FINALLY, and in spite of the Government doing it’s very best to smoother private capital from re-entering the residential real estate mortgage lending industry and controlling it themselves (while punishing all of you who have to deal with those crazy people, wacky standards & new processes at Fannie,Freddie & FHA) , there was a HUGE, SIGNIFICANT, MAJOR, EARTH-SHAKING MEGA NEW PIECE I saw last week:

First let me please translate it into English for some of you: Even though this is a baby step, it is the FIRST real tangable sign that the Government’s total control of the entire industry is coming to an end; that is the best news I have heard in a couple of years – here it is:

Arch Bay in Private-Label Nonperforming Subprime MBS

‘Arch Bay Capital has issued a $57.4 million MBS backed by seasoned performing and delinquent subprime loans, garnering a AAA rating on the bond, a sign that the private-label market could come back but only if issuers are willing to make little money on their deals. The mortgage-backed security was rated by DBRS and the end investor is a bank, said one official familiar with the transaction. Quincy Tang, senior vice president of structured finance/RMBS for DBRS, told National Mortgage News that because of the credit enhancement put on the security by Arch Bay, the investor in the AAA bond will not suffer any losses unless delinquencies on the underlying loans exceed 75%, an astronomical number. The loans originally funded a few years back by such subprime firms as Accredited Home Loans, NovaStar Mortgage and others have a 30-day delinquency rate of 21%. The collateral for the bond are loans with a principal balance of $229 million. One NPL investor, requesting anonymity, said based on what he knows of the deal, Arch Bay doesn’t stand to make much money, if any, on the transaction. The Irvine, Calif.-based hedge fund could not be reached for comment. Its profit will be determined by how much it paid for the NPLs which it bought in the secondary market and the cost of the credit enhancement on the bond. Roughly 19% of the loan pool has been modified, according to DBRS.’





What We’re Hearing
This popular column in the National Mortgage News is a piece it’s editor Paul Muolo publishes each week (here it is http://nationalmortgagenews.com/columns/hearing/) today I saw a Comment I had left published ….:

“Posted: 2010-02-13 11:36:23
by Peter Samuel Cugno

Paul had said “…the money that is looking to enter the industry only wants to fund Fannie/Freddie/FHA loans….” (I replied) and if you think about that, how stupid could they be? Fannie/Freddie’s future existence is questionable at best, their delinquencies & REO’s exceed subprime (as you’ve reported), and FHA continues to be way in over its head and is all but DONE … and those “bright guys/investors” think the Government’s future hand in our industry is wise, steady, or even a good idea with almost 90% of the (now small) market controlled by them for maybe 20 more minutes (when securitizations come roaring back). Did you even wonder Paul, what about those ZILLION Americans the NEED non-government loans to come back? Think they’re gonna wait forever, or maybe just go away? All this Fannie/Freddie FHA control is just nonsense, says me (one of the pioneers of subprime – back when it made sense)!

YOU Could Use The Extra LOOT!
Just like so many others in our industry I've spoken with recently ... You Know A Guy ... who possibly can be the equity investor/ partner with the $2.5 Million that I'm looking for. If you can possibly help with this task, please contact me directly, so we can discuss the significant referral fee I will make payable to you upon their funding of my new venture.

I want them to do it at the Speed of Opportunity, which means NOW and not manana ... you want to Do it For the Money!

Get his long-experienced perspective and analysis of issues which face our industry during these interesting times; all from our Founder - 'My Perspective' Read Daily

---

Link to the permanent version of our newsletters by Clicking Here and save our online Newsletter Library in your computer's 'favorites' - check out past issues too!

---

This is how I feel after all these many months trying to raise Expansion Capital from Private Equity Funds & Investment Bankers! Took me a few months to figure out they are 'investors' and clueless about our business - so what makes sense to me, they just don't get it! So, I'm asking for your help.

---

XML









News courtesy National Mortgage News

I was speaking with my lawyer one morning last week about my extreme degree of frustration at having been trying to raise $2.5 Million for a consumer residential real estate mortgage lending financial services family of companies, from a potential equity partner/investor these last 8 months. I was telling him I had aggressively gone after investment bankers, private equity funds, angel investors, and mortgage banker lawyers (hedge funds are my next target) – as possibilities of folks who could aim me in the right direction to acquire these funds so I can re-start my old firm and do (for the fifth time in my career) a non-bank holding company with several related wholly – owned industry subsidiaries who’s synergy and cross quality control works perfectly together. It’s been a homerun for me and a handful of my clients in the past. I even reminded him (even though we’ve known each other for 25+ years) about the vast network of industry big-shots I have come to know and the numerous connections I still have within the ranks of the executive offices here in America, and yet I haven’t yet come up with one!

He’s a real sharp guy, he listen carefully to me, then he told me a story about Charles deGaulle … years before he was a General, back when as a young officer, he developed the concept of armored warfare just after the First World War, as a means to break the stalemate of trench warfare. Everyone else was still looking backwards trying to figure out how to improve trenches. He was fairly ridiculed at the time. A few years later, when everybody was still working on how to build better more effective trenches, the Germans had read about the papers deGaulle had written and said ‘… hey that’s it – TANKS, that’s a great idea’ … the German Blitz creed was born!

De Gaulle was famous for ‘fighting the next war’ and not the last one, the mistake so many old Generals tend to do (looking the wrong way), and that’s the core advice he gave me. To get out of this mess and invest in our industry’s future – you’ve got to have forward looking vision. He said, “… Peter it’s all about timing, maybe next week you come across a half dozen of them, the changing landscape needs to get one of those forward looking Generals to think and then Bingo!”

We need more Generals who are looking to fight the Next war and not the Last one, for our industry to turn around.