The Securities and Exchange Commission’s no-action letter that cleared the way for the Royal Bank of Scotland to register public offerings of covered bonds is likely to fuel demand for U.S. dollar-denominated covered bonds, according to Fitch Ratings. The SEC letter paves the way for issuers to offer covered bonds to a wider range of investors than previous bonds issued under the restrictive Rule 144A of the Securities Act of 1993, said Fitch analyst Vanessa Purwin. The rule provides a safe harbor from registration requirements for certain securities that are resold privately to qualified large...

More companies are seeking ratings for their warehouse lending facilities, but these programs require special consideration, according to a new report from DBRS. In the past, securitization warehouse facilities were mostly un-rated because they were completely executed and funded by banks or their conduits. But industry participants are now more keenly interested in assessing the relative risk of these entities, DBRS said. For instance, warehouse ABS may have a change in collateral composition thanks to a revolving period in warehouse facilities. To make up for this dynamism, other...

Most of the non-mortgage securitization market seems to be approaching the more normal levels that were seen prior to the financial crisis, according to market participants, analysts and observers gathered for the annual meeting of the American Securitization Forum this week in Washington, DC. “We’ve come a pretty long way, if you think about 2008, pre-2008 and post-crisis,” said Bob Behal, principal with The Vanguard Group. He noted that there have been healthy pricing levels in auto loan and credit card ABS and more active student loan and container sectors, as well as some interesting niche products and...

The Federal Deposit Insurance Corp. late last week filed separate lawsuits against a number of companies that issued or underwrote non-agency MBS purchased by Citizens National Bank and Strategic Capital Bank, two Illinois banks that failed in May 2009. The two banks purchased some $140.5 million of non-agency MBS issued by Bear Stearns, Citicorp, Credit Suisse and Merrill Lynch. The lawsuits also name JPMorgan Securities, Citigroup, Credit Suisse, Deutsche Bank, Ally Securities, HSBC Securities, RBS Securities and UBS Securities as underwriters of these transactions. The FDIC is seeking $77.0...

The Securities and Exchange Commission has given Royal Bank of Canada the green light to issue residential mortgage covered bonds registered in the U.S. The SEC granted permission through a no-action letter shortly after RBC submitted plans for a program through which covered bonds backed by U.S. home loans will be offered to U.S. investors. RBC is a “foreign private issuer” under U.S. securities laws and, as a Form S-3 issuer, has a registered shelf with the SEC through which it can offer multiple securities on an immediate, continuous or even on a delayed basis. Covered bonds are debt securities backed by cash...

Uncertainty lingers in the wake of last week’s announced $8.7 billion settlement between non-agency MBS investors and Ally Financial’s subsidiary Residential Capital as the details and implications of the deal resonate throughout the market. The agreement with 17 residential MBS investors was struck in a photo finish shortly before ResCap’s bankruptcy filing, and it represents the second major settlement between non-agency MBS investors and the sponsors of non-agency securitizations. Bank of America’s controversial $8.5 billion proposed settlement with investors that purchased Countrywide non-agency MBS...

While non-agency mortgage-backed security investors did not file a formal challenge to the $25.0 billion servicing settlement, they remain concerned with the implementation of principal forgiveness loan modifications. The latest qualms were raised last week in a letter to Shaun Donovan, secretary of the Department of Housing and Urban Development, from Sens. Sherrod Brown, D-OH, and Bob Corker, R-TN. “Because any settlement could dramatically affect [pension funds and retirement funds], their managers should ...

The still-developing market for real estate-owned property rentals is starting to get crowded. A number of firms have formed in recent weeks hoping to benefit from low prices on REO properties. Homebuilder Beazer Homes announced this month that it formed a private real estate investment trust to acquire, refurbish and lease single-family homes on a large scale in select markets. Beazer Pre-Owned Rental Homes was arranged by affiliates of Kohlberg Kravis Roberts & Co. and has approximately $85 million in funding ...

Effective June 2012, Ginnie Mae will provide monthly disclosures about accumulated multiple issuer pool (MIP) activity in terms of dollar amount and number of loans as well as by pool term, pool type and security interest. The information provided will apply to issuances for the current month. The disclosure will provide issuers and investors additional insight into the multiple issuer pools in process. However, the information can change any time until the completion of the MIP process at the end of the month, Ginnie Mae cautioned. A final list will be ...

With banks under increased pressure to manage their exposure to risks related to mortgage-backed securities and whole loans, Moody’s Analytics has updated its risk and capital allocation tool so clients can run their mortgage portfolio under various stressed scenarios and get a better handle on potential losses. The latest iteration of the Mortgage Portfolio Analyzer features an enhanced framework for modeling stressed macroeconomic scenarios, defaults, prepayments and severities. The tool that the firm has put together can “simultaneously benefit institutions that have portfolios of not...