Up to 55 bps off rate on 5-Year Fixed Period ARM Refinance with combined Rate Specials.
This summer, Countrywide®, America's Wholesale Lender® is cranking up the heat with non-prime specials designed to help accelerate your business. The rate specials detailed below can be combined for maximum savings (up to 55 bps off rate on 5-Year Fixed Period ARM Refinance) or utilized separately depending on your borrowers' needs.
Non-Prime Summer Rate Specials*:
ARM Rate & Term and Cash-Out Refinance Specials
35 bps off rate on Full Doc with ≤ 80% LTV
25 bps off rate on Full Doc with ≥ 80.01% to 90% LTV
25 bps off rate on Stated Doc with ≤ 85% LTV
5-Year Fixed Period ARM Special
20 bps off rate
Rate Specials available on:
Approved applications submitted between July 9 and July 30, 2007
Loan files that fund within 30 days of approval
As an example of how valuable the rate specials can be to your qualified borrowers, combining the specials above with our already low rate on the 5-Year Fixed Period ARM Refinance may provide an option that is up to 70 bps lower than our traditional Fixed Rate product.
The amazing thing about the chart is that there are double-digit deliquency rates even before the ARMs kick in.
Also, a number of the lenders have "kinks" early in the graphs, before rising sharply; wonder if there are some special "first 3-months" sales incentives that account for this initial grace period?
Finally, doing consistently worse than New Century must make a firm feel the chill breath of BK down its back...
Please be advised that we have some changes coming that could effect qualifying your loans, this will affect loans that are approved and not locked as well. Remember you are not protected from guideline changes and price adjustments if your loans are not locked.
I can not go into specifics as I don't have the full information as of yet, just wanted to give you a heads up for any loans that you may have currently floating which could be effected! Loans must be locked by the 13th to avoid potential issues.
Also, a number of the lenders have "kinks" early in the graphs, before rising sharply; wonder if there are some special "first 3-months" sales incentives that account for this initial grace period?
It could be the LO or broker helped the borrower pay the first 3 months of mortgage payments. Most broker agreements I have seen the broker has to pay back all commission/YSP if the borrower defaults in the first 3 months.
I just got off the phone with one of our investors. A large part of the call had to do with Stated Income loans and what is a reasonable income. I have been informed that all investors in New York who eventually purchase most every loan from all correspondents and brokers are now very critical of what income is being used on a stated income loan and they are quickly turning back loans where the feel the income stated is to high for the occupation on the application. Our investor's comment was "You won't believe how many stated loans are being kicked out of our pools right now".
Just a little bit of color regarding S&P's, um, "oversight" of the mortgage insurance. All classes remaining on CreditWatch pending resolution of the issuer's appeal due to the existence of MI belong to NovaStar Financial. Use of deep MI has been something NovaStar has long claimed as a competitive advantage. MGIC looks to be the bagholder for those tranches.
After checking out that performance of the Fremont loans, you have to wonder how Newcastle's 2007-1 deal will fare. Newcastle (NCT) is the specialty finance REIT backed by Fortress Investment Group. Fortress was widely rumored to have been the buyer of most of Fremont's subprime portfolio. Those loans were likely packaged and sold today in Newcastle's 2007-1 deal. See portions of release excerpted below:
NEW YORK, July 12 /PRNewswire-FirstCall/ -- Newcastle Investment Corp. (NYSE: NCT - News) today announced the securitization of the subprime residential mortgage loans purchased in March and April 2007. Newcastle originally agreed to purchase $1.70 billion of loans. Following due diligence, Newcastle funded $1.27 billion or approximately 75% of the original commitment. The agreement between the seller and Newcastle requires the seller to repurchase any delinquent loans for 3 months following Newcastle's acquisition. As a result of the repurchases as well as borrower prepayments, the unpaid principal balance of the portfolio as of securitization is $1.09 billion.
A little off topic but the Economist (out today online) sheads light on where some of the demand for AAA-CDO tranches is coming from and why. I don't recall seeing this before.
"But the questions being asked of the agencies are important because banks around the world have been filling their vaults with AAA-rated structured products ahead of international implementation of the Basel 2 regulations on bank capital. Under this new accord, a bank holding triple-A assets is allowed to keep less capital, enabling it to lend more. So banks have stocked up, especially on CDOs. If they were forced to sell securities that had been downgraded, liquidity could dry up."
