Archive for August, 2009
Chris Kavanagh and Sarah Cantrowitz join real estate auctioneer REDC as vice president and managing director, respectively, of its commercial real estate auction division.
Kavanagh comes to REDC after serving as vice president of dispositions at Granite Investment Group, where he successfully disposed of a $350m commercial and multifamily portfolio.
Cantrowitz recently served as director of real estate finance at UBS Investment Bank in New York, and previously served as vice president of real estate finance at Bear Sterns Commercial Mortgage.
“We are delighted and excited to announce the addition of Chris and Sarah to our executive team,” Daniel Culler, chief operating officer of REDC’s commercial auction division, said in a statement. “They are well-respected and highly-impactful industry executives with tremendous experience and success in commercial real estate. With their addition to our executive team, REDC continues its rapid growth to take advantage of an array of opportunities in the real estate industry and as we grow our infrastructure to meet real estate opportunities head on.”
Write to Austin Kilgore.
The 60 plus-day delinquency rate for Dutch residential mortgage-backed securities (RMBS) rose slightly to 0.57% of the current balance in Q209, from 0.52% in the previous quarter.
The increase arrived uniformly across vintages and transaction series, and remained in-line with rising Dutch unemployment, according to Moody's Investors Service.
The weighted-average cumulative foreclosures also increased at a moderate rate during the quarter, reaching 0.42% in Q209, compared with 0.39% in Q109 and 0.35% in the year-ago quarter. Moody's notes this is a relatively low foreclosure volume for the region encompassing Europe, the Middle East and Africa — or EMEA.
HousingWire's sources say the Dutch market is largely considered the most stable market in the European secondary sector. It has perhaps until now been thought to be the market most cushioned against the credit crisis.
But Moody's says the high degree of debt leverage among Dutch households leaves them "considerably vulnerable" to shock waves felt through the economy.
"Weak house prices are likely to continue in the economic recession," says Nitesh Shah, a Moody's economist and co-author of the report. "Furthermore, as unemployment increases and personal insolvencies rise, households are likely to come under increasing financial stress."
A July securitization report out of Deutsche Bank also drew an important link between spiking unemployment, rising delinquencies and plunging home prices. Deutsche researchers noted June’s 9.5% unemployment rate is well above the 5.6% level seen a year ago and marks the highest rate since the early 1980s. As the ABS market expanded, the report notes, performance of consumer-related ABS and national employment trends became inextricably linked.
Write to Diana Golobay.
Jim Regan joins Austin, Texas-based Amherst Securities Group as head of asset-backed securities (ABS) trading.
Regan joins the residential mortgage-backed securities broker-dealer after most recently serving as the head of ABS trading at Cohen and Company. Prior to that, he was head of structured trading at ABN AMRO and as a senior trader on the ABS desk at Credit Suisse and as a senior ABS trader at Prudential Securities.
Regan brings 19 years of experience to Amherst, where he will operate out of the company’s New York City office, spearheading the company’s efforts in dealing in traditional consumer-related ABS products and further developing its expertise in distressed ABS markets, such as lease-backed ABS, aircraft and insurance products.
“Jim has become one of the most well respected traders in the industry, and his addition will make Amherst an even stronger broker-dealer,” Amherst CEO Sean Dobson said in a statement. “We see the expansion of our ABS trading efforts as an important part of our growth, and Jim's broad knowledge of various ABS product lines fits perfectly with our existing account base and overall mortgage expertise.”
Write to Austin Kilgore.
GMAC Financial Services announced last week it will step up its correspondent and warehouse lending volume.
The announcement comes, however, at a time when outsider observers are questioning the viability of GMAC’s Residential Capital division and other warehouse lenders are facing increased stress and government scrutiny.
CreditSights, a debt ratings agency, said GMAC may reallocate ResCap’s desirable assets to other parts of GMAC and leave behind $11.4bn in debt to spin off the company and “put ResCap out of its misery,” in a report it issued last week.
“While GMAC continued to toe the company line, indicating that it intends to provide support to ResCap as long as it benefits its owners to do so, we believe ResCap’s days could be numbered,” the report said.
A spokesperson for GMAC said the report was “purely speculative” and that CreditSights had no affiliation or special access to GMAC when producing the report.
For the first half of 2009, GMAC’s correspondent business originated more than $28bn in loans, which is on track to eclipse the $34bn it originated during all of 2008. GMAC also maintains $2.2bn in warehouse line commitments.
With the decrease in the number of national correspondent and warehouse lenders — and the recent suspension of a major FHA originator after a federal probe into its warehouse lender — GMAC said it can expand in both the correspondent and warehouse arenas.
