Refinance Free Credit

The furor over monoline bond insurers reared its ugly head again Wednesday afternoon, with Moody’s Investors Service warning that it would likely downgrade both MBIA Inc. (MBI: 5.58, -16.59%) and Ambac Financial Corp. (ABK: 2.55, -15.00%) over concerns that each company’s deteriorating credit profiles no longer put them into Aaa-rated territory.

Already-battered shares of both companies plummeted on the news, with Ambac falling more tha 17 percent and MBIA falling more than 16 percent; shares in MBIA were at $5.64, off 15.7 percent, when this story was published. Ambac was trading at $2.53, off 15.67 percent.

“MBIA’s credit profile may no longer be consistent with current ratings given the company’s diminished new business prospects and financial flexibility, coupled with the potential for higher expected and stress losses within the insurance portfolio,” the ratings agency said in a press statement. Moody’s made similar comments about Ambac, as well, although it noted that the insurer’s mortgage exposure was particularly more problematic.

Moody’s said that recent mortgage performance data, and MBIA’s own reported first quarter results, were “indicative of continued deterioration within the guarantor’s insured portfolio.” A ratings downgrade to Aa was the likely outcome of the review process, the agency said.

Jay Brown, MBIA chairman and CEO — not surprisingly — took issue with the news of a potential downgrade.

“We disagree with Moody’s decision today,” Brown said in a press statement. “When Moody’s affirmed our rating with a negative outlook in February, we believed that it would refrain for six to 12 months from taking additional ratings actions unless the environment or MBIA’s position changed materially.”

MBIA had planned to fund its insurance subsidiary with $900 million needed to retain a Aaa-rating; Brown said that “in light of Moody’s action today, we will continue to hold the cash at the holding company level pending our strategy review and consultation with our board.”

Ambac CEO Michael Callen took a similar tack, suggesting that any problems facing the New York-based insurer were “temporary.”

“The timing of Moody’s announcement is unfortunate since we believe that the uncertainty surrounding Ambac is temporary,” he said. “Outside the mortgage-related exposures, the remainder of our portfolio is performing well, and in line with our expectations.”

Of course, it’s those looming mortgage exposures that have Moody’s most worried, with the agency singling out Ambac’s exposure in that segment of its insured portfolio as particularly problematic for a continued Aaa rating.

Insurers like MBIA and Ambac provided the top-rated portions of private-party RMBS and related CDO deals with a guarantee that essentially was designed to serve as a proxy for the government guarantee that exists on Fannie/Freddie/Ginnie mortgage bond issues. But the strength of that guarantee is only as good as the rating of the firm that provides it — which means that increasing MBS losses have led to assumptions of increasing losses for investors by rating agencies, imperiling both the insurers that guaranteed principal payments as well investors in some of the most senior tranches of securitized transactions.

Disclosure: The author held no positions in MBI or ABK when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

Hedge funds looking for outsized returns are beginning to get creative as they assess the wreckage of not only the mortgage marketplace, but local housing markets as well.

The latest example is Three Arch Partners, which is readying a fund to snap up abandoned land in hard-hit California, according to a report published Tuesday in Financial News. The fund is looking to launch the aptly-named California Distressed Land Fund with $150 to $250 million — a small fund, to be sure, but one that the company is pitching as an alternative commercial property funds or residential property index derivatives.

The fund expects to hold the land through 2010 to 2014, the Financial Times said, citing IGS Group managing partner John Godden. IGS is promoting the fund.

The land pitch comes in stark contrast to the increasingly crowded marketplace for mortgage assets, which features some large players jockeying for position as well as growing number of smaller funds looking to find pockets of value at smaller capital levels.

Among the larger players in the sapce, BlackRock Inc. (BLK: 215.25, -0.97%), the biggest publicly traded U.S. asset manager, said in March it was backing a new company called Private National Mortgage Acceptance Co. LLC, also known as PennyMac, that will buy mortgages at a discount and look to make money in the so-called scratch-and-dent business. PennyMac has a $2 billion war chest to step in and start buying, and will bankroll its own in-house servicing platform; in May, BlackRock also negotiated a deal to snap up $15 billion in mortgages from Swiss bank UBS AG (UBS: 23.59, -0.04%).

Beyond BlackRock’s move, Marathon Asset Management, LLC, a global investment manager with $10.6 billion under management and over $20 billion in assets, is also buying up distressed mortgages and is also pumping the mortgages it buys to its own captive servicing operation, Phoenix-based Marix Servicing, LLC.

