Subprimes Not Dead for Deutsch, American General New offerings Planned

Editor’s Notes: They are STILL doing it. This report clearly shows that the main players are still packaging sub-prime loans (which most people would define as loans likely to fail). The reason is money. The higher the spread the higher the yield spread premium. These YSP’s are still not reported to borrowers. They are hidden from both investors and borrowers. My opinion is that there is no statute of limitations on a cause of action you don’t know exists — especially if the intent and conduct of the defrauding parties was a pattern to withhold information.

What is interesting is to see how they are addressing investor concerns about toxic assets and what they disclose now versus what they disclosed when the real mess was created. What is scary is that without regulation, the game continues. This is like a sports event where the referees have left the field.

“the underlying borrowers have full documentation, were fully examined by the company and most have made 50 payments or more – factors that have often been missing from poorly performing loan pools.

“Subprime mortgages were once the lifeblood of the securitization business, accounting for more than $1 trillion of deals in the decade leading up to the 2007 credit-market crash

Subprimes Not Dead for American General
Asset Backed Alert, Harrison Scott Publications Inc. (March 26, 2010)

American General is about to start shopping the second in what could be a series of securitizations this year, this time in the form of a deal backed by subprime mortgages. The offering, totaling $800 million, is set to hit the market within the next two weeks via lead underwriter Deutsche Bank. It would be backed by 30-year fixed-rate loans that were mostly written 3-7 years ago through American General’s own branches, with no credits newer than 18 months old.

The transaction is separate from a securitization the Evansville, Ind., unit of AIG is poised to price in the coming days. RBS is leading that $1 billion issue, backed by alternative-A credits written through brokers. The alt-A deal was seen as a rarity when it hit the market just over a month ago, as it was among just a few private-label mortgage securitizations to go into development since the global credit crisis intensified in late 2008. Even then, however, subprime-loan issues were presumed extinct.

Indeed, investors have been treating subprime-mortgage securitizations as toxic for nearly three years. But American General is touting some characteristics that might ease buyers’ concerns. For instance, the underlying borrowers have full documentation, were fully examined by the company and most have made 50 payments or more – factors that have often been missing from poorly performing loan pools.

There will also be substantial credit enhancement for the deal’s triple-A-rated senior class, in the form of three or four subordinate pieces equal to about half the top-rated tranche. Deutsche plans to pitch the top class to large “real-money” investors like insurers or pension plans, while shopping the junior notes more quietly among hedge funds.

After that, American General could try to complete six or seven more deals over the course of the year. Most if not all would be backed by subprime loans, mainly from a $10 billion mortgage portfolio the company holds in what it calls its centralized retail pool. It could also draw on a smaller book of brokered loans.

Deutsche would likely run the books on deals involving the retail portfolio with RBS as a co-lead, as is the case with the upcoming subprime-mortgage issue. The arrangement reverses for brokered-loan deals, with RBS in front and Deutsche as a co-lead. American General is also in talks with whole-loan buyers.

Like other mortgage-bond issues that have gone into development in recent months, American General’s securitizations are being talked about as indicators of how the new-deal market will unfold in the months ahead. Other issuers might see successful offerings as justification to pitch bonds of their own, including Wall Street dealers and hedge funds that bought loans on the cheap.

American General has never been a frequent issuer of mortgage-backed bonds, but sees now as an opportune time to use its loan-origination business to carve out a presence in the market. Subprime mortgages were once the lifeblood of the securitization business, accounting for more than $1 trillion of deals in the decade leading up to the 2007 credit-market crash. Amid rampant defaults, the flow of those deals slowed late that year and then shut off entirely in 2008.

14 Responses

  1. I don’t mean to hijack this thread. We have a big opportunity in Florida and I can’t post links!! Awaiting moderation since yesterday.

    I’m a member of a group of volunteers headed to the Capital April 21, 2010 to show our opposition to HB1523 and SB2270.

    The legislators have been “persuaded” by the Florida Bankers Association to sponsor these bills, and alone we cannot match their resources.

    Can you help us inform the public? This is very important.



    There is some terrible legislation in front of the Florida Legislature that will eliminate our rights in this foreclosure and unemployment mess.

    WE are organizing a Freedom Ride Circa 2010: A Pilgrimage:

    COME ON ALONG for a historic event.

