that someone "tricked" them into guaranteeing ABS CDO backed by Bear Stearns 2007 ABS bond.
Here's the story, would you be surprised basically it's about they got taken to the cleaner?
Douglas Renfield-Miller, an executive vice president at Ambac, said Thursday in an interview that the company's policies will pay bondholders unconditionally, even in the event of fraud.In a case where a loan is determined to have been misrepresented "then Ambac may have recourse against the issuer to repurchase that loan," he added.A bigger claim would involve an entire insurance deal that was fraudulent.
This could give Ambac a claim against the issuer for any claim payments made.Ambac's worst-performing deal covers home equity lines of credit, packaged into securities by Bear Stearns Cos. (BSC) in 2007. Over-60-day delinquencies in the underlying loans have shot up to 81% of the current balance loans in the transaction.That delinquency rate is a multiple of the average for such securities, according to a Standard and Poor's report issued Thursday.
Total delinquencies for 2007 second mortgage-backed securities that had their ratings lowered hit 11.88% in March, the ratings agency said. Individual transactions have projected ultimate losses ranging from 11.56% to 88.36%.A Bear Stearns spokesman did not immediately return a phone call asking for comment.
"Financial guarantors did not sign up for the fraud that appears to have been rampant in the mortgage market," Ambac said in an emailed response to questions Friday. "As our positions continue to develop in this area, any assumptions about recoveries will be built into our loss reserving against particular transactions. Hopefully, our efforts will also prevent some deals from becoming impaired in the first place."
So I figure what the heck, maybe I take a gander what it is just for shitkicking fun:
Nine months old mortgages!! 92% refinance, and most of those managed to even cash out $$$ during the credit crunch in 2007. Kudos to BSC, the hero of little subprime midgets. (Hmm, Just occured to me, this is what avoiding reset through refi would look like, eeeekkk ... )
How was the deal supposed to perform? (For the BBB bond of that deal which was backing the CDO Ambac was complaining about)
Well, do you prefer Libor minus 15,000 or Libor minus 24,000? By that yield, does it mean the whole thing is wiped out in 3 and a half weeks or four? WTF.
The right enemy
5 years ago