fledgling market for mortgage-backed debt will grow fast next year but big foreign investors will not be interested until lenders adopt common standards, a top regulator said on Wednesday.

Guillermo Babatz, in charge of improving Mexico's market for mortgage-backed bonds, said lenders were making debt issues too complicated, forcing potential investors to waste time and money working out the details and picking good deals.

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SEC Nabs Mortgaged-Backed Securities Broker for Fraudulent Sales

November 16, 2006
From CCH Wall Street:
 The SEC filed charges this month against a former registered broker, charging him with fraudulent trading of mortgage-backed securities.

Jamie Solow, engaged in a scheme involving an inverse floating rate collateralized mortgage, also known as inverse floaters. Inverse floaters are complex and volatile fixed income offerings whose interest payments fluctuate inversely with its reference rate. These investments are the most thinly traded mortgage of its kind in the over-the-counter market, the regulator said.

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Understanding Mortgage-Backed Securities

November 12, 2006
From Best Syndication:
 The housing boom of the last seven years has been one of the biggest ever. Mortgage-backed securities are one reason for the torrid pace of real estate growth.

Understanding Mortgage-Backed Securities

A mortgage-backed security is essentially a bond. Investors purchase interests in the mortgage security and your monthly mortgage payment is the revenue earned from the security. Unlike a bond, however, the value of a mortgage fluctuates because it can be paid off early. A 10-year bond definitely matures in 10 years, but a similar mortgage may be paid off at any time with a refinance or outright cash payment.

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Fannie Mae to Delay 3Q Filing

November 8, 2006
From Forbes:
 Mortgage finance giant Fannie Mae said Wednesday it will not file its 2006 third-quarter report on time, due to a pending restatement of past financial statements.

In a filing with the Securities and Exchange Commission, Fannie Mae (nyse: FNM - news - people ) said it determined financial statements from January 2001 through the second quarter of 2004 should no longer be relied upon, due to issues with accounting practices and material weaknesses in internal controls over financial reporting.

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New Issue - Freddie Mac sells $1 bln in bills

November 7, 2006
From Reuters:
 Freddie Mac (FRE.N: Quote, Profile, Research) on Tuesday said that it sold $1.0 billion of six-month reference bills due May 8, 2007 at a stop-out rate of 5.085 percent.

The six-month bills were priced at 97.4434 and have a money market yield of 5.218 percent, Freddie Mac said.

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NexCen Brands Sells Mortgage-Backed Securities Portfolio

November 1, 2006
From EarthTimes.org:
 The Company will no longer own any MBS, nor will it be engaged in the MBS business once the remaining sale transactions are settled on November 21, 2006. Total proceeds from these MBS sales, exclusive of accrued interest and prepayments already received in October, and including any prepayments to be received in November 2006, will be approximately $78.0 million.

NexCen received approval to sell its remaining MBS at its annual shareholder's meeting held on October 31, 2006. The proceeds from the sale of its MBS will be used to support the Company's intellectual property business.

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Fannie Mae buys back $4.156 bln with expired calls

October 30, 2006
From Reuters:
 Fannie Mae (FNM.N: Quote, Profile, Research), the largest U.S. home funding company, said on Monday that it repurchased $4.156 billion of its debt with call options that had expired, based on preliminary tender offer results.

Fannie Mae, on Oct. 23, said it would buy back as much as about $21 billion of these securities in the week-long repurchase operation.

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BofA planned portfolio cuts stir up mortgage market

October 19, 2006
From MarketWatch:
 Bank of America's (BAC) announcement Thursday that it is planning to reduce $100 billion in securities in its portfolio over the next several years caused short-lived weakness in the mortgage bond market.

Though the company's Chief Financial Officer Alvaro de Molina didn't specify the type of securities that would be affected, the bank's mortgage-heavy portfolio caused bond investors to fear selling that would disproportionately affect the mortgage-backed securities market.

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Poor MBS Performance Hurts Webster Financial's Earnings

October 17, 2006
From BankNet360:
 A decision to sell $1.9 billion of mortgage-backed securities led to an 81% drop in third-quarter earnings at Webster Financial Corp., the Waterbury, Conn.-based bank announced this morning.

Net income was $8.9 million, or $0.17 per share, down from $46.6 million, or $0.86 per share, a year ago.

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Fannie, Freddie Mortgage Bonds May Gain on Lehman Index Changes

October 12, 2006
From Bloomberg:
 Fannie Mae and Freddie Mac, the biggest sources of funding for U.S. home loans, may expand in the market for adjustable-rate mortgages with the help of Lehman Brothers Holdings Inc.

