GLG News by Structured Finance Experts
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James McMahonPresidentJM Bear Advisors
May 21, 2009
Consulting Management Platform | news.glgroup.com
Much has happened in the credit markets in the past several years and many things have contributed to the current economic downturn. The road in the rear view mirror is littered with failed policies from the government and from private segments of the econimic system. One thing is certain. The start of this current economic cycle, the tip of the spear that created this crisis, is the collapse of the residential mortgage market. This situation manifested itself in changes to the marketplace spurred on by changes in the Congress and Senate during the 2006 election cycle. During this time the Democrates took control of both sides of the ails. Barney Frank was named head of the House Budget Commitee and Chris Dodd was named head of the Seante Banking and Finane Committee. Both of these men had a major effect on how the morgage market changed from years past.
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James McMahonPresidentJM Bear Advisors
Corporate C&I and Commercial Real Estate Lending is Taking a "Wait and See" Attitude
May 18, 2009
Sharp slowdown in corporate lending | www.ft.com
Almost every bank is taking the "Wait and See" attitude depending on each institutions capitol, geography, market demographic or new/ revised growth strategies in this current environment. This wait and see strategy is the new balancing act in most independent community, regional and super regional banks. The lifeblood of most commercial bank lending has always been focused or centered on "Relationship" lending. Lending to companies, within a banks designated SIC spread or range that have typ,ical C&I as well as CRE potential are always nurtured if they already are on board and are coveted as business development . The ability to position lending to any business within the banks appetite is always a balancing act between the risk and the reward. Customers who have the greatest potential for a multi level lending product need as well as all the typical deposit, cash management, trust, trade debt and other add on products is how banks grow and how profitability is maximized
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James McMahonPresidentJM Bear Advisors
Loan Delinquencies & Loan Losses Continue to Hit Record Levels In Almost all Loan Product Categories
May 18, 2009
Consulting Management Platform | www.financialexpress.com
Loan Delinquencies & Loan Losses Continue to hit record levels In all Loan Product Categories as this lastest economic cycle moves hrough the pipeline. Even with the changes that most FI's have made to their loan policies and underwriting guidelines the number of loans madewithin th the prior parameters continue to move through the pipeline. Since deliquencies and loan losses are another lagging indicator within the cycle we are just starting to see the final chapter being written on where these two major indicators will end up. The key question is where will these delinquencies and losses rank in relation to previous cycle highs...Does anyone want to guess? How long will it take to see these levels?
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James McMahonPresidentJM Bear Advisors
FICO vs. Vantage Consumer Credit Scores - Where We Have Been & Where we are Now
May 18, 2009
Consulting Management Platform | www.financialexpress.com
1. The history of the evolution of the importance and use of consumer credit scores is explored. 2. The launch of the new Vantage consumer credit bureau scoring models in 2006 by the three major credit bureaus, Experien, TransUnion and Equifax has created a new dynamic. 3. What has been the impact on the use of either or both score models within the lending market? 4. Has the new Vantage score made a huge dent in the use of the current market king, FICO score or has the use or acceptance of Vantage score been a slow and measured process?
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James McMahonPresidentJM Bear Advisors
Loan Information & Data Verification Processes Back In Vogue - Lessons Learned
May 13, 2009
Consulting Management Platform | www.financialexpress.com
Prior to late 2007 verification of loan applicants income, employment, address, social security number and any other information critical to the loan underwriting process. Due to the significant issues within the mortgage market during this most recent credit meltdown that were caused by subprime mortgages, stated income, no or low doc loans, Alt-A programs etc, it has been determined that almost 90% of the current delinquency and forclosures could have been prevented or mitigated by using "old fashoined" verificantion processes on loan appilcation integrity. Where do we go from here from a lessons learned perspective and what has been the effect on existing data verification companies and the creation of new companies in this space.
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James McMahonPresidentJM Bear Advisors
Stress Testing Now Being Applied to Loan Underwriting Models
May 12, 2009
Consulting Management Platform | www.financialexpress.com
Just as stress tests have now been applied to the top banks. New stress tests or shock measurements are now being built into a number of consumer, business and commercial real estate automated loan platforms Regardless of being a small FI or a supoer regional or a national new loan underwriting variance or shck/stress testing parameters are being incorporated in vendor and proprietary loan models The end result is a more clear predictive laon recomendation or outcome that will establish worset case repayment senarios on a loan by loan. loan priduct and portfolio segmenation basis.
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James McMahonPresidentJM Bear Advisors
Residential Mortgage Application Market Still Dominated By Fear
May 11, 2009
Abbey says mortgage market is set to grow | www.timesonline.co.uk
We are clearly at the trough of this cycle. Except for some speed bumps ahead which will all be different in size and lenght we have some time before we see a ramp up. Consumer skepticism in the existing and new housing market still dominated by consumer fears of job stabiity and housing prices.
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Richard Van LeeuwenFormer EVP, Chief Risk OfficerFORD MOTOR CREDIT COMPANY LLC
Investors Seeking Higher Return Need To Look No Further Than Auto ABS
April 30, 2009
Volkswagen Offers $1 billion TALF-Eligible Deal | money.cnn.com
Auto ABS shut down when mortgage-backed securities imploded. This was unfortunate and unjustified, because it remained a sound investment, particularly when backed by auto loans originated and serviced by sound lenders such as the finance arms of Volkswagen, Honda and Ford. There is a lot of money essentially on the side line in government securities and money markets earning a low return when auto ABS is a smarter option.
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Robert CanterPresident-FounderPerformance Realty Solutions, LLC
How and why the mighty are falling
April 28, 2009
Opus South Files Chapter 11 | www.globest.com
The fact that a well respected usually conservative developer has filed for Chapter 11 protection under the Bankruptcy Code is another chilling example of just how far and deep this economic downturn has affected every corner of the commercial real estate sector.
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Justin HupetConsultantJustin Hupet
Institutional Investors Participation in Recent Equities Market Rally: A Canadian Perspective
April 20, 2009
financial times ft.com | www.ft.com
The major Canadian equities market index, the S&P/TSX Composite Index, is up 5% YTD (up 25% since March 9th, 2009) ; with the overall value traded down 27%, and volume up roughly 18% compared with the same period last year on a year-over-year basis. The number of transactions is up 26% YTD vs. the same period last year. The TSX Venture exchange (which consists of micro and small capitalization companies) is up 24% YTD. The consensus among institutional investors in Canada, as elsewhere around the globe, remains divided. A few things likely need to occur before the majority of the naysayers move toward the other camp, such as; a visible and sustainable improvement in the global economy, a broad-based recovery in corporate earnings, a steady and meaningful increase in the prices of commodities, a slowdown or reversal in the recent rate of increase in the unemployment rate, more balanced conditions in the housing market, and a significant positive shift in consumer confidence.
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