Monolines Back in The Subprime News - Housing Tracker

Global Subprime Fallout

Socgen Q1 Residual Monoline Exposure Up, Gross US Mortgage Exposure Down. “Societe Generale said its net residual counterparty exposure on monoline insurers, after writedowns in Q1, rose to €800 million from €400M at the end of last year. Its gross counterparty exposure increased to €2.4 billion from €1.9B. First-quarter writedowns tied to monolines were €1.1B, up from writedowns of €900M last year, all booked in Q4. SocGen also said its gross exposure to US residential mortgage risk through unhedged collateralised debt obligations, fell by €459M in Q1 to €4.395B on Mar 31 from €4.854B at the end of last year. It cited amortisations linked to early repayments on underlying assets and changes in the euro-dollar exchange rate for the decline.” (Forbes, May 13th)

IndyMac Weighs Raising Capital as It Posts Loss. “[Low-doc lender] IndyMac Bancorp Inc. (IMB)… posted a $184.2 million loss for Q1 and… warned that it could fall below the minimum level of capital needed to be classified as "well capitalized.” IMB said it is selling shares through a program that allows investors to buy stock directly from IndyMac and is exploring other alternatives for raising capital. Risk-based capital was 10.26% of assets at the end of Q1, just above the 10% minimum needed to be classified as "well capitalized," but IndyMac said it aims to raise that to 11% as soon as possible.” (Wall St. Journal, May 13th)

Wall Street Buoyed By Top Bond Insurer's Big Losses. “The world's largest bond insurer, MBIA, has assured investors that it is financially robust despite suffering a quarterly loss of $2.4bn (£1.2bn)… MBIA, like other monoline insurers, diversified into insuring investors against default on mortgage-related instruments, credit swaps and other esoteric financial instruments. A sudden surge in defaults on US mortgages and the resulting volatility on the credit markets has left MBIA nursing huge liabilities. The company revealed credit impairments of $1.34bn on its portfolio of housing-related credit instruments, taking total losses on mortgage-linked securities to $2.15bn over two quarters.” (Guardian UK, May 13th)

PMI Earnings Show Slump Not Over. “[Mortgage insurer] PMI Group Inc. (PMI) lost $274 million during its Q1’08. Operating loss was $333M. The red ink compared with a profit of $102M for Q1’07. "PMI had a challenging first quarter, reflecting the continued difficulties in the U.S. housing and capital markets," L. Stephen Smith, PMI's chairman and chief executive, said during a conference call Monday. PMI also pointed to ongoing financial jolts unleashed by its investments in two companies: Financial Guaranty Insurance Co., a bond insurer that has faltered with its own difficulties; and Ram Reinsurance Co.” (Contra Costa Times, May 12th)

PMI Streamlines Loan Modification Process. “PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group Inc., has issued new guidelines for modification of insured loans that are intended help more distressed borrowers save their homes. The new guidelines define the criteria for loans insured by PMI that qualify for modifications and delegate the authority to modify the terms of these eligible loans directly to loan servicing companies. These new guidelines are applicable to all delinquent loans insured by PMI, the company adds.” (Mortgage Orb, May 12th)

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