“New efficiencies in our operations, our accelerated purchase facility and current market conditions have resulted in a tremendous opportunity for us and our clients,” Adam Glassner, ResCap’s new executive vice president and senior managing director said in a statement.
Glassner joined GMAC in March to lead the effort of combining its correspondent and warehouse lending efforts. The executive vice president and senior managing director responsibilities were added to Glassner’s job when Thomas Neary, who previously held the position, voluntarily resigned for personal reasons at the end of July.
But ResCap lost at least $1bn every quarter since Q307, and while GMAC keeps it functioning, “it systematically plundered the company for the more attractive assets via asset sales and exchanges,” the CreditSights report said, citing GMAC’s divestment of ResCap’s ownership in GMAC Bank (now Ally Bank) and the placement senior liens on other ResCap’s other “attractive” assets, like its mortgage servicing rights.
GMAC said ResCap continues to operate based upon a strategy that it announced in September 2008 — to shed its non-core businesses and focus on core mortgage lending and servicing in the United States and Canada.
Write to Austin Kilgore.
Congress itself may soon face stricter requirements for transparency and disclosure of personal financial information.
Senators Barbara Boxer (D-Calif.) and Johnny Isakson (R-Ga.) introduced legislation late last week that would force members of Congress to disclose mortgage information.
A “full and complete” disclosure of residential mortgages includes the date the mortgage was entered, the range of the amount, the interest rate, the term and the creditor’s name and address.
“Transparency is the key to accountability in government. We must continually revisit ethics in government, and strengthening our disclosure rules takes an important step forward,” Boxer, who chairs the US Select Committee on Ethics, said in a statement.
The introduction follows letters sent to senators Christopher Dodd (D-Conn.) and Kent Conrad (D-N.D.) from the Ethics Committee, dismissing complaints that they received special mortgages from Countrywide Financial. The dismissal wraps up a long year of controversy over special mortgage loans the senators were alleged to have received.
Citizens for Responsibility and Ethics in Washington (CREW) made the initial complaint in June 2008, when HousingWire first reported the claims, but after a year-long investigation the committee found no violation of the Senate Gifts Rule, according the letters.
“Since my first year in Congress, I have always disclosed my home ownership and the mortgages against my home. It’s the right thing to do and I believe it should be required of all members of Congress,” Isakson, vice-chairman of the Committee on Ethics said in a release.
Write to Jon Prior.
Bond insurer Ambac Financial Group (ABK: 0.00 N/A) reported a net loss of $2.39bn or $8.33 per share for Q209, reflecting higher losses in the portfolio of insured residential mortgage-backed securities (RMBS) transactions.
Ambac also insures the collateralized debt obligations (CDOs) of an asset-backed securities (ABS) transactions. The value and payments come from the assessment of its portfolio of fixed-income underlying assets by rating agencies such as Fitch Ratings and Moody's Investors Service. The monoline typically insures products that are equal to or below its own credit rating.
Second-lien and Alt-A RMBS transactions accounted for $1.23bn in losses for the quarter. Ambac Assurance Corporation’s (AAC) other-than-temporary impairment losses amounted to $675.4m, compared to a net loss of $2.4m in Q208.
Management decided to sell investment securities, primarily Alt-A RMBS securities rated below investment grade by Moody’s or Standard & Poor's, held in the insurance company investment portfolio. As a result, Ambac took other-than-temporary impairment charges on these securities.
In July, HousingWire reported S&P cut Ambac Assurance to double-C from triple-B, lowering it to junk status on expected losses for the quarter.
Earned net premiums shrank 45% from $325.5m in the second quarter to 2008 to $177.7m in Q209. Net investment incomes also decreased by 5% from Q208 to $120.4m, primarily due to a portfolio liquidation needed to pay losses on the transactions.
“The quarter’s financial results are obviously very disappointing, as continued poor performance of the mortgage-related portfolios and rising forward interest rates have escalated projections of future claims,” Ambac’s president and CEO, David Wallis said in the report.
Last week, Ambac filed a suit against Citigroup (C: 30.87 +1.61%) and Credit Suisse, alleging that the two companies misrepresented the risks and market values of securities. Ambac hopes to void $2bn in a portion of the credit default swap protection written on the residential mortgages Citi originated.
Write to Jon Prior.
The delinquency rate of US commercial mortgage-backed securities (CMBS) reached 3.04% at the end of July as the extent of the credit crisis unwinds in the commercial real estate space.
At its current rate, the US CMBS market will likely rise above 5% delinquent by year-end, according to an analysis by Fitch Ratings of commercial MBS across the retail, muti-family, office, hotel and industrial sectors.