It could be the LO or broker helped the borrower pay the first 3 months of mortgage payments. Most broker agreements I have seen the broker has to pay back all commission/YSP if the borrower defaults in the first 3 months.
I forgot to add that the broker also has to buy the loan back. That would kill a lot of small broker shops.
i'm not entirely convinced they've caught all the pools that shouldn't have been included. who cares at this point though they'll just go in the later downgrades.
GE is going to have to pay somebody to buy WMC. They already laid off most of the company. The only assets they most likely have left are toxic mortgages.
These guys were the kings of the 80/20 loans.
We all know how the 20's are performing.
Maybe Cerebus can buy them and merge them with Options One.
A subprime loan 59 days past due is not even reported as 30 days delinquent since subprime services use the OTS method (give whoever thought of this a medal):
"Under the OTS method, a loan is considered delinquent if a monthly payment has not been received by the close of business on the loans due date in the following month. Therefore a loan with a due date of 8/1/02, with no payment received by the close of business on 8/31/02, would have been reported as current on the September statement to certificateholders. Assuming no payments are made during September, the loan would be reflected as delinquent on the October statement."
"Under the MBA method, a loan would be considered delinquent if payment had not been received by the end of the day immediately preceding the loans next due date (generally the last day of the month which the payment was due). Using the example above, a loan with a due date of 8/1/02, with no payment received by the close of business on 8/31/02, would have been reported as delinquent on the September statement to certificate holders."
Explanation courtesy of the working stiffs at S&P.
Executives at the San Diego County Employees Retirement Association plan to search for six to nine managers for its $1.4 billion alpha engine within the next 12 months, said Brian White, chief executive officer of the $8.4 billion fund.
Under its new tactical plan, adopted June 21, the association is adding long/short equity, event-driven and relative value managers to diversify the in-house fund of funds that represents the plans entire domestic large-cap equity exposure, Mr. White said.
The associations new tactical target suballocations for the program are 5% to long/short equity, 15% opportunistic, 20% event driven and 60% relative value. Currently, the program has 2% long/short equity, 13% opportunistic, 20% event-driven and 65% relative value.
Funding will come from a combination of cash and portfolio reductions to some managers in the program.
Both S&P and Moody's now project cumulative losses for subprime loans originated in 2006 to reach as high as 14 percent, more than double projections at the start of the year.
"That's a huge change in their projections and has huge implications for the market," said Inna Koren, an analyst at Barclays Capital in New York.
Does it make sense that in two days the whole world Aluminum industry ios worth 30% more ?
I am assuming AA will be bought for $52/share (+-)
Sorry it does make any sense to me. Was there new Aluminum found ? Prices higher than they were a week ago ? Price estimate for the future changed drastically ?
or is it all just mad money chaching more and more "control" like two Russian oligarch paying any amount just to own the "better" English soccer club than the other guy.
I found it interesting that almost all of the differences in the chart on delinquencies were due to the first three months. After that the slopes are about the same. I would have thought that some of the "high quality" operations, like CFC would have done better. As mentioned above, it just looks like they cover the first three months.
After all, you can't get 90 days past due 30 days after closing
Remember that this chart is months seasoning of the deal, not the loans. So a significant number of the loans were one or two months old when the deal closed; some were undoubtedly older than that.
Can someone slpain how the support classes can get downgraded, but not the senior classes? wouldn't the impact of reduced support apply across the entire structure?
Can someone slpain how the support classes can get downgraded, but not the senior classes? wouldn't the impact of reduced support apply across the entire structure?
Well, first of all, that's one of the changes to the surveillance methodology they're talking about--notching the upper classes along with the lower classes.
It is true that "normally" (yeah, right) you get fast enough amortization on the top tranches so that by the time the downgrades come in on the subs there's not much above A left to downgrade. What they're struggling with now is that this vintage went south so fast that those senior bonds are still out there, and given the drop in prepayment speeds, they're gonna be out there for a while.
L'brothers is wrong this is just the beginning of a long term credit contraction.
Just watch the the central banks around the world raising their rates, commentaries about the highly leveraged commercial real estate loans, huge corp debt not likely to be serviced in the future.
Leverage trumping over credit worthiness. Debt loads greater then the values of the assets.
The incremental risk aversion now evident in the financial markets seems to us to be a sign that the financial liquidity spigot is starting to tighten,'' Richard Bernstein, chief investment strategist at Merrill Lynch & Co. in New York, said in a research note. ``The childhood alliteration to remember how to turn a spigot isrighty-tighty, lefty-loosey.' It's now righty- tighty time for the financial markets.''
