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ABS Vegas: What’s holding the non-agency RMBS market back?
Industry leaders discuss what has to be resolved to revive it
Trey Garrison
February 10, 2015
What is stopping the marginal non-agency residential mortgage-backed securitization deal today, and if volume increases, what are the inhibitors to gaining scale in the market?
Those were just a few of the questions before a panel Tuesday at ABS Vegas 2015, the Structured Finance Industry Group/IMN capital markets conference at the Aria Resort & Casino in Las Vegas. This is the second ABS Vegas conference since the split of SFIG from the American Securitization Forum.
The panelists also discussed the competitive threat of cheaper funding through the GSEs, and how RMBS 3.0 help resolve the inhibitors.
Moderator Eric Kaplan, managing director at Shellpoint Partners, led the panel consisting of Larry Rubenstein, managing counsel at Wells Fargo; Patrick Tadie, group vice president of Global Capital Markets at Wilmington Trust; Stephen Kudenholdt, co-chair of the U.S. capital markets practice at Dentons; Cheryl Glory, managing director at Bank of America/Merrill Lynch, and Vincent Fiorillo, global sales manager at Doubleline Group.
More than 6,000 traders, investors and structured finance/securitization professionals turned out for the three-and-a-half day program, developed by leaders representing the full spectrum of industry participants including investors, issuers, financial intermediaries, regulators, law firms, accounting firms, technology firms, rating agencies, servicers and trustees.
“Volume in 2015 is likely to remain flat in prime jumbo originations,” Glory said. “The market is extremely fragile. The economics are negative to the way we view execution on a whole loan sale.”
She also said that another arena worth watching is money center banks.
“Money center banks are inelastic in their view of interest rate movements and (looking) to bring on their balance sheet jumbo loans,” Glory said. “Aggregates competing with money center banks to buy loans.”
On moving into non-QM focus, Glory had this to say:
“The performance on new issue jumbo has been stellar. Tremendous performance. I think we are trying to frame this market as we move onto a non-QM space and (it bears watching as a growth area),” she said
Kudenholdt said that a lot of the work on reps and warrants is wrapping up and “now what we’re focusing on a lot are the roles of transaction parties – we’re looking at 125 roles in transaction parties and assigning responsibility for those roles” such as trustee, owner trustee, document custodian role, and so on.
Specifics he emphasized included that the role of a trustee can’t be that of an originator, and that it’s unclear whether the fiduciary role would have prevented problems of the past or will prevent “some of the stuff people are fearful of going forward.”
Fiorillo said he wasn’t clear that the issue of reps and warrants is done.
“When did we find the agreement on reps and warrants? I’m wondering why I spend three hours a week talking with Treasury about what reps and warrants mean,” he said.
He said deals also need an ombudsman role with authority to execute problems in investments and servicing deals, as well as the adoption of simpler documents to make it easier for investors to look at a deal and move on.
Rubenstein, following Fiorillo, said that to the extent that there are future settlements and how they affect future PLS RMBS deals, those issues Fiorillo raised need to be resolved. But the two disagreed on where the responsibility lies on policing, on determining issues of misrepresentation, and what should protect servicers and investors.
“What Vince is saying is I need someone in the deal who is minding the shop,” Kaplan said.
Kudenholdt said that the industry is moving from an area of vast regulatory uncertainty to where most of the issues have been sorted out.
“That’s good for the market to have that uncertainty behind us,” he said. “The most important highlight for RMBS is that the RMBS industry is just not engaged in Reg AB 2. I haven’t found anyone in the pilot program for RMBS.”
Fiorillo said that he thinks the markets will get there, and the simplification is helping.
“I think we can get there. Simplification of the regs – what is fraud…” Fiorillo said.
“The only benefit today in the PLS market is we don’t have no-doc loans,” Glory said, interrupting.