Lehman plans to add Fannie Mae and Freddie Mac bonds backed by adjustable-rate mortgages, or ARMs, to its U.S. Aggregate Index, the benchmark for the managers who oversee about $2 trillion of assets. The change, scheduled for April 1, may boost demand for the securities, which now total $321.5 billion. There are more than $6.2 trillion of mortgage bonds outstanding.

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The Risky Business of Mortgage-Backed Bonds

October 12, 2006
From The Motley Fool:
 Yesterday, another article on bonds and risk discussed the fact that while bonds and other fixed-income securities have earned a reputation as being less risky than stocks, that doesn't mean they don't have any risk at all. Historically, while stocks have sometimes had some extremely dramatic fluctuations in value, bonds have also endured similar spells of volatility, albeit with slightly smaller oscillations. Contrary to the pronouncements of some financial marketing materials, it's possible for you to lose money by investing in bonds.

To understand fully the risks involved in owning bonds, you need to understand the way bond prices are calculated. Most investors don't have much trouble intuitively understanding the way stock prices move. If a company is doing well by increasing sales and earnings, then most of the time, its stock price will go up. Bond prices, however, are a little trickier, as they fluctuate with a host of factors that don't necessarily have anything specific to do with the entity issuing a particular bond. As fellow Fool S.J. Caplan explains very clearly in her article on bond risk, investors face a number of perils that can adversely affect the value of their investments, including interest-rate risk, the risk of a bond being called early, default risk, the risk of inflation, and the potential risk of not being able to find a buyer if you have to sell the bond prior to maturity.

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Goldman Sued Over Fannie Mae Accounting

October 4, 2006
From The Houston Chronicle:
 Goldman, Sachs & Co. said Wednesday that it has been added as a defendant in lawsuits regarding mortgage financier Fannie Mae's accounting practices.

In its quarterly report with the Securities and Exchange Commission, the Wall Street powerhouse said the complaints allege that it violated laws, including U.S. securities laws, in arranging some Fannie Mae-sponsored bond deals.

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Luminent Mortgage in repurchase agreement with Barclays Capital

October 4, 2006
From Reuters:
 Luminent Mortgage Capital Inc. (LUM.N: Quote, Profile, Research) on Wednesday said it entered into a $435 million term repurchase agreement with Barclays Capital.

The company said it plans to use the facility to acquire AAA-rated mortgage-backed securities.

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Mexico's Su Casita places mortgage-backed debt

September 26, 2006
From Reuters:
 Mexican mortgage lender Su Casita said on Tuesday it passed 800 million pesos of home loans to investors in the country's fledgling mortgage-backed securities market.

Su Casita, part-owned by Spanish savings bank Caja Madrid, said it sold the mortgage-backed securities in two series, both denominated in inflation-pegged units known as UDIs and worth a total of about $70 million.

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Australia: St.George prices global mortgage-backed securities

September 21, 2006
From The Asian Banker:
 St.George Bank Limited announces the pricing on last Friday, 15 September in Sydney, London and New York of Crusade Global Trust No.2 of 2006, an issue of global mortgage-backed securities under its Crusade securitisation programme.

The securities denominated in U.S. dollars will be registered with the Securities and Exchange Commission of the U.S.. The Australian dollar and Euro senior tranches will be listed on the Australian Stock Exchange. All securities will be backed by Australian residential mortgage loans originated by St.George.

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Mortgage-backed Securities, Who Bears The Risk? Who Risks The Bear.

September 17, 2006
From ePluribus Media:
 Who Bears The Risk? This is the question which defines the take-off subject for one of the New York Times' editorials this morning. This link will take you there: NYT on Mortgage-backed Security Risk.

I thought it might paradoxically be a useful way to discuss the question of building pipelines for energy and fuel transportation in Asia.

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Delta Financial prices $825 mln of mortgage-backed securities

September 14, 2006
From Reuters:
 Delta Financial Corp. (DFC.A: Quote, Profile, Research) on Thursday said it priced $825 million of mortgage-backed securities through its subsidiary, Renaissance Mortgage Acceptance Corp.

The securitization was co-lead managed by JPMorgan and RBS Greenwich Capital, the consumer finance company said in a statement.

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Market conditions favor mortgage-backed securities

September 2, 2006
From MarketWatch:
 "The main story this week in the market is mortgage-backed securities," said Thomas di Galoma, managing director of U.S. Treasurys at Jefferies & Co.

A mortgage-backed security is an ownership stake in a group of mortgages that trade much like bonds. Major issuers include the government-sponsored mortgage issuers Ginnie Mae, Freddie Mac and Fannie Mae.