Yal asked: "and now a question to banker and Sebastian:
Does it make sense that in two days the whole world Aluminum industry is worth 30% more?..."
Not to me. I imagine the buyers are overpaying. Large, high-profile buyouts and mergers like these are often exercises in "empire-building" and not genuinely based on sound business principles.
That said, however, overpaying with cash is not nearly as significant a sign of rampant speculation as overpaying with stock.
Dear Valued Business Partner:
Up to 55 bps off rate on 5-Year Fixed Period ARM Refinance with combined Rate Specials.
This summer, Countrywide®, America's Wholesale Lender® is cranking up the heat with non-prime specials designed to help accelerate your business. The rate specials detailed below can be combined for maximum savings (up to 55 bps off rate on 5-Year Fixed Period ARM Refinance) or utilized separately depending on your borrowers' needs.
Non-Prime Summer Rate Specials*:
ARM Rate & Term and Cash-Out Refinance Specials
35 bps off rate on Full Doc with ≤ 80% LTV
25 bps off rate on Full Doc with ≥ 80.01% to 90% LTV
25 bps off rate on Stated Doc with ≤ 85% LTV
5-Year Fixed Period ARM Special
20 bps off rate
Rate Specials available on:
Approved applications submitted between July 9 and July 30, 2007
Loan files that fund within 30 days of approval
As an example of how valuable the rate specials can be to your qualified borrowers, combining the specials above with our already low rate on the 5-Year Fixed Period ARM Refinance may provide an option that is up to 70 bps lower than our traditional Fixed Rate product.
The amazing thing about the chart is that there are double-digit deliquency rates even before the ARMs kick in.
Also, a number of the lenders have "kinks" early in the graphs, before rising sharply; wonder if there are some special "first 3-months" sales incentives that account for this initial grace period?
Finally, doing consistently worse than New Century must make a firm feel the chill breath of BK down its back...
And this little email from my AE at Aurora
FYI,
Please be advised that we have some changes coming that could effect qualifying your loans, this will affect loans that are approved and not locked as well. Remember you are not protected from guideline changes and price adjustments if your loans are not locked.
I can not go into specifics as I don't have the full information as of yet, just wanted to give you a heads up for any loans that you may have currently floating which could be effected! Loans must be locked by the 13th to avoid potential issues.
Thank you,
I am sorry, but I have to admit that this story is addicting. Where is the popcorn?
Also, a number of the lenders have "kinks" early in the graphs, before rising sharply; wonder if there are some special "first 3-months" sales incentives that account for this initial grace period?
It could be the LO or broker helped the borrower pay the first 3 months of mortgage payments. Most broker agreements I have seen the broker has to pay back all commission/YSP if the borrower defaults in the first 3 months.
tranches of love,
Keep us updated of the guideline changes.
tranches of love --- The BEST screen name ever. You have my utmost respect.
Won't hurt the big banks. They can make it up in the stock market on long and short holdings.
This came from our boss the other day:
I just got off the phone with one of our investors. A large part of the call had to do with Stated Income loans and what is a reasonable income. I have been informed that all investors in New York who eventually purchase most every loan from all correspondents and brokers are now very critical of what income is being used on a stated income loan and they are quickly turning back loans where the feel the income stated is to high for the occupation on the application. Our investor's comment was "You won't believe how many stated loans are being kicked out of our pools right now".
I'd be interested to see who the servicers are that are handling the downgraded carp. I'd be willing to bet that you could count them on one hand.
Just a little bit of color regarding S&P's, um, "oversight" of the mortgage insurance. All classes remaining on CreditWatch pending resolution of the issuer's appeal due to the existence of MI belong to NovaStar Financial. Use of deep MI has been something NovaStar has long claimed as a competitive advantage. MGIC looks to be the bagholder for those tranches.
ltv now lt
After checking out that performance of the Fremont loans, you have to wonder how Newcastle's 2007-1 deal will fare. Newcastle (NCT) is the specialty finance REIT backed by Fortress Investment Group. Fortress was widely rumored to have been the buyer of most of Fremont's subprime portfolio. Those loans were likely packaged and sold today in Newcastle's 2007-1 deal. See portions of release excerpted below:
NEW YORK, July 12 /PRNewswire-FirstCall/ -- Newcastle Investment Corp. (NYSE: NCT - News) today announced the securitization of the subprime residential mortgage loans purchased in March and April 2007. Newcastle originally agreed to purchase $1.70 billion of loans. Following due diligence, Newcastle funded $1.27 billion or approximately 75% of the original commitment. The agreement between the seller and Newcastle requires the seller to repurchase any delinquent loans for 3 months following Newcastle's acquisition. As a result of the repurchases as well as borrower prepayments, the unpaid principal balance of the portfolio as of securitization is $1.09 billion.