    Buses are filling fast! Email your group info to

  2. To konatina,

    okay if they must replace it then why are the trustee bringing the foreclosure suit? why wouldn’t there be another assignment that no -one can produce that removes it from the certificates series..It Is really gonna get deep this is just the beginning. I already posted on here the securities fraud … so to search at the top and type in semantics what a difference… scroll down to my name and read. the prospectus is clear in my case as to how the loans need to be placed

  3. The loans was missrepresented in the beginning…did not have the proper docs, to even put the loan into a securities… Hench while we all have assignments from such n such that is VP of MERS,JP MORGAN CHASE and anyone else they needed to say that they were VP,attorney in fact ETC…

  4. If you read the pooling and servicing agreements that the servicer has with the pool, they must replace a foreclosed or modified loan with a loan of similar size and rate. Thus, they are now offering sub prime loans again to be able to generate a loan that matches one that has been expunged from the pool through foreclosure or modification (highly doubtful that they did a modification). The servicer guarantees the pool trust a certain payment on ALL the loans that the trust purchased. Douche Bank must be worried that they are violating some sort of clause in the trust agreement if they cannot replace the loans of homes that they have foreclosed on quick enough. Can someone look into this? Maybe Douche Bank will be the next to be investigated now that Goldman Sachs has been accused!
    BANKSTERS BEHIND BARS is my prayer!
    They loaned counterfeit money, ran up the national debt, harrassed us all, threw hundreds of thousands of Americans out of their homes. They all need a 5 x 8 cell!

  5. sorry for the other crap that was copied from the page… Now SEC go after the rest of them!!!!

  6. U.S. charges Goldman Sachs with civil fraud
    Civil suit claims Goldman sold securities that were designed to fail

    SEC: Goldman Sachs charged with fraud
    The SEC has filed fraud charges against Goldman Sachs for misstating, and omitting key facts related to subprime securities. CNBC’s Scot Cohn has more.

    Goldman Sachs Group, Inc. 161.98 -22.29 -12.10%
    Enter Company Symbol • Lookup symbol

    Quotes delayed 15+ min.

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    updated 12 minutes ago
    WASHINGTON – The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was faltering.

    The Securities and Exchange Commission announced Friday civil fraud charges against the Wall Street powerhouse and one of its vice presidents. The agency alleges Goldman failed to disclose that one of its clients helped create — and then bet against — subprime mortgage securities that Goldman sold to investors.

    Investors in the mortgage securities are alleged to have lost more than $1 billion, the SEC noted.

  7. U.S. charges Goldman Sachs with civil fraud
    Civil suit claims Goldman sold securities that were designed to fail


    I am stunned. We knew it was coming, but wow.

    Dan Edstrom


  9. I hope Goldman´s time arrived.
    Not only they s….. us but now they are shorting Hungary and Greece causing instabilty in Greece. And selling their shit to Brazil.

  10. 4-16-2010 Goldman [sucks] Sachs was accused by the US Securities and Exchange Commission on Friday of defrauding investors by misleading them about subprime mortgage products as the US housing market collapsed.

  11. And why wouldn’t it still be business as usual … after all, who’s going to stop them ??


  12. This is a no brainer for all the players involved as they are awashed with cash from all the mortgage derivatives money they collected and all the illegal foreclosures that have fraudulently taken from the american public. They are thinking why not go right back to business as usual as if it is not broke don’t fix it and we do not have to reinvent the wheel as Washington & Wall street & Most of the Judges ruling on these issues have sent a clear message to the American Taxpayer and the message is THIS IS OUR TOWN AND RULES AND DON’T YOU FORGET IT!!!

  13. Regarding the TILA Statute of Limitations:

    When a violation of TILA occurs, the one-year limitations period applicable to actions for statutory and actual damages begins to run. U.S.C. § 1641(e).
    A TILA violation may occur at the consummation of the transaction between a creditor and its consumer if the transaction is made without the required disclosures.
    A creditor may also violate TILA by engaging in fraudulent, misleading, and deceptive practices that conceal the TILA violation occurring at the time of closing. Often consumers do not discover any violation until after they have paid excessive charges imposed by their creditors. Consumers who later learn of the creditor’s TILA violations can allege an equitable tolling of the statute of limitations. When the consumer has an extended right to rescind or
    pursue other statutory remedies because a violation occurs, the statute of limitations for all the damages the consumers seek extends to three years from the date the violation is revealed.
    McIntosh v. Irwin Union Bank & Trust Co., 215 F.R.D. 26, 30 (D. Mass. 2003).

  14. SEC Sues Goldman Sachs, Alleging Fraud in CDO Tied to Subprime

    April 16 (Bloomberg) — The U.S. Securities and Exchange Commission today sued Goldman Sachs Group Inc., accusing the company and one of its vice presidents of defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages.

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