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Commercial Mortgage-Backed Securities Gain Favor in Europe

August 30, 2006
From The Wall Street Journal:
 With a burst of activity in the German housing market, commercial-mortgage-backed securities, or CMBS, are picking up steam in Europe, more than a decade after they began to take off in the U.S.

This month, private-equity group Fortress Investment Group LLC of New York issued CMBS valued at €2.7 billion ($3.45 billion) to refinance a housing portfolio, according to Barclays Capital, the investment-banking division of Barclays Bank PLC in London. The portfolio includes nearly 80,000 apartments in western Germany, concentrated in ...

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Early Subprime Mortgage Defaults Rising

August 29, 2006
From The Houston Chronicle:
 More subprime borrowers are defaulting in the early months of their home loans, a trend that has led to greater fear among investors and lenders of rising delinquencies and losses.

For more than a year, shareholders in mortgage lenders and investors in mortgage-backed securities have worried that the end of the housing boom, along with higher interest rates, would cause more borrowers to default on their home loans, leading to more bank and investment losses. But credit quality industrywide has generally held firm, thanks to a still-strong economy and a robust job market. However, in recent months, an increasing number of lenders catering to borrowers with weak credit have reported a sharp rise in delinquencies that had occurred as soon as six months after origination.

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China to expand market for mortgage-backed securities

August 18, 2006
From The Australian:
 CHINA is drawing up plans to develop its nascent mortgage-backed securities market, which allows home loans to be repackaged and sold into the capital markets.

China Construction Bank issued the first mortgage-backed securities from the country last year with a 3.1 billion yuan ($500million) deal under a pilot scheme.

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First Active raises €1.8 billion in public mortgage backed securitisation deal

August 17, 2006
From Finfacts:
 First Active plc, part of the Ulster Bank Group has launched its tenth public mortgage backed securitisation raising €1.8 billion and consolidating what its terms "its position as the leading issuer of securitisation paper with a total of €7 billion in mortgage-backed securities issued since its initial public transaction in 1998."

The issue, which was significantly oversubscribed, is secured on a portfolio of Irish residential mortgages and it is the largest issue to date from First Active, building on the continuing First Active securitisation programme. This programme gives First Active’s parent - Ulster Bank Group - access to the asset-backed financial markets where it can optimise its use of capital and diversify its sources of funding.

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Herbies’ finance team signs off mortgage-backed deals for Lehman and property giant

August 9, 2006
From LegalWeek.com:
 Herbert Smith’s structured finance team is celebrating after signing off two major mortgage-backed deals for key clients Lehman Brothers and London & Regional.

The Lehman deal saw Herbert Smith advise the bank as lead manager on its £1.038bn commercial mortgage-backed securitisation (CMBS).

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American Financial posts profit

August 9, 2006
From The Philadelphia Inquirer:
 American Financial Realty Trust, a Jenkintown-based landlord to banks and other financial concerns, posted a quarterly profit yesterday.

A few minutes later, it canceled a conference call with analysts, saying it was not ready to discuss efforts to boost shareholder value that it had said were forthcoming.

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Morgan Stanley Builds Mortgages

August 9, 2006
From TheStreet.com:
 The housing market may be slowing down, but that's not stopping Morgan Stanley (MS - commentary - Cramer's Take) from expanding its mortgage lending business.

The big Wall Street said Wednesday it is buying mortgage banker Saxon Capital (SAX - commentary - Cramer's Take) for $706 million, or $14.10 a share. The cash deal will add to Morgan Stanley's growing home loan business and enhance its ability to generate more mortgage-backed securities.

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US mortgage bonds widen before key data, Bernanke

July 17, 2006
From Reuters:
 Yield spreads on U.S. mortgage-backed securities ended slightly wider on Monday in subdued summer trade ahead of this week's key economic events.

Wednesday's Consumer Price Index for June should reflect broader trends in inflation. A stronger-than-expected reading could cause U.S. Treasury bonds to sell off and as a result may exacerbate extension risk in the mortgage bond market.

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Farmer Mac Announces $1 Billion Offering of Agricultural Mortgage-Backed Guaranteed Notes Due 2011

July 13, 2006
From Yahoo! Finance:
 The Federal Agricultural Mortgage Corporation (Farmer Mac) (NYSE: AGM - News, AGM.A - News), reported today that the previously announced offering of Guaranteed Notes by the newly-created Farmer Mac Guaranteed Notes Trust 2006-2 would total $1 billion and is expected to price today. The Notes will be collateralized by an obligation of Metropolitan Life Insurance Company that, in turn, will be collateralized by Farmer Mac-eligible agricultural real estate mortgage loans. Farmer Mac will fully and unconditionally guarantee the timely payment of interest and principal on the Notes. The offering is substantially the same as the $500 million Farmer Mac Guaranteed Notes Trust 2006-1 offering that closed January 20, 2006.