“If I want to write 100% LTV loans – I should have the right to,” Fiorillo countered. “As long as we’re not putting the taxpayer on the hook.”
http://www.housingwire.com/articles/32899-abs-vegas-whats-holding-the-non-agency-rmbs-market-back
ABS Vegas: Consistency needed to ensure U.S. stays capital markets destination
Industry wants regulators to look at big picture of regs
Trey Garrison
February 10, 2015
The new risk retention rules and lending standards have served as an impediment to mortgage investors and the housing market.
That was the broad consensus of a panel focused Tuesday morning on regulatory issues at ABS Vegas 2015, the Structured Finance Industry Group/IMN capital markets conference at the Aria Resort & Casino in Las Vegas. This is the second ABS Vegas conference since the split of SFIG from the American Securitization Forum.
More than 6,000 traders, investors and structured finance/securitization professionals turned out for the three-and-a-half day program, developed by leaders representing the full spectrum of industry participants including investors, issuers, financial intermediaries, regulators, law firms, accounting firms, technology firms, rating agencies, servicers and trustees.
Moderator Jason H. P. Kravitt, a partner with Mayer Brown led the panel that included Calvin Wong, chief credit officer at Morningstar Credit Ratings; Sairah Burki, director, for the Structured Finance Industry Group; Katherine Hsu, chief of the Office of Structured Finance in the corporation finance division at the Securities & Exchange Commission, and Deborah Toennies, managing director at JP Morgan Securities.
“A lot of regulations have gone into securitizations, so there’s been an enormous amount of change, and there’s just as much, if not more, to come,” Toennies said. “Some of them will have as large if not a larger impact to the overall markets.
“I am hopeful someone in the regulatory community is taking a look at the entirety of markets to ensure we haven’t gone too far, from a crisis (that initiated these regulations) that will impede future growth.”
Similarly, Burki said there needs to be more consistency for investors.
“(There’s) a need in terms of consistency across jurisdictions — look at the difference between the United States and Europe (in terms of) risk retention, the high quality securities standard on our doorstep,” she said. “(We need to) build some kind of consistent framework globally.
Kravitt said he wishes regulators would respect the rules and regulations of other countries to facilitate investment, for instance the differences in originating mortgages in the United States versus European countries.
“(It) makes it difficult for the United States to be a capital markets destination,” Kravitt said.
http://www.housingwire.com/articles/32895-abs-vegas-consistency-needed-to-ensure-us-stays-capital-markets-destination?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire
Did anybody hear what was covered at this discussion?
Monday, February 9
3:45 PM PST
Counselor to the Treasury Secretary for Housing Finance Policy Michael Stegman
Panel Discussion at the Information Management Network’s 2015 ABS East Conference
Aria Resort & Casino
3730 Las Vegas Boulevard
Las Vegas, Nevada
Yes, we get our day in court, and she wants to know how and when discovery will be completed. The rest of us just need to hang on for the roller coaster ride to the end!
It is very heated, down to the nitty gritty, depositions, discovery, only the attorneys know the specifics.
no conference this Wed the 11th
131
02/09/2015 JOINT STATUS REPORT Regarding February 11, 2015 Status Conference, filed by USA. (Schwind, Gregg)
WB had his run with Fannie, Freddie years ago. He made millions!!! It seems like he has shied away since the 2008 Financial crisis. There are numerous reasons that he may be lying low for a while now. Even the latest Goldman Sachs revelation might be something, or not?
Patswil was posting the same thing. They're talking about communication to shareholders between 2006-08. It's not that easy for all posters to post snapshots, etc. Sorry! I'm probably totally budding in here.
I'd like to hear our questions asked, whether it's our congressmen in a hearing, the media, 60 minutes. Why aren't we getting our message out there?
I was thinking the same thing except I can't tell if it's a pre-recorded interview or live. But still!! Lew was just in front of US Reps this week and US Senate on another day this week. Where is anyone delivering our message? These are our elected, paid representatives, we need to be represented. Our questions should at least be asked! IMHO
I think this is what they are talking about. A lot of people have been asking, so thought I'd repost this. It's for shareholders during a certain timeframe.
