What’s with all these public CMBS offerings?  And what about all that rule-making?  The registered market has otherwise been frozen since the pre-crisis days, and the cloud of heavy-handed regulation looming over our heads is anything but an invitation to dust off your public shelf.  Moreover, given that some of those regulations may be (or have been) applied in the 144A context, shouldn’t one be concerned about the private market before we even think about re-entering the public space?  And all of that is without even considering the general mid-year market slump.  To address these critical questions and the state of the galaxy as we know it, CREFC held an after-work seminar recently, hosted by Dechert, entitled “Review and Outlook for Public CMBS Offerings.”Continue Reading Summary of a CREFC After-Work Seminar: The Return of the Public Deal or the Regulator Strikes Back?

The other week, I was musing in this blog about the likelihood of more AIB and Bank of Ireland type auctions of U.S. Dollar denominated assets by European banks. In the Wall Street Journal, on Friday, September 23rd, the headline was “Banks in France Cut Dollar Loans”. The article focuses on two of France’s biggest banks, BNP Paribas and Société Générale, jettisoning U.S. Dollar denominated assets.

And then, the news about Dexia broke on October 10th. Dexia is a huge French-Belgian bank, though with a lesser profile here in the States than its more famous Parisian and Brussels-based sisters. The French, Belgian and Luxembourgian governments immediately swooped in to guarantee deposits and provide credit support and began chitchatting about a good-bank, bad-bank fix. The reaction in the markets has been curiously muted. Dexia is huge. Its reported balance sheet is more than 500 billion euros. (And, of course, Dexia had been reporting Tier 1 capital of 10% a couple of months ago. How’d that happen? But that’s a different story.)Continue Reading Always Look on the Bright Side of Life: How Dexia’s Failure Could be Good for Capital Formation

The fallout from Ibanez continues in the Bay State.  As I (fearfully) predicted earlier this year, the SJC of Massachusetts (in its second foreclosure-related ruling of 2011) has affirmed a lower court’s decision in Bevilacqua v. Rodriguez.  The SJC ruled Tuesday that Mr. Bevilacqua lacked clear title to a home he purchased from U.S. Bank (which had …

Ahh, Miami. I’d say it’s good to be back here at the Fontainebleau for ABS East 2011 but it’s been pouring and exceptionally windy so my time outdoors will be limited.  Dechert attorneys Mac Dorris, Ralph Mazzeo, John Timperio, Cindy Williams, Larry Berkovich, Lorien Golaski, Andrew Pontano and I hosted a well-attended cocktail party Sunday night. It was great to catch up with our friends/clients in person.

Monday morning began with a general session where some blurbs about risk retention from this October 14 New York Times article were projected on two very large screens. I later attended the “Evolving Risk Retention Requirements” panel before lunch. It’s been a while since the joint regulators released the credit risk retention NPR back in March of this year. In response, hundreds of comment letters were submitted. Click here for the ones posted by the SEC. We have blogged repeatedly on this topic here at CrunchedCredit.

Recently there has been chatter that the regulators may re-propose a new risk retention rule for comment in lieu of promulgating a final rule.Continue Reading 2011 ABS East Conference

Not only is football back, but so is Reg AB II. Just as enduring as our love of tailgating and touchdowns is our love of transparency in the capital markets. On the heels of yet another Reg AB comment deadline (see re-proposed rule here (pdf)) now is a good time to check the score. Dechert continues to participate in committee (and subcommittee) discussions with industry specialists and we were happy to serve as nose tackle for the drafting of CREFC’s response/comment letter (see CREFC comment letter here (pdf)). So where do we stand with shelf registration eligibility requirements now that Dodd-Frank and its related regulations have addressed some of the issues included in the second round of Regulation AB from April 2010 (i.e., Reg AB II)?

There is still plenty to talk about with respect to Reg AB II, but some issues are now being dealt with elsewhere. Risk retention was addressed by March 2011’s Dodd-Frank rules and on-going ’34 Act reporting by ABS issuers was addressed by Dodd-Frank’s Section 942(a) and Rule 15Ga-1. Both of those issues have been removed from the scope of Reg AB II. The previous discussion concerning confirmation of reps and warranties has evolved, as detailed below, into a discussion about the role of a credit risk manager and procedures related to repurchase dispute resolution. At least one thing that is still clear: credit ratings are to be eliminated from the shelf eligibility test.Continue Reading Reg AB II Revisited: Fourth and Goal

A few weeks ago the Congressional Budget Office (CBO) released a white paper entitled “An Evaluation of Large-Scale Mortgage Refinancing Programs,” analyzing the potential impact of a so-called stylized refinancing program (more on that in a minute) that would promote widespread mortgage refinancing (or so they say..more on that too).Continue Reading Thoughtful Refinancing or Lipstick on a Pig?

