And there was this 4 billion panick sale in July, resulting in 200 million loss, offset by 13 million derivative gain.
What do you mean? For future mortgage defaults they have to go back to the court. A monthly session?
As I read it, Flagstar had to take back all the breached loans and that also applies to future finds. Therefore, 75% of the deal is back on their balance sheet.
The proportion AGO got was 100% of the amounts paid by them. The confusion is about their claim re the interest compensation. AGO asked for 9% but was granted by the judge the contractual Libor + 2% rate. All in all Ago will be fully compensated.
I even expect that from now on Flagstar has to consolidate the two SPV's on their books as the economic risk has entirely shifted towards them. The latter will be a very interesting one for BAC. Another reason to settle soon.
In contrast to what is sometimes suggested Assured will be compensated in full for all payments under the two contracts, that is 90 million plus interest. Assured claimed 114 million, but that is inclusive interest. The judge has ruled that the interest amount has to be determined seperately.
Therefore it is 100% victory, flagstar got nothing.
Or is it time to drop Moody's rating. After all, a company that needs nine months to re-review a company, what is that worth? And in the meantime the economy and housing market has recovered...
With 400,000 loans available, do you really think it is statistically difficult to show that: 'it is very unlikely that these breaches did not cause higher losses?'
That is sample statistics 101. BofA has 0.0001% chance to win.
MBIA will recover all of their losses anyway. Since the proportion of breached loans is so huge it is clear that without these loans all of the deals would not breach the MBIA attachment point. i.e. the threshold were MBIA starts to pay. Either put back or rescissory damages would give the same result.
'Five of 18 banks that sued MBIA and the New York State Insurance Department including UBS AG, BNP Paribas SA, and Bank of America are still fighting the split. '
That leaves them to four: UBS, BoA, CS?, ?. Anyone?
I am not a legal expert but I get the impression that BoA has more or less assumed Countrywide's liabiities after the merger.
At least a bankruptcy of Countrywide will open up long term litigigation uncertainty for BoA. I get the impression it is more a BoA negotiation tactic than a serious option for BoA.
It is part of the Bofa strategy to delay final judgment as long as possible. In the meantime many loans, with breaches, will have been prepaid.
100% sure Bofa has no chance. Do you really think Bofa, according to the contract, agrees to buy back bad loans that, later, Bofa can come up with a completely arbitrary argument that these loans didn't default? So they don't have to buy them back?
That is not how common law works.
Why didn't they agree upon: well you have to buy back all bad loans unless they don't default. This condition was not in any of the contracts, for a reason of course.
Your argument may be: well, these non-defaulted loans with breaches don't cause any harm to MBIA.
On the contrary, all these breached loans are causing uncertainty over the strength of MBIA, both capital and liquidity, and these loans are the very reason why MBIA is currently out of business. These loans are the very reason Bofa will have to pay massive punitive damages.
Question: when US government debt is downgraded to AA+, similar to AGO, what do you expect the implications for AGO will be?
Will this be a good thing for AGO from a marketing perspective?
Does this impact AGO's rating?
Figures are indeed not too bad. I am surprised they took much lower RMBS losses than AGO this quarter.
Now we can sit back and wait for the Great Countrywide Settlement, and all the others
Under GAAP your liabilities increase in (negative) value when your own credit spread tightens. Sounds counter intuitive but that is how it is.
Big chance MBIA will report losses beacause of this whereas in a normal world you would expect spread tightening is a good thing.
Due to this MBIA spread tightening, do you expect a massive MtM loss to be reported by MBIA next week? That may be the reason this stock is so volatile these days?
Interesting to see that BAC was prepared to take back 80% of the loans in the first lien deals.
From the AGO announcement:
The settlement agreement includes a payment of $1.1 billion to Assured Guaranty as well as a loss-sharing reinsurance arrangement on 21 first lien RMBS transactions. The settlement covers all Bank of America or Countrywide-sponsored securitizations, as well as certain other securitizations containing concentrations of Countrywide-originated loans, that Assured Guaranty has insured on a primary basis.
The settled transactions have a gross par outstanding of $5.2 billion ($4.8 billion net par outstanding) as of December 31, ..., and consists of 8 second lien securitizations and 21 first lien securitizations.
"...This settlement significantly strengthens our balance sheet..."
The cash settlement of $1.1 billion will be paid in full by March 31, 2012. ... In addition, Bank of America and Countrywide have agreed to a reinsurance arrangement that will reimburse Assured Guaranty for 80% of all paid losses on the 21 first lien RMBS transactions ... . As of December 31, 2010, Assured Guaranty's gross economic loss on these RMBS transactions, which assumes cumulative projected collateral losses of $4.6 billion, was $490 million. The total estimated value of the settlement is expected to be accretive to shareholders' equity and adjusted book value, a non-GAAP financial measure.
Blackrock and all that, it is much simpler, article 78 is about:
"whether a determination was made in violation of
lawful procedure, was affected by an error of law or
was arbitrary and capricious or an abuse of discretion,
including abuse of discretion as to the measure or
mode of penalty or discipline imposed;"
"When something is deemed “arbitrary and
capricious” it means the action taken is unreasonable and
without any regard to the facts."
So, both unreasonable and with no regards to the facts. That is the hurdle, not whether Blackrock etc are much closer to the truth.
MBIA will prevail.