Fannie Mae settles shareholder lawsuit for $170 million
By Jonathan Stempel
NEW YORK | Fri Oct 24, 2014
By Jonathan Stempel
NEW YORK (Reuters) - Fannie Mae (FNMA.OB) has reached a $170 million settlement of a lawsuit accusing it of misleading shareholders about its finances, risk management and mortgage exposure before it was seized by the U.S. government during the 2008 financial crisis.
The settlement, which requires court approval, was disclosed in a Friday filing with the U.S. District Court in Manhattan.
It resolves shareholder allegations that Fannie Mae defrauded shareholders and inflated its stock by issuing false and misleading statements about its internal controls, capitalization, accounting, and exposure to subprime and low-documentation "Alt-A" mortgages.
The settlement allocates $123.8 million to common stockholders and $46.2 million to preferred stockholders between Nov. 8, 2006 and Sept. 5, 2008.
Fannie Mae's market value peaked during that period at more than $60 billion. It is now $2.71 billion.
"We are pleased to put this matter behind us," Joseph Grassi, Fannie Mae's interim general counsel, said in a statement. "This is another sign of progress as Fannie Mae continues our focus on serving the market and helping lenders make mortgage credit available to qualified borrowers."
The government seized Fannie Mae and the smaller Freddie Mac (FMCC.OB) on Sept. 7, 2008, and put them into a conservatorship under the Federal Housing Finance Agency, where they remain.
Fannie Mae and Freddie Mac together drew about $187.5 billion of bailout funds, but have returned roughly $218.7 billion to taxpayers in the form of dividends.
The lead plaintiffs suing Fannie Mae are the Massachusetts Pension Reserves Investment Management Board, the State-Boston Retirement Board and the Tennessee Consolidated Retirement System, and are seeking class-action status.
They said the settlement averts potential "numerous and substantial risks" of continuing the lawsuit after similar litigation against Freddie Mac was dismissed last year.
"We're extremely pleased with the results, particularly in light of the dismissal of a similar lawsuit against Fannie Mae's sibling company, Freddie Mac," Daniel Greene, the chairman of State-Boston, said in a statement.
The law firms Labaton Sucharow and Berman DeValerio, which represent common stockholders, and Kaplan Fox & Kilsheimer, which represents preferred stockholders, plan to seek fees of as much as 20 percent of the settlement fund, court papers show.
A separate lawsuit over Fannie Mae's disclosures was brought in 2011 by the U.S. Securities and Exchange Commission against former Chief Executive Officer Daniel Mudd and former Chief Risk Officer Enrico Dallavecchia, and remains pending.
The SEC filed a similar lawsuit against former Freddie Mac officials, including onetime Chief Executive Officer Richard Syron.
The case is In re: Fannie Mae 2008 Securities Litigation, U.S. District Court, Southern District of New York, No. 08-07831.
(Reporting by Jonathan Stempel in New York; Editing by Chris Reese and Alan Crosby)
http://mobile.reuters.com/article/topNews/idUSKBN0LC0K820150208?irpc=932
@CNBCPR: .@CNBC Exclusive: @steveliesman sits w/ Treasury Secretary Jacob Lew for interview to air on Feb 9 on @SquawkCNBC: http://t.co/rcEs5g8XQg
Treasury Secretary Lew will be on CNBC Monday 6am EST.
Fairholme continues to add there. :)
http://m.gurufocus.com/news_read.php?id=314502
They seem to have the patience and most importantly the $$$$$.
I only caught that clip. We could go back over the video or email Sen Cardin. He said the community banks in his area of Maryland would like to buy back their preferred shares from the Treasury. Lew said, we could look into that.
Good news! Wise to keep a strong legal support team. They just repeated,
"We remain convinced that Treasury’s net worth sweep will ultimately be reversed and the GSEs’ future share prices will be a large multiple of their current prices"
Pershing Square Holdings Annual Update Presentation Jan 29, 2015
Hopefully, we'll hear something different with the next earning release.
We could have some fun with those extra billions of dollars the Treasury is swiping!