A little off topic but the Economist (out today online) sheads light on where some of the demand for AAA-CDO tranches is coming from and why. I don't recall seeing this before.
"But the questions being asked of the agencies are important because banks around the world have been filling their vaults with AAA-rated structured products ahead of international implementation of the Basel 2 regulations on bank capital. Under this new accord, a bank holding triple-A assets is allowed to keep less capital, enabling it to lend more. So banks have stocked up, especially on CDOs. If they were forced to sell securities that had been downgraded, liquidity could dry up."
It could be the LO or broker helped the borrower pay the first 3 months of mortgage payments. Most broker agreements I have seen the broker has to pay back all commission/YSP if the borrower defaults in the first 3 months.
I forgot to add that the broker also has to buy the loan back. That would kill a lot of small broker shops.
They must have a different definition of "serious delinquency" than I do.
I thought serious delinquency meant 90+ past due, but that can't be what they mean.
After all, you can't get 90 days past due 30 days after closing
Option One and Wells Fargo must have pretty good servicing units. Opt1 actually drove the number down from months 1 to 3.
BTW, the excerpted article in the Economist is titled:
"AAAsking for trouble"
Cute.
"but you can trust us. we know what we're doing, i swear."
i'm not entirely convinced they've caught all the pools that shouldn't have been included. who cares at this point though they'll just go in the later downgrades.
either way what an embarassing bunch of idiots.
Riddler,
Tanta said in a prior post that unlike the prime world, the subprime world places a loan 59 days past due in the 30 day bucket.
News:
GE to sell subprime unit:
GE to Sell Its Subprime Unit - WSJ.com
BankUnited warns (alt-a):
Expired
"GE to sell subprime unit"
GE is going to have to pay somebody to buy WMC. They already laid off most of the company. The only assets they most likely have left are toxic mortgages.
These guys were the kings of the 80/20 loans.
We all know how the 20's are performing.
Maybe Cerebus can buy them and merge them with Options One.
Riddler, it is worse than I thought.
A subprime loan 59 days past due is not even reported as 30 days delinquent since subprime services use the OTS method (give whoever thought of this a medal):
"Under the OTS method, a loan is considered delinquent if a monthly payment has not been received by the close of business on the loans due date in the following month. Therefore a loan with a due date of 8/1/02, with no payment received by the close of business on 8/31/02, would have been reported as current on the September statement to certificateholders. Assuming no payments are made during September, the loan would be reflected as delinquent on the October statement."
"Under the MBA method, a loan would be considered delinquent if payment had not been received by the end of the day immediately preceding the loans next due date (generally the last day of the month which the payment was due). Using the example above, a loan with a due date of 8/1/02, with no payment received by the close of business on 8/31/02, would have been reported as delinquent on the September statement to certificate holders."
Explanation courtesy of the working stiffs at S&P.
That should have been "subprime servicers" (not subprime services)
Ok, Ok,
Let me ask the burning question. Who knows what method AltA servicers use to report delinquencies, OTS or MBA?
I suspect MBA since many large prime shops do AltA, but not many subprime shops do.
Heaven help us if I am wrong about that.
ALPHA ENGINE
Executives at the San Diego County Employees Retirement Association plan to search for six to nine managers for its $1.4 billion alpha engine within the next 12 months, said Brian White, chief executive officer of the $8.4 billion fund.
Under its new tactical plan, adopted June 21, the association is adding long/short equity, event-driven and relative value managers to diversify the in-house fund of funds that represents the plans entire domestic large-cap equity exposure, Mr. White said.
The associations new tactical target suballocations for the program are 5% to long/short equity, 15% opportunistic, 20% event driven and 60% relative value. Currently, the program has 2% long/short equity, 13% opportunistic, 20% event-driven and 65% relative value.