Disclosure: The author held no positions in BLK or UBS when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

It’s likely not quite the mea culpa some in the industry might have hoped for, but numerous published reports on Wednesday suggest that both Standard & Poor’s Ratings Services and Moody’s Investors Service have reached a deal with New York attorney general Andrew Cuomo on their core ratings businesses.

According to the New York Times, which first broke news of the expected deal early Wednesday morning, Cuomo would co-opt the rating agencies into his office’s ongoing investigation into the role investment banks played within the formerly booming private-party mortgage securitization space; in particular, numerous reports have suggested that Cuomo is looking to see if i-banks withheld information from investors and due diligence providers alike, massaging the ratings of key MBS and CDO deals in order to obtain the best possible rating.

Earlier this year, Cuomo secured the cooperation of due diligence and loan surveillance specialist Clayton Holdings Inc. (CLAY: 5.87, -0.34%) as part of the same investigation.

In exchange for their help, Bloomberg News reported that the agencies would receive the equivalent of immunity — freedom from any sanctions that might otherwise be levied for prior ratings missteps, with Cuomo’s office terminating its own inquiry into the rating agencies as a result.

Such an outcome, if confirmed, would seem sure to lead at least some investors to cry foul.

While a formal announcement has yet to be made, a number of media outlets obtained what appeared to be confirmation of the pending agreement from S&P president Deven Sharma, who said the agency was “pleased” to work with Cuomo’s office on a new set of standards. Neither Moody’s or Fitch have commented to the press on the alleged deal.

New ratings rules
Under the new rules being reported on Wednesday, rating agencies would be able to earn their fees regardless of whether or not they rated the final issuance — preliminary review work on a deal would be sufficient for earning fees on mortgage-backed securities and other forms of structured debt. Currently, only the firms selected to formally rate a new issue typically earn a fee for so doing.

Word that the agencies might be able to add to their fee base, while simultaneously avoiding sanctions for missteps that many believe helped create the current secondary mortgage market carnage, clearly irked some investors that spoke with Housing Wire.

“These guys commit highway robbery, and get off scot-free because they’re going to name the make and model of the car they drove to do it?” said one MBS investor, who asked that his name not be used. “Unbelievable.”

The deal between the New York AG and the rating agencies is expected to be announced ahead of a scheduled June 11 release of new ratings conduct guidelines by the Securities and Exchange Commission. The SEC is expected to follow recent suggestions published by the International Organization of Securities Commissions, an international conglomerate representing more than 100 securities regulators.

It’s unclear if any deal between Cuomo and the rating agencies would conflict with expected SEC regulations.

Disclosure: The author held no positions in CLAY when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

Since this title is my most popular post by more than 4 times my next post I thought it was time I expanded it a bit.  You can find my most popular post here.  

There is a FANTASTIC Ebook available here that would be extremely useful to you if you are facing foreclosure!

I think it is time I take this topic to a different level.  Just because you are facing late payments, no payments, notice of default or foreclosure, it doesn’t mean that you are out of options.  You need to know what other choices are out there for you since the government has stepped in realizing that there was a problem and helping where there used to be little or no solutions.  Here are some options that can help you find a solution to avoid foreclosure or selling your home:

1. If your rate is starting to adjust or has already adjusted then you need to read my post for answers. If you are late on payments because you ARM adjusted then you need to know your options.  Selling your home or foreclosure may not be your only choices.  Refinancing with those late payments is now an option.  The Government put in new rules and now will allow you to refinance into an FHA loan but rules do apply. 
2. You need to know the math behind the adjusting loan and the only way to figure that out is to look at your note provided to you at the time of signing your loan documents.  I will help you with your rate adjustment payments so e-mail me your current mortgage statement and your mortgage note with all the riders attached to the note and I will tell you your new adjusted payment. It may not be that bad and could be manageable in the short run.
3. Being “upside down,” (owing more than your home is worth), is no longer a hopeless situation. It’s a difficult situation to be in, but know one thing; you can get a new fixed rate mortgage at an extremely low interest rate if you know how to handle the banks.  Look for upcoming articles about negotiations along with success stories of others we have helped.
4. If your ARM has not yet adjusted and you expect it to adjust in the next 10 months you may be able to get a 5-year freeze on your interest rate.  You need to call your lender and ask them about this option and reference the “Hope Now” program.  This is a voluntary program on behalf of the lenders and it can stop your rate from increasing if approved by the lender.  To qualify your loan must have been between Jan. 1st, 2005 and July 31st, 2007.