The numbers are all there for the court to see! Depositions coming up next! What is the government thinking?
U.S. budget deficit grew slightly in first four months of FY 2015-CBO
Reuters
2 hours ago
Budget deficit will hit Obama-era low of $468 billion in 2015, CBO forecasts MarketWatch
OTC BBFri, Feb 6, 2015 4:00 PM EST
WASHINGTON, Feb 6 (Reuters) - The Congressional Budget Office on Friday estimated a $195 billion U.S. budget deficit for the first four months of the current fiscal year, up from $183 billion in the same period last year.
The CBO said the $12 billion increase in the deficit for the October-January period was largely driven by lower payments to the U.S. Treasury this year from government-controlled mortgage finance groups Fannie Mae and Freddie Mac compared to the prior year period. Both receipts and outlays were up by about 8 percent, the non-partisan budget agency said.
(Reporting By David Lawder; Editing by Sandra Maler)
http://finance.yahoo.com/news/u-budget-deficit-grew-slightly-213154490.html?.tsrc=applewf
We could write our own song, "Discernment," or"Fiduciary duty,"
A fiduciary is a legal or ethical relationship of trust between two or more parties. Typically, a fiduciary prudently takes care of money for another person.
From another site, but good!thetruthaboutfannieandfreddie
THE TRUTH ABOUT FANNIE MAE AND FREDDIE MAC
“Dear Prudence”
Prudence: the ability to govern and discipline oneself by the use of reason; skill and good judgment in the use of resources. Merriam-Webster.
As we encourage those in government who are responsible for solving the current quagmire with Fan and Fred, we ask for them to apply Prudence. Perhaps our leaders can find inspiration from The Beatles.
“Dear Prudence”
By John Lennon and Paul McCartney
Dear Prudence, won’t you come out to play?
Dear Prudence, greet the brand new day
The sun is up, the sky is blue
It’s beautiful and so are you
Dear Prudence, won’t you come out to play?Dear Prudence, open up your eyes
Dear Prudence, see the sunny skies
The wind is low, the birds will sing
That you are part of everything
Dear Prudence, won’t you open up your eyes?Look around round
Look around round round
Look around
Dear Prudence, let me see you smile
Dear Prudence, like a little child
The clouds will be a daisy chain
So let me see you smile again
Dear Prudence, won’t you let me see you smile?
Dear Prudence, won’t you come out to play?
Dear Prudence, greet the brand new day
The sun is up, the sky is blue
It’s beautiful and so are you
Dear Prudence, won’t you come out to play?
It did come up. Cardin asked, Lew said he would look into it. :)
I'd like to hear it. Only a few people mention it.
Digra Ive,
you're thoughts? Is this off base?
Pentagon 2008 study claims Putin has Asperger's syndrome
Ray Locker
22 Hours Ago
USA Today
Vladimir Putin
Mikhail Klimentyev | RIA Novosti | Kremlin | Reuters
Vladimir Putin
A study from a Pentagon think tank theorizes that Russian President Vladimir Putin has Asperger's syndrome, "an autistic disorder which affects all of his decisions," according to the 2008 report obtained by USA TODAY.
Putin's "neurological development was significantly interrupted in infancy," wrote Brenda Connors, an expert in movement pattern analysis at the U.S. Naval War College in Newport, R.I. Studies of his movement, Connors wrote, reveal "that the Russian President carries a neurological abnormality."
The 2008 study was one of many by Connors and her colleagues, who are contractors for the Office of Net Assessment (ONA), an internal Pentagon think tank that helps devise long-term military strategy. The 2008 report and a 2011 study were provided to USA TODAY as part of a Freedom of Information Act request.
Read more from USA Today:
Pentagon studies Putin body language for hint of intent
Pentagon body movement study will track another leader
Pentagon think tank chief long focused on psych studies
Researchers can't prove their theory about Putin and Asperger's, the report said, because they were not able to perform a brain scan on the Russian president. The report cites work by autism specialists as backing their findings. It is not known whether the research has been acted on by Pentagon or administration officials.