Funding will come from a combination of cash and portfolio reductions to some managers in the program.
http://www.pionline.com/apps/pbcs.dll/article?AID=/20070709/PRINTSUB/70706018/1031/TOC
Did'nt they roll the dice with Amaranth ?
Bagholder ho..., starboard side.
Both S&P and Moody's now project cumulative losses for subprime loans originated in 2006 to reach as high as 14 percent, more than double projections at the start of the year.
"That's a huge change in their projections and has huge implications for the market," said Inna Koren, an analyst at Barclays Capital in New York.
612 placed on credit watch July 10
498 downgraded
26 remain on credit watch
74 affirmed
9 were not supposed to be included
498+26+74+9 = 607
What happened to the other 5?
These clowns need to be jacked off with a handfull of cockleburs.
Hey, what's to worry, it's different this time!!!
For the color blind can someone list the ranking in the delinq chart ?
TIA.
Tanta,
What does it mean when they down garde 1.3% (+-) of the bonds under rating ?
What about the other 98.7% ?
they have not yet reviwed them (no time) or they review and they are OK ?
are we going to see a down grade of 1.3% every week now ? that is the rate they can work but not faster ???
Yal:
From highest to lowest :
Long Beach, Fremont, WMC, New Century, Countrywide, Option One, Wells Fargo
Thanks !
an now a question to banker and Sebastian:
Does it make sense that in two days the whole world Aluminum industry ios worth 30% more ?
I am assuming AA will be bought for $52/share (+-)
Sorry it does make any sense to me. Was there new Aluminum found ? Prices higher than they were a week ago ? Price estimate for the future changed drastically ?
or is it all just mad money chaching more and more "control" like two Russian oligarch paying any amount just to own the "better" English soccer club than the other guy.
chaching = chasing.
I found it interesting that almost all of the differences in the chart on delinquencies were due to the first three months. After that the slopes are about the same. I would have thought that some of the "high quality" operations, like CFC would have done better. As mentioned above, it just looks like they cover the first three months.
After all, you can't get 90 days past due 30 days after closing
Remember that this chart is months seasoning of the deal, not the loans. So a significant number of the loans were one or two months old when the deal closed; some were undoubtedly older than that.
don't worry mark hulbert is with us
Contrarians believe that further market gains are likely Mark Hulbert - MarketWatch
Not only in housing, credit markets have also "bottomed":
Lehman Says Worst Is Over in Credit Markets, Buy Corporate Debt - Bloomberg.com
Can someone slpain how the support classes can get downgraded, but not the senior classes? wouldn't the impact of reduced support apply across the entire structure?
Can someone slpain how the support classes can get downgraded, but not the senior classes? wouldn't the impact of reduced support apply across the entire structure?
Well, first of all, that's one of the changes to the surveillance methodology they're talking about--notching the upper classes along with the lower classes.
It is true that "normally" (yeah, right) you get fast enough amortization on the top tranches so that by the time the downgrades come in on the subs there's not much above A left to downgrade. What they're struggling with now is that this vintage went south so fast that those senior bonds are still out there, and given the drop in prepayment speeds, they're gonna be out there for a while.
Yal,
L'brothers is wrong this is just the beginning of a long term credit contraction.
Just watch the the central banks around the world raising their rates, commentaries about the highly leveraged commercial real estate loans, huge corp debt not likely to be serviced in the future.
Leverage trumping over credit worthiness. Debt loads greater then the values of the assets.
Not to mention our national debt.
More from Bloomberg
CDOs Lose Marbles; Credit `Kerplunks!': Mark Gilbert (Update1) - Bloomberg.com
The incremental risk aversion now evident in the financial markets seems to us to be a sign that the financial liquidity spigot is starting to tighten,'' Richard Bernstein, chief investment strategist at Merrill Lynch & Co. in New York, said in a research note. ``The childhood alliteration to remember how to turn a spigot isrighty-tighty, lefty-loosey.' It's now righty- tighty time for the financial markets.''
Yal asked: "and now a question to banker and Sebastian:
Does it make sense that in two days the whole world Aluminum industry is worth 30% more?..."
Not to me. I imagine the buyers are overpaying. Large, high-profile buyouts and mergers like these are often exercises in "empire-building" and not genuinely based on sound business principles.
That said, however, overpaying with cash is not nearly as significant a sign of rampant speculation as overpaying with stock.
Sebastia
Dean Baker has a post about how to milk money out of the treasury via goodwill....you need look no further for a driver of LBOs.