Financial Regulatory Forum

ANALYSIS – US mortgage investors see headway on second-lien write downs

By Al Yoon

NEW YORK, April 12 (Reuters) – On March 17, 2009, a group of mortgage bond investors worried about the losses they could suffer as a result of U.S. foreclosure prevention plans asked top bankers to share the pain by taking some write-downs on $450 billion in home equity loans.

But the bankers said they would talk only after the investors first allowed modifications on their primary loans as prescribed under the Obama administration’s Home Affordable Modification Program, according to a trader who attended the meeting at the American Securitization Forum in New York.

Thus began a year of frustration for the investors, such as asset manager BlackRock Inc, who claim their rights as primary mortgage holders have been trampled by the foreclosure program that let second-lien holders off the hook. Most agreed that the program, known as HAMP, was good policy, but balked at who sustained losses and when.

“It doesn’t make sense,” said Scott Simon, a managing director at Pacific Investment Management Co., in Newport Beach, California. “You’d think if you are first lien holder you’d be in first lien position.”

More than a year later, investors whose losses would be lessened if banks took write-downs on second-lien mortgages are getting some attention, after being stonewalled by banks and regulators, according to the trader who attended the meeting with bankers. The change comes as they are being asked to help restore private credit to the U.S. housing finance system, which is costing taxpayers a bundle.

US housing agency subpoeanas 15 FHA mortgage lenders

WASHINGTON, Jan 12 (Reuters) – Housing and Urban Development Inspector General Kenneth M. Donohue and Federal Housing Administration Commissioner David Stevens on Tuesday announced that 15 FHA-approved lenders have been subpoenaed to question why so many of their loans are going into default.

The lenders, including a unit of First Horizon National Corp. are in the sights of the U.S. authorities for questionable underwriting practices on loans backed by the government.

Donohue said the “initiative” was not an investigation and said his office was not yet making any accusations of wrongdoing.

ANALYSIS-Extended U.S. bankruptcies killed by cheap debt

Cory Lipoff, the Executive Vice President and Principal of Hilco Merchant Resources, LLC speaks at the 2009 Reuters Restructuring Summit, September 30, 2009. REUTERS/Brendan McDermid (UNITED STATES BUSINESS) By Tom Hals
NEW YORK, Oct 2 (Reuters) – Years of easy credit followed by an economic downturn have led to a predictable wave of bankruptcies, but with a twist: layers of debt have essentially killed the expensive, drawn-out bankruptcies of the past.


U.S. asks banks to expand foreclosure prevention

House for sale WASHINGTON, July 10 (Reuters) – The Obama administration is asking the largest mortgage finance┬ácompanies to quicken the pace of modifying home loans and so help more troubled borrowers avoid foreclosure. The largest 25 mortgage servicers should appoint a special liaison officer to work directly with government officials who are overseeing the program meant to save as many as 4 million borrowers from foreclosure. (more…)