The 2008 report cites Dr. Stephen Porges, who is now a University of North Carolina psychiatry professor, as concluding that "Putin carries a form of autism." However, Porges said Wednesday he had never seen the finished report and "would back off saying he has Asperger's."
Instead, Porges said, his analysis was that U.S. officials needed to find quieter settings in which to deal with Putin, whose behavior and facial expressions reveal someone who is defensive in large social settings. Although these features are observed in Asperger's, they are also observed in individuals who have difficulties staying calm in social settings and have low thresholds to be reactive. "If you need to do things with him, you don't want to be in a big state affair but more of one-on-one situation someplace somewhere quiet," he said.
PLAY VIDEO
Putin's actions have been under particular scrutiny since early 2014, when Russian annexed Crimea from neighboring Ukraine. Since then, Russia has backed Russian separatists in eastern Ukraine while the United States and European allies have started a series of economic sanctions that have weakened the Russian economy.
USA TODAY reported in March 2014 about the Office of Net Assessment's support for the research, but the Pentagon did not release the details of its studies. At the time, Pentagon officials said the research did not reach Defense Secretary Chuck Hagel or his predecessors. That is still true, said Lt. Col. Valerie Henderson, a Pentagon spokeswoman.
The Office of Net Assessment provides long-range plans for the Pentagon and helps shape future strategy. It has been particularly active in developing the military's "pivot to Asia," which has emphasized strategies to deal with China.
Read MoreHow the US made its Putin problem worse
Connors' team has done several studies on Putin for ONA beyond those from 2008 and 2011, Henderson said.
Connors' program is called Body Leads. Military contract records show the Pentagon has paid at least $365,000 on outside experts to work with her since 2009. The two reports mention other work she and associates have done since Putin's rise to power, including a 2005 study called "An Act of Trust to Move Ahead" and studies in 2004-05 and 2008 by movement pattern analysis pioneer Warren Lamb.
Both reports, the 2008 study of Putin and a 2011 analysis of Putin and then-President Dimitry Medvedev, cite Putin's physical difficulties as shaping his decision making and behavior. "His primary form of compensation is extreme control," which "is reflected in his decision style and how he governs," the report said.
Read MoreBeware: Putin, the wounded animal
Military analysts first noticed Putin's movement patterns on Jan. 1, 2000, "in the first television footage ever seen of the then, newly appointed president of Russia," wrote Connors, who has been studying movement patterns for the Pentagon since 1996.
"Today, project neurologists confirm this research project's earlier hypothesis that very early in life perhaps, even in utero, Putin suffered a huge hemispheric event to the left temporal lobe of the prefrontal cortex, which involves both central and peripheral nervous systems, gross motor functioning on his right side (head, rib cage, arm and leg) and his micro facial expression, eye gaze, hearing and voice and general affect," the report said.
MPA's history
PLAY VIDEO
Movement pattern analysis means studying an individual's movements to gain clues about how he or she makes decisions or reacts to events. First developed in Great Britain in the 1940s by Rudolf Laban, a Hungarian movement analyst and dance instructor, the practice was expanded after World War II by Lamb, Laban's protégé and a British management consultant.
Experts believe each individual has a unique "body signature" that tracks how one body movement links to the next. These "posture/gesture mergers" can lead investigators to learn more about a person's thinking processes and relative truthfulness when combined with the person's speaking.
Read MoreRussia extends olive branch to Greeks
Lamb, who died last year at age 90, believed the patterns were unique as DNA to each person.
Since July 2011, the war college had paid more than $230,000 to Richard Rende, a Brown University psychiatrist and specialist in the field of movement pattern analysis, federal spending records show. Rende received a no-bid contract last year for his work on the Body Leads project.
Timothy Colton, a Harvard University expert on Russia, has been paid $113,915 since 2009 for his research with Connors, military contract records show.
