Investments

Morningstar plans launch of CMBS 2.0 watchdog watchdog

The headline to this article does not contain a syntax error; Morningstar Credit Ratings is going to put together a new risk assessment service for its clients. Morningstar announced the initiative in an email Monday. The new risk assessment will monitor the potential boom in CMBS 2.0 operating advisors. CMBS 2.0 refers to newly structured commercial mortgage-backed securities. CMBS 2.0 differs from pre-bust CMBS deals in that there are more loans pooled and less perceived operational risk.
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GAO determines recent mortgages already meet QM requirements

The origination of new mortgages remains at historic lows. But, on the bright side, just about every single one meets "qualified mortgage" requirements proving the borrower's ability-to-repay, according to a report from the Government Accountability Office. New restrictions and increased oversight of mortgage origination come into effect with the opening of the Consumer Financial Protection Bureau on July 21. This change in regulatory structure is a mandate of Dodd-Frank financial reform.
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RMBS market worries quiet mortgage cramdowns may get louder

The Helping Families Save Their Homes in Bankruptcy Act, signed into law mid-2009, threatened to derail parts of the residential mortgage-backed securities market. That was until legislators stripped out the part that allows bankruptcy judges to cram down mortgages. Credit rating agency and analytics firm DBRS is reporting that mortgage writedowns since then are, in fact, currently being done by some bankruptcy judges. Bankruptcy judges arguably only wish to reduce the mortgage so the debt is more in line with the actual value of the property.
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Property contracts coming to CBOE Futures Exchange

The CBOE Futures Exchange is going to offer property-linked futures contracts, using Radar Logic real estate indexes, the two firms announced Tuesday. Daily house prices across the top 25 metropolitan statistical areas are already available on the Radar Logic Residential Property Index. The CBOE Futures Exchange (a.k.a. CFE) will now list tradable residential property futures contracts based on those RPX values.
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FCIC dissent blames shock and panic for economic collapse

One dissenting opinion to the Financial Crisis Inquiry Commission blames the "shock and panic" in the markets in September 2008 for expediting the quick collapse of the global economy. The FCIC report largely credits the regulatory shortcomings of the U.S. government and extreme risk taking of the nation's largest financial institutions for the current economic turmoil. Another opinion, however, says the scope is much, much larger than that.
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Markit purchases risk analytics firm

Financial information data provider Markit, acquired QulC Financial Technologies, a Canadian risk analytics firm. QulC tests market and credit risk tolerance in financial portfolios for clients and can simulate risk at the enterprise level. Markit maintains several leading indices, notably those that track asset-backed securities. Markit, for example, powers a Fannie Mae coupon stack aggregate. QulC’s 105 employees will join the Markit payrolls.
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Goldman Sachs to revamp operations after 4Q earnings

Goldman Sachs [stock GS][/stock] is making certain changes to its business segments, commencing with its earnings release for the fourth quarter of 2010. The revamp will be effective concurrent to the earnings report, being issued on Jan. 19, 2011, according to a filing Tuesday with the Securities and Exchange Commission. Essentially the investment bank will switch its operations from three distinct business segments to four.
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Refinancing wave ending, say mortgage bond analysts

Mortgage refinancings through the Home Affordable Refinance Program known as HARP increased 26% in the third quarter of 2010. Strategists for Fannie Mae and Freddie Mac investors, however, say the spike is likely to be short lived. Fannie Mae and Freddie Mac loan modifications through HAMP increased 16% in the third quarter of 2010, according to Federal Housing Finance Agency, which oversees the government-sponsored enterprises.
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ACA Financial sues Goldman Sachs for CDO fraud

Bond insurer ACA Financial Guaranty filed suit Thursday against Goldman Sachs. The suit alleges fraud and seeks $30 million in compensatory and $90 million in punitive damages stemming from the role the investment bank played in the marketing of the synthetic collateralized debt obligation named ABACUS. Goldman Sachs developed ABACUS and sold it to investors on behalf of its hedge fund client Paulson & Co. in 2007.
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