"For the past several months, delinquencies have increased at a rate of over $2bn per month; the 30-to-60 day rollover rate has consistently exceeded 50%, and resolutions from the index have been slow due to the lack of refinancings and dispositions," said Mary MacNeill, managing director of Fitch’s US CMBS Group.
"If current trends continue," MacNeill added, "delinquencies are likely to pass 5% by the end of 2009, though the likelihood of large recent vintage proforma loans depleting their debt service reserves by year-end could drive the percentage of delinquent loans past 6% by first-quarter 2010."
Retail loans made p $4.8bn of delinquent loans as of July 31, while multi-family and office loans rose to $3.5bn and $2.3bn, respectively. Hotel loans accounted for $2.2bn in delinquencies, while industrial loans made up $510m of delinquencies. The multi-family segment alone bore a 5.03% delinquency rate, while hotels followed with 4.3%. Office properties seemed to far the best as of July, with only 1.54% delinquent.
Write to Diana Golobay.
Walnut Creek, Calif-based PMI Group (PMI: 0.00 N/A) reported a $222.6m net loss in Q209, or $2.71 per share.
The residential mortgage insurance provider narrowed its losses from a year earlier, improving from a $246.3m net loss in Q208.
US mortgage insurance operations continue to suffer heavy losses and decreased premium earnings. That, along with a $25.4m after-tax charge from an increase in the market value of certain holding company senior debt instruments, drove the second-quarter losses, the company said.
PMI wrote $169.7m in consolidated net premiums in Q209, down from $202.2m in Q208. The first half 2009 (H109) total of $354.6m was also down from the H108 total of $414.9m. The decreases were due to lower levels of new insurance written and higher refunded premiums from rescinded — or canceled — insurance.
PMI said the reduction in new insurance written and refunds from canceled insurance dropped premiums earnings from $207.4m in Q208 to $181.6m in Q209 and from the H108 total of $418.5m to $369.7m in H109.
Write to Austin Kilgore.
Standard & Poor's on Friday slashed ratings of 37 classes of residential mortgage-backed securities (RMBS), citing delinquencies and an overall weakness of the housing market.
After a review of three RMBS transactions backed by US prime jumbo, Alt-A and subprime mortgages issued in 2004 and 2006, the ratings agency downgraded 37 classes, 22 of which previously bore negative watches. Two of the downgraded classes moved from triple-A to triple-B, but most slipped from triple-A to double-B.
The ratings agency also affirmed ratings on 11 triple-A classes, one double-A class and one triple-C class, indicating the performance of these classes is likely to continue much as it has.
The downgrades, on the other hand, indicate the current level of credit enhancement will likely prove insufficient to cover projected losses as the housing market remains weak overall.
"Although cumulative losses were generally low compared with our projected lifetime losses for the transactions reviewed, we are projecting an increase in losses due to increases in delinquencies and the current negative condition of the US housing market," S&P said in a corporate statement.
The mortgages backing the RMBS involved reside in a 2004-vintage CHL Mortgage Pass-Through Trust, a 2004-vintage Citigroup Mortgage Loan Trust and and a 2006-vintage Fieldstone Mortgage Investment Trust.
S&P dealt the majority of downgrades to the CHL Mortgage Pass-Through, while the majority of affirmations split almost evenly between CHL Mortgage Pass-Through and Citigroup Mortgage Loan Trust.
Write to Diana Golobay.
Corpus Christi resident Robert Sanchez found out his energy provider was doing more than providing him with power after opening his last bill.
The utility company, CPL Retail Energy, also decided to pick up a year’s worth of Sanchez' mortgage payments, up to $40,000 in total.
At a time when foreclosures grip the housing market, some tend to forget the utility providers. After all, if foreclosed homes sit vacant with no one living in them, lamps stay dark, ceiling fans quit spinning and faucets dry up. Fewer owners means lower wattage, spawning creative promotions by utility companies like CPL.
The energy provider entered all residential customers who signed up with the energy provider as of March 31, 2009 into a drawing for the complimentary mortgage payments. Secondary prizes included a month’s worth of groceries for 35 winners and a summer’s worth of free electricity to 50 customers.
Adding to the giving spirit, CPL teams traveled to towns in South Texas to perform random acts of kindness like purchasing gas, coffee, and event tickets for customers. They even dropped them wallets filled with movie tickets, gift cards or $100 checks.
While the promotions are meant to draw new customers into the arms of CPL, Sanchez is, in fact, a lifelong customer. Now, that isn't likely to change.
"I would have never believed I would win something like this, especially from my energy provider," said Sanchez.
Write to Jon Prior.
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