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Have We Come Full Circle? Lone Star To Sell $239 Million In Subprime Debt
The company which for nearly two decades has been the ultimate vulture investor, Dallas-based Lone Star Funds, is in the process of finding yield starved novice asset managers, or in other words, buyers for $239 million of subprime backed securities. According to Bloomberg, the portfolio represents holdings which the company acquired at or about the time it acquired CIT's mortgage business for $1.5 billion, which also gifted the distressed fund $4.4 billion worth of CIT debt.
The marketed transaction represents a total of $598 in various loans, which have an average 571 FICO score, and a 106% LTV. Yet the deal does provide certain credit enhancement, with $150 million of junior ranking securities and an "ownership certificate" not part of the transaction. As for delinquency and coupon specifics:
The marketing document didn’t provide potential credit ratings for the securities being sold, which may carry a 6 percent coupon. A total of 647 of the 4,888 of loans, 15.3 percent by principal balance, are 30 days delinquent.
So who is the creative giant who is packaging toxic crap as the next BBB+ yield investment: why Bank of America, the firm that together with Citigroup, is riddled with more toxic assets than any entity known to man. It is only fair that if they can't offload theirs, that at least they collect some money helping others time the market top.
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Isn't this just another five cents on the dollar portfolio?
http://www.wikinvest.com/stock/Merrill_Lynch_(MER)/Bank_of_America_(BAC)/Bears/Subprime_Exposure
So a firm that has mostly been buying is selling now? Another cog in this devilish machine turns, but this time the wrong way...
And the hits just keep on coming....
You have to get that sideline money and yield starved folks somehow.
As for why not 5c / $1, those were tranches of ABS CDOs that were almost definitively torched. Obviously entirely different from direct RMBS, in terms of potential loss severity.
I also don't think we can extrapolate how good the deal is until we have more information: 15.3% 30+ Del? What is the total % (of dollar value and number of loans outstanding) at any stage delinquent? Depending on current cum. losses 15.3% could be pretty good.
The average loan comes with 106% LTV and a FICO score of 571. AAA-Okay with you? Doesn't exactly give me a warm fuzzy feeling.
Let me make sure I got this right. Bought or sold or on the books, these assets are all worthless, but they are not really worthless cause of the giant financial back stop that guarantees everything to have a marked to market value that is not real. Did I get that right? Here in fantasy land you can buy or sell anything that is worthless at market value and always count on the government to fraudulently back the value of the worthless assets so you can fraudulently inflate the value of your assets to avoid any form of insolvency especially if you are a financial institution. I'd appreciate some clarification.
If you added up all the mortgages in america it equals $10 Trillion.
We are in debt at $12.8 Trillion.
Get it?
In addition, we are backstopping $10 trillion more in debt we have no idea about.
The eye of the paper-ponzi. Roll up, cut yourself a slice of the printing press.
If I understand this correctly,
http://www.informationclearinghouse.info/article23557.htm
it means the supreme court has decided in favour of homeowners and not corporations.
is this not the stake in the heart of collateral debt obligations? If the holders of these toxic instruments cant foreclose on the underlying assets, all the untold billions the Fed has thrown at propping them up is wasted
this is off topic but dont know where to send it.
how did you miss it?
http://www.ft.com/cms/s/0/4cfe8a18-a645-11de-8c92-00144feabdc0.html
is blankfein able to read? we should be told!
It's all okay. There shouldn't be any concerns. Uncle Ben has BofA's backside covered. US taxpayer assume your position and get ready for another round. What's another $1 QUADRILLION in crappy paper assets.
Bank of . . . . not America:
http://www.wistv.com/Global/story.asp?S=11158795