Most important fact of all is to explore your options and know your adjustment date on the nose.  If you are approaching the anniversary date to your purchase and you fall within the first 10 years of ownership, you may have an adjustable rate mortgage and not even be aware of it.  Open those loan documents or call your lender to find out those details.  If you need help with anything please email me atbrent@brentlane.net. Here is more information about myself and my Team.  If you are feeling uncomfortable contacting me, take a look at my license information here and see what other say about me here.

[digg=http://digg.com/business_finance/I_can_t_Pay_my_Mortgage_and_I_m_going_into_Foreclosure_Pt_2

I really couldn't believe the numbers were going to be that high!

I mean really, think about it that is entire cities, states for that matter. I hope that those of you reading this that happen to be facing foreclosure do something about it.

Sores Predicts 5 Million Foreclosures in the next 18 months

After searching all over the net I finally found the complete guide for people facing FORECLOSURE!

In one EBook I found everything it would take to STOP FORECLOSURE but it was more than that, it was information you needed to know in order to HELP YOURSELF!

Go and Read the EBook HERE

Learn all you can, read the book and DONT BECOME A STATISTIC!

GMAC LLC said early Wednesday afternoon that it had successfully arranged more than $60 billion in new and refinanced credit for ailing mortgage arm Residential Capital LLC, in a move designed to push the lender through ongoing mortgage market woes. Touting the package as “one of the largest global refinancings ever completed,” more than 50 firms were involved in structuring or restructuring financing for both GMAC and ResCap, the companies said.

Among the deals involved in the financial package, GMAC said it had agreed to provide a $3.5 billion two-year credit facility to ResCap, which includes $750 million of first loss protection from General Motors Corp. (GM: 17.04, -3.07%) and majority investor Cerberus Capital Management, L.P. — that credit facility was seen by investors as critical to managing ResCap operations going forward, according to sources that spoke with Housing Wire earlier on Wednesday.

“I am extremely proud of our team’s achievement,” said GMAC CEO Alvaro G. de Molina. “Executing a transaction of this magnitude and complexity in such a challenging capital markets environment demonstrates the dedication of our people and the international banking community’s confidence in our company.”

The deal, somewhat surprisingly, also included $14 billion in private exchange and cash tender offers for outstanding debt. ResCap said earlier on Wednesday that it had extended its original offer deadline amid tepid response from investors. For many investors, the offers saw them exchange current notes for debt with longer maturities and higher interest rates — but at the cost of receiving less than the face value of their current investment.

ResCap had said in previous filings with the SEC that it expects to issue $5.7 billion in new notes under the program.

It also said in a separate filing with the Securities and Exchange Commission late Tuesday that both GMAC and Cerberus had agreed to provide roughly $2.4 billion in immediate cash funding to meet liquidity needs after a planned asset sale and hedging strategies at ResCap had failed.

“Cerberus is confident of GMAC’s future and is gratified by the support the company has received from the capital markets, as well as our continuing constructive partnership with GM,” said Steven Feinberg, CEO of Cerberus Capital.

Despite the refinancing, it’s yet possible that ResCap will continue to run into financial difficulties, sources told Housing Wire. GMAC risk chief Sam Ramsey suggested otherwise.

“This refinancing is expected to provide GMAC and ResCap with the important liquidity and financial resources to execute our business plan,” he said.

Disclosure: The author held no positions in GM when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

Inman News’ Matt Carter digs into the housing price index debate today, suggesting that those attempting to back indexes published by the NAR and OFHEO (and disparage indexes like the Case-Shiller) lack a basic understanding of what the indexes really capture.

We won’t cover the whole analysis here, because it’s long, in-depth, and well worth your time to read. But we will note that there is an interesting dichotomy in the industry variously called mortgage banking, real estate finance, mortgage finance, and so forth.

Those backing the NAR stats are invariably those on the transactional side of the real estate business — the production side, if you will. Those that tend to sneer at the NAR’s stats and rely on the Case-Shiller (and likely the newly-introduced IAS360) come from the investment side of the business.

Witness the following argument from Inman News columnist Bernice Ross:

“Ultimately, the question is whom should you believe — the academicians and Wall Street with their complex derivatives that gave us the subprime mess, or NAR, the federal government and the real-world numbers from publicly traded real estate companies?”