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The Privatization of Fannie Mae

July 5, 2006
From Knowledge @ W.P. Carey:
 Fannie Mae, the nation's top financer and guarantor of home mortgages, has been in the news since its $11 billion accounting scandal -- including alleged manipulation of earnings to trigger executives' bonuses -- was reported in September 2004. But even before that, critics, analysts and academics have urged that Fannie Mae be completely privatized.

Among those privatization advocates is Herbert Kaufman, professor of finance at the W. P. Carey School of Business, who has been studying the situation for decades.

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Fitch Affirms 6 Classes from Wells Fargo Mortgage Backed Securities 2005-4

June 27, 2006
From BusinessWire:
 Fitch Ratings has affirmed the following ratings from Wells Fargo Mortgage Backed Securities, series 2005-4:

-- Class A affirmed at 'AAA';

-- Class B1 affirmed at 'AA';

-- Class B2 affirmed at 'A';

-- Class B3 affirmed at 'BBB';

-- Class B4 affirmed at 'BB';

-- Class B5 affirmed at 'B'.

The affirmations, affecting approximately $257.65 million in outstanding certificates, reflect adequate levels of credit enhancement relative to expected losses and low seasoning. The pool is seasoned 15 months and has a pool factor of 86%. The transaction has not taken a loss to date, and the serious delinquencies (more than 60 days delinquent, inclusive of foreclosures (FC) and real estate owned (REO)) account for only approximately 56 basis points of the outstanding balance. There are currently no loans in FC or REO.

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Vneshtorgbank Issues Mortgage-Backed Securities

June 15, 2006
From Russian Newswire:
 Vneshtorgbank (VTB) reports that it has issued securities within the framework of a project designed to support its proprietary mortgage loan portfolio. The total volume of the issue is expected to reach US$90 million. The transaction was arranged by Barclays and HSBC, and with the support of the International Financial Corporation.

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Standard Bank placed R3 bln mortgage-backed bonds

June 13, 2006
From Reuters South Africa:
 South African banking group Standard Bank has placed 3 billion rand worth of bonds backed by a portfolio of residential mortgage loans, the group said on Tuesday.

Standard Bank said the transaction was its third securitisation in the last 12 months and is aimed at raising longer-term funding.

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Delta Flies High with $825M Mortgage-Backed Securitization

June 12, 2006
From Commercial Property News:
 Delta Financial Corp. has priced a securitization backed by $825 million of mortgage loans though subsidiary Renaissance Mortgage Acceptance Corp., the company said today. The Renaissance Home Equity Loan Trust 2006-2, a senior subordinate structure, is expected to close on or about June 30. The 47 other asset-backed securitizations that the company has completed since 1991 were collateralized by a total of $15.7 billion in mortgage loans.

Delta Financial aims to securitize at the end of every quarter, according to a company spokesperson. "Our strategy will be to securitize the vast majority we originate," she told CPN. The company announced similar securitizations of $875 million each on Dec. 16 and March 7. After paying back the warehouse line from which Delta Financial borrowed, it will add the remainder to its quarterly income statement.

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Commercial mortgage bond market braces for supply

June 7, 2006
From Forbes:
 Yields on commercial mortgage-backed securities are rising to their highest levels relative to swaps since March amid expectations that more than $20 billion in sales this month will be met with waning demand, analysts said on Wednesday.

Commercial mortgage bond yield spreads have widened by 2 basis points in the past month from their tightest levels this year to about 24.5 basis points more than swaps, according to Merrill Lynch & Co.

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Australia's Macquarie Bank plans China-based mortgage-backed securitization

May 8, 2006
From Forbes:
 Australia's Macquarie Bank is expected to launch a landmark one bln yuan mortgage-backed securitization scheme based on mainland properties, the South China Morning Post reported.

The newspaper, citing market sources, said the plan to securitize one bln yuan worth of commercial mortgages - the minimum possible given the large fixed costs involved in such a transaction -- would be less likely to strike resistance from Chinese regulators who are slowly opening the door to securitization.

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Lo-doc arrears twice as high

May 1, 2006
From YourMortgage.com.au:
 A recent report by Standard & Poor's Ratings Services has revealed that lo-doc mortgages are twice as likely to be in arrears than standard residential property loans to traditional Australian borrowers. Confirming the general consensus on the higher risk of these products, the results are not totally unexpected.