My team and I have spent the better part of the past eight weeks dealing with Irish loans and other portfolios of…stuff. While the conduit market was imploding, pipelines were being aggressively repriced and loan production was shifting into a very low gear, there has been a full scale feeding frenzy for portfolios of seasoned loans. While new loan originations were being dragged through the knot hole of torturous and ultimately paralytic analysis, millions of dollars were spent in high speed car chases for billions of dollars of seasoned loans in awkward, brief and brutal auctions.

Cognitive dissonance anyone? These are alternate universes. In the Ordinary Course Loan Origination Universe, every proposal suffers the death of a thousand cuts: “OK, maybe it’s a pretty good loan but I need to really understand what happens if the anchor tenant leaves, the president of the management company gets arrested and an asteroid hits Ohio. What exactly happens in the cash flow?”  In the Alternate "Bid ‘Em Up Universe", crappy reps, document defects and weird deal features? Fine! Win the bid!
 Continue Reading And the Momentum is Going Which Way?

Returning from a Labor Day weekend spent cleaning up after Irene, here are some notes as I clean out the desk drawer of Summer 2011: 

  • I spent the first week of August with my family on Martha’s Vineyard as the Dow Jones lost 1000 points, bond spreads blew out, securitized lending ground to a halt and the United States lost its triple-A credit rating. Past that, it seems the market held things together pretty well in my absence.
  • Not altogether unsurprising, but still notable that during the trading days following the U.S. downgrade, treasury yields decreased, leaving some doomsday investors scratching their heads. Of course, the thing about betting on the end of the world is that you can only be right once.
  • The third week of August saw the release of almost simultaneous reports that residential mortgage interest rates hit all-time lows and residential mortgage applications hit 15-year lows.
  • Meanwhile, the FHFA is suing 17 or so of the nation’s largest banks for billions in losses incurred during pre-bubble subprime securitizations. Many analysts are asking when (if?) the U.S. will stop punishing banks.

Continue Reading Summer Winds

On August 17, the final rules from the SEC came out (“Rules”) regarding an ABS issuer’s duty to file Exchange Act reports — specifically, if and when an issuer can suspend reporting.

The Rules specify that, effective September 22, the duty to file periodic reports under the Exchange Act will be suspended if all outstanding ABS are held by affiliates of the depositor or if no ABS are outstanding.

Before the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the obligation to file certain Exchange Act reports was automatically suspended for any fiscal year after the year in which the issuer’s registration statement became effective or, for offerings of ABS shelf takedowns, the fiscal year after the takedown. Prior to the Dodd-Frank Act, most ABS issuers could and did take advantage of the suspension. Section 942(a) of the Dodd-Frank Act amended Section 15(d) of the Exchange Act by eliminating the automatic suspension of the duty of ABS issuers to file Exchange Act reports for transactions in which the ABS are held by fewer than 300 persons and authorized the SEC to issue rules providing for the suspension or termination of an ABS issuer’s reporting obligations.Continue Reading SEC Clarifies Exchange Act Reporting for ABS Issuers

Sure, vacant properties bring to mind decay, blight, vandalism and the like, and Chicago’s south and west sides are plagued (pdf) with vacant properties; but is the answer requiring lenders to shoulder the responsibility (and liability) for the maintenance and upkeep of these properties?

Chicago Mayor Rahm Emanuel thinks so. On July 28, Chicago’s City Council passed an ordinance amendment that would require mortgage holders (and assignees named in RMBS securitizations) to assume liability for the maintenance, security and upkeep of vacant properties, regardless of the delinquency or foreclosure status. The ordinance would define as an “owner” of a vacant building a mortgage holder — even before the mortgage holder has foreclosed on the property. Unless it is delayed, the ordinance is expected to become effective on September 18, 2011.
 Continue Reading May There Be Enough Wind in Chicago to Blow This Ordinance Amendment Away