Read MoreBuffett: Buying in Western Europe, eyeing Russia
Rende, Connors and Colton published in September 2013 a paper in the academic journal Frontiers in Psychology that detailed the uses of movement pattern analysis to determine leaders' decision-making process. Such analysis, they wrote, "offers a unique window into individual differences in decision-making style."
"The premise of Body Leads," Connors wrote in 2011, "is that meticulous attention to nonverbal signals — to the physical movement of the body and its parts, as distinct from speech — yield insights into the behavior of individuals, including for present purposes political leaders."
Read MoreWhat the US needs to do to defeat ISIS
Tandem style
In 2011, Connors finished a study for Net Assessment on the interactions between Putin and Medvedev, who succeeded Putin as president between 2008 and 2012 and who is now Russia's prime minister.
The difficulty in getting accurate, real-time information about Russia and its leaders made the use of movement pattern analysis critical for U.S. officials, Connors wrote. Lamb, she wrote, analyzed Medvedev in the spring and summer of 2008, and they worked together to develop their analysis of the two leaders.
Medvedev, she wrote, is an "Action Man," who "is inclined to size up situations quickly and to do so in black and white terms, shunning subtler shades of gray."
Read More'Active discussions' in administration on arming Ukraine, officials say
Putin, on the other hand, "has very different predilections," and "methodically cycles back to aspects of the problem facing him, continuing revising data to verify his research and confirm his priorities," the report said.
U.S. officials should present "the information-craving" Putin with "meaty policy research and white papers," Connors recommended. "Putin the private decision maker cannot be expected to enter into public exchanges with others on information interpretation or a final course of action."
Medvedev, she wrote, should be presented with "priorities that both resonate with his values and declared objectives and contain a timeline for commitment, the stage where he is most at home."
Lew will be on CNBC at 6am est Monday, might as well tweet our questions! No one else is asking him any questions about Fannie, Freddie!!
REGULATORY RELIEF FOR COMMUNITY BANKS AND CREDIT UNIONS
Tuesday, February 10, 2015
10:00 AM - 12:00 PM
538 Dirksen Senate Office Building
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS will meet in OPEN SESSION to conduct a hearing on the “Regulatory Relief for Community Banks and Credit Unions.” The witnesses will be Mr. Toney Bland, Senior Deputy Comptroller for Midsize and Community Bank Supervision, Office of the Comptroller of the Currency; Ms. Doreen Eberley, Director of Risk Management Supervision, Federal Deposit Insurance Corporation; Mr. Larry Fazio, Director, Office of Examination and Insurance, National Credit Union Administration; Ms. Candace Franks, Commissioner, Arkansas State Bank Department on behalf of the Conference of State Bank Supervisors; and Ms. Maryann Hunter, Deputy Director of the Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System.
All hearings are webcast live and will not be available until the hearing starts. Individuals with disabilities who require an auxiliary aid or service, including closed captioning service for webcast hearings, should contact the committee clerk at 202-224-7391 at least three business days in advance of the hearing date.
Praying for you for comfort, strength and peace! Hang in there!
Treasury Secretary Lew will be on CNBC Monday, 6AM EST
Good update, Ripcord01. Freddie CEO said we would see new developments every month or so.
Party time!!! Thanks SP!
It is very exciting. Can you elaborate a little for us here on the Board. It would be fun to talk about the good news for a while! :)
Redactions were due yesterday. I don't see anything posted yet. Hopefully, someone here will have a public transcript to share with us.
very simple, gov wanted to add info from Iowa's ruling to case, plaintiff responded to that. Not too big of a deal.
sounds that way
This is the latest
130
02/05/2015 RESPONSE to 129 Notice of Additional Authority , filed by All Plaintiffs. (Cooper, Charles)
Why don't you find out and have a sen or rep ask the question?
Lew was before senate finance committee today about the budget. The part I brought up was Sen Cardin was giving the community banks in his area a voice saying, they would like to buy back the preferred shares from the Treasury. I would just like someone to speak directly on our behalf to Lew, etc.
redactions due today, I don't see any redactions yet!!