Lo-doc loans have increased in popularity in the last five years and are used primarily by self-employed workers who may have income and assets but may not be able to supply financial statements or tax returns at the time of the application. Many mainstream lenders now offer lo-doc products.

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Hungry for Yield

April 30, 2006
From Barron's Online:
 AFTER A WHITE-HOT PACE of issuance in March, new offerings of commercial-mortgage-backed securities have practically disappeared, according to the Barron's/John B. Levy & Co. National Mortgage Survey.

But all that's about to change. Citigroup reports that some $43 billion in CMBS is scheduled to come to market before the second quarter is over. Domestic first-half volume in commercial-mortgage-backed securities is expected to total $103 billion, 28% more than in the same period last year. But 2005's activity was heavily concentrated in the second half, so Citigroup's full-year forecast is just slightly ahead ...

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Falcon asset backed listing aims at $125m

March 13, 2006
From Financial Times:
 Gulf International Bank plans to launch an initial public offering in London for a specialist company that will make leveraged investments in bonds backed by assets such as mortgages, the Middle Eastern investment bank said on Monday.

The listing on the main London Stock Exchange, which aims to raise up to $125m in early April, hopes to take advantage of growing investor interest in both ABS as an asset class and simple access to alternative asset managers.

London has seen a raft of hedge funds and other specialist asset managers floating, or announcing an intention to float, on Aim and the main board in recent months. It has also seen the listing at the end of last year of an investment company run by Cheyne Capital Management, the London-based hedge fund, focused on buying the riskiest tranches of securitisations from banks across Europe.

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Fannie Mae finds more errors in review

March 13, 2006
From BusinessWeek:
 As it continues to peel through the onion-like layers of its $11 billion faulty accounting, mortgage company Fannie Mae disclosed Monday that it has found additional errors in its government-ordered review.

The government-sponsored company, which finances one of every five home loans in the United States, said it had made "substantial progress" toward completing its accounting review but will miss a regulatory deadline for filing its annual financial report for the second straight year.

Top company executives sought to assure investors that all focus and energy was not being engulfed by the massive reworking of Fannie Mae's books and that new avenues of business were being pursued in an increasingly competitive U.S. mortgage market. Some high-level executives have been "walled off" from the work of the accounting review, they said.

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Wall Street lures commercial real estate loans

March 13, 2006
From mlive.com:
 Wall Street is siphoning profits from regional and community banks as it piles into the commercial lending business, forcing some of Boston's smaller players to take on riskier projects and offer new products as they rejigger their operations to stay competitive.

The pain has been sharpest for the local savings and thrifts that have traditionally dominated the loan market for large apartment and office developments -- existing properties that offer steady and predictable cash flow. In some instances, those banks have built upwards of 50 percent of their loan portfolios around such products, industry experts and local banking executives say.

Today, those banks are increasingly being forced aside by the country's biggest financial houses. JP Morgan Chase & Co. (NYSE: JPM), Morgan Stanley (NYSE: MS), Wachovia Corp. (NYSE: WB) and Goldman Sachs Group Inc. (NYSE: GS) are but a few of the larger players to set up special lending arms aimed at the commercial property market. The trend is steering a significant amount of business toward these so-called "conduits," which can outmaneuver their highly regulated competitors with lower rates and more flexible borrowing terms.

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Internal Review of Fannie Mae Cites “Attitude of Arrogance”

February 28, 2006
From AccountingWEB.com:
 In a 1996 internal memo to Timothy Howard, Chief Financial Officer of Fannie Mae, Leanne Spencer, Vice President of Financial Reporting wrote, “What do I have up my sleeve to solve an earnings shortfall?” She adds in the same document, according to Bloomberg.com, “I recognize (and thought about it yesterday) that we might want to show the board $2.48. I made the decision that I wanted to show you the real answer and the let you decide if you wanted me to make any adjustment. Will be easy to do on Monday morning.” Fannie Mae reported earnings of $2.48 in 1996.

The memo is quoted in a 2,600 page report, issued on Friday by Fannie Mae’s Board of Directors, on the results of an 18-month internal investigation led by former Senator Warren Rudman, now an attorney at Paul, Weiss, Rifkind Wharton & Garrison. The company’s directors initiated the probe after accounting violations at the mortgage company were disclosed by the company’s chief regulator, the Office of Federal Housing Enterprise Oversight (OFHEO) in September 2004.

The report concludes that financial executives at Fannie Mae developed a culture that fostered misleading results and employed a unqualified staff consisting of employees who occupied critical accounting functions who “were either unqualified for their positions, did not understand their roles, or failed to carry out their roles properly.”

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