Ross, perhaps not surprisingly, comes from the transactional side of the business — the side that likes to sneer at Wall Street and its modeling attempts, and has done so for years.

Carter’s analysis takes Ross’ flawed ethic behind the woodshed and destroys it, so we won’t here — but we want to note that despite the industry’s historic crisis, a crisis that is as much about housing as it is about mortgages, it’s certainly disheartening to yet see those with access to a media platform continue to push the sort of short-sighted approach to this business that really drove us into this mess in the first place.

I’m referring to the idea that what happens in origination is one thing, while what happens in securities markets and with the mortgage loan is entirely a different thing — that sort of “my turf, your turf” approach led originators to care little about what was being originated, and secondary market participants to care little about the collateral they were actually securitizing.

Regular readers know that I started HW with the mission of connecting primary and secondary market participants, and it’s an idea that many of those taking a longer-term view of the industry have embraced, because they understand that’s where this business — whether we call it housing or mortgages — is ultimately headed.

It’s no longer good enough for a self-described real estate coach such as Bernice Ross to sneer at investor-types, any more than it’s worthwhile for a secondary market bond investor choosing to ignore collateral trends in a particular housing market.

If I accomplish anything with Housing Wire — online and in print (subscribe today!) — I hope it’s being able to effectively kill off that sort of flawed thinking.

Amid growing speculation by Wall Street insiders and analysts this week that Lehman Brothers Holdings Inc. (LEH: 31.43, +2.68%) may need to raise substantial capital to shore up its balance sheet, the company has begun taking steps to deleverage by looking to sell off its riskiest and most troubled assets, according to a published report late Tuesday evening.

CNBC’s Charlie Gasparino reported that Lehman’s deleveraging plan includes unloading mortgage-related bonds, likely including collateralized debt obligations backed by asset-backed securities. Citing senior officials at the Wall Street firm, CNBC said that the firm has already unloaded $100 million in such assets for far; the size and scope of the alleged sale program remains unclear, nor is it clear if Lehman is looking to conduct a fire-sale of its assets, or pursuing a more orderly sales strategy.

It’s worth noting that news of Lehman’s selling intentions comes at the same time troubled subprime mortgage operation Residential Capital LLC said Tuesday that it, too, will look to sell both whole loans and mortgage bonds in an effort to boost liquidity.

Lehman has not commented to the press on the report; a call to the company’s press desk on Wednesday was not immediately returned. The company has said, however, that raising additional capital is only one of the options on the table as it looks to restore investor confidence, according to a separate CNBC reported filed earlier on Wednesday.

Speculation that Lehman could be the next major investment bank to fail has waxed and waned at varying levels ever since Bear Stearns & Cos. wobbled and was bailed out by JPMorgan & Chase Co. (JPM: 41.54, -0.84%) and the Federal Reserve.

For its part, Lehman has strongly asserted its capital sufficiency, dismissing any such claims; but the i-bank is now the smallest among Wall Street banks, a status that sources told Housing Wire leaves it somewhat vulnerable to what was characterized as “financial bullying.”

The firm posted a 57 percent drop in earnings in the most recent completed quarter, as it absorbed a $1.8 billion in mortgage-led write-downs. It’s expected to post a loss for the second quarter, according to a review of most analysts’ estimates by Housing Wire.

While Lehman continues to remain mum to the press on any plans to raise capital, published reports Wednesday suggested the Wall Street firm is yet looking overseas for potential investment partners. In particular, the Wall Street Journal reported that it may be looking to a strong capital base in South Korea as a source of fresh funding.

Not everyone, however, is convinced that Lehman needs new capital or that the stock hasn’t already priced in any new capital altogether. Shares of the battered Wall Street firm reversed course strongly on the New York Stock Exchange Wednesday morning, jumping more than 7 percent on a call from Merrill Lynch (MER: 40.58, -3.13%) analyst Guy Moszkowski that suggested the company’s stock was “over-corrected.” Bloomberg News first reported on the analysts’ call.

Shares in Lehman were trading at $31.97/share, up just under 5 percent, when this story was published.

Disclosure: The author held no positions in LEH or MER when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

Troubled Residential Capital LLC, the mortgage lending unit of GMAC LLC, said in a regulatory filing with the Securities and Exchange Commission Tuesday that it needs roughly $2 billion in cash before the end of June to stay in business — a number more than three times the company’s earlier estimates. Previously, the company had said it needed roughly $600 million to satisfy its short-term liquidity needs.

The troubled lender cited numerous “adverse conditions” behind its latest cash needs, saying that a plan to sell $1.3 billion in assets collapsed and that “adverse movement of hedge collateral” had hurt the company’s financial position. The disclosure makes ResCap the latest financial firm to see its hedging strategies head south — Lehman Brothers Holdings Inc. (LEH: 31.43, +2.68%) has been facing speculation of similar problems, as well.

News of a cash crunch anew at the former subprime lending giant sent both GMAC and investor parent Cerberus Capital Management, L.P., which controls 51 percent of GMAC, scrambling to shore up the firm’s weakening cash position — to the tune of nearly $3 billion, including the short-term capital the lender said is needed to keep the doors open.

To help with cash needs, ResCap said in its SEC filing that it would draw $450 million this week from an amended credit facility provided to it by GMAC and secured by some of the company’s mortgage servicing rights; GMAC recently increased its available credit under that facility from $750 million to $1.2 billion, Rescap said. GMAC will also pump an additional $750 million to ResCap after agreeing to purchase RFC’s resort-finance business and buying the company’s mortgage servicing receivables.

For its part, Cerberus will provide roughly $1.2 billion in additional capital, after agreeing to buy ResCap’s model-home assets as well as serving as backstop for an “orderly sale” of the company’s performing and non-performing mortgages and associated mortgage-backed securities.

Debt offer flounders
ResCap said early Wednesday morning that it had extended a deadline for investors to exchange $14 billion in existing notes, so that the firm can ostensibly avoid heading for the bankruptcy heap; not encouraging, however, has been investors’ lackluster response to the offer, which for many would see them exchange current notes for debt with longer maturities and higher interest rates — but at the cost of receiving less than the face value of their current investment.

The company said Wednesday that approximately 80 percent of notes expiring this year and next had been tendered as of Tuesday evening; investors with longer maturities have been less receptive to the offer, however, with the lender disclosing that only 63 percent of notes with a maturity later than 2010 had been tendered.

Those numbers were little changed from levels reported in a separate SEC filing last month.

The fly in the ointment, HW’s sources say, is a proposed $3.5 billion senior secured credit facility that ResCap is attempting to secure from parent GMAC — the SEC filing said that ResCap is still “in negotiations” on the facility. Without it, sources suggested, ResCap faces an uncertain future.

“Investors are playing wait-and-see,” one source told Housing Wire Wednesday, a senior executive for a large private equity firm that asked not to be identified. That source suggested that the moves by Cerberus and GMAC signal that neither will likely let the troubled lender fall into bankruptcy, although a restructuring was likely in the offing in the very near future.

ResCap has been a drag on GMAC’s earnings for well over a year, and posted a $859 million loss during the first quarter.

Disclosure: The author held no positions in LEH when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

Metlife, the insurance giant, is making a bet that the housing market is bottoming out by purchasing residential mortgage lender First Horizon.  This purchase comes on the heels of their recent pick-up of reverse mortgage lender EverBank Financial.  I think they’re crazy to jump in at this point, but I don’t have a team of over-paid analysts, so what do I know.  If they have cash to burn short-term they may find some long-term advantage, but to me the risks seem severe at this point.

From Bloomberg on the purchase:

MetLife Inc., the largest U.S. life insurer, agreed to buy a residential mortgage business from First Horizon National Corp., expanding its bet on the U.S. housing market.

The purchase includes the home loan unit of First Horizon’s Tennessee Bank National Association outside of that state, with 230 offices in the U.S., the New York-based insurer said today in a statement. MetLife said it isn’t acquiring any subprime or Alt- A mortgages in the purchase. Terms weren’t disclosed.

MetLife is expanding its banking services after agreeing in April to buy a reverse mortgage specialist from Jacksonville, Florida-based EverBank Financial Corp. Life insurers including No. 2 Prudential Financial Inc. and Principal Financial Group Inc. reiterated last month their strategies of investing in mortgages even after the meltdown of the subprime home market prompted writedowns and stock drops.

“They’re probably calling a bottom on prices or close to it,” Alan Devlin, an analyst with Atlantic Equities LLP in London, said of MetLife in an interview. “It does tell you that they are willing to step in and make investments and confident enough in their capital levels.”

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