Trans-Atlantic Coalition Calls for Global Securities Regulations

The EU-US Coalition on Financial
Regulation is calling on policy makers in the US and the European Union (EU) to
resume discussions of a framework to regulate the trade of securities,
derivatives, and other financial instruments. 

The Coalition was established in 2005 to
encourage governments and regulatory authorities in Europe and the U.S. to move
forward on inter-jurisdictional regulatory recognition and exemptive relief on
the basis of regulatory compatibility, and where possible to establish
appropriate mutual rules.  The overall
objective is to facilitate customer choice and market access to financial
services on a global basis.

The Coalition commissioned the international law firm Clifford Chance LLP to
produce a report on the need to resume a dialogue to establish a framework of
transatlantic inter-jurisdictional regulatory accreditation and recognition. These
discussions were abandoned when the financial crisis hit in 2008.

The new report, Inter-jurisdictional
Regulatory Recognition: Facilitating Recovery and Streamlining Regulation,
a call by the G20 in 2010 for vigilance “to ensure open capital markets and
avoid financial protectionism”.  A press
release from the eleven Association members* of the Coalition states they have
become increasingly concerned by growing elements of regulatory
extraterritoriality and protectionism in both the EU and US programs for
regulatory overhaul, which are increasingly inconsistent with this G20 call for

The report states that while it recognizes there are differences in the
overarching legal systems and in the market practices and regulatory priorities
of the EU and the US, there is a common foundation between their regulatory
policies, objectives, standards and outcomes. These are sufficient to secure a
level of regulatory inter-reliance that will help to sustain the international
competitiveness of transatlantic businesses. 
“Importantly, such an approach will also reduce legal risk, compliance
complexity, regulatory uncertainty and transactional costs that will flow from
what is an increasingly fragmented regulatory approach.”

The report states that International Organization of Securities Commissions’
(IOSCO’s) “38 Objectives & Principles of Securities Regulation” issued in
1998 and updated in 2010 provide an internationally-accepted foundation of
regulatory adequacy. The Coalition recognizes, however, that regulatory
interdependence will require a greater degree of in-depth analysis and due diligence,
if it is to be credible and effective but it does provide a credible
starting-point for building international regulatory accreditation.

*American Bankers Association Securities Association,
Association of Financial Markets in Europe, Bankers’ Association for Finance
and Trade, British Bankers’ Association, Futures Industry Association, Futures
and Options Association, International Capital Market Association, Investment
Industry Association of Canada, International Swaps and Derivatives Association

Securities Industry and Financial Markets Association, Swiss Bankers Association

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CoreLogic Reports 66,000 Foreclosures in April, Down 15.4% YoY

CoreLogic is reporting that foreclosures last month totaled 66,000, down 12,000 or 15.4 percent from April 2011 but unchanged from March 2012. There have been approximately 3.6 million completed foreclosures in the US since the financial crisis began in September 2008.  That number is for legal actions where the bank took possession of the property and does not include the numbers of homes surrendered through short sales or deeds-in-lieu of foreclosure.

The national foreclosure inventory in April contained 1.4 million homes or 3.4 percent of all homes in the country with a mortgage.  This was unchanged from the previous month but was down .1 million or 0.1 percent from April 2011.  CoreLogic defines foreclosure inventory as the number and share of mortgage homes that have been placed into the process of foreclosure by the mortgage servicer.

 “There were more than 830,000 completed foreclosures over the past year or, in other words, one completed foreclosure for every 622 mortgaged homes,” said Mark Fleming, chief economist for CoreLogic. “Non-judicial foreclosure markets, like Nevada, Arizona and California, completed two and a half times as many foreclosures over the past year as judicial foreclosure states.

 “The inventory of homes in foreclosure in judicial foreclosure states is growing, but this increase is being more than offset by declining inventories in non-judicial states where the processing timelines to clear a foreclosure are shorter,” said Anand Nallathambi, chief executive officer of CoreLogic. “Nationally the inventory of homes in foreclosure decreased 0.1% from what it was a year ago at this time, and has leveled off over the first four months of 2012.”

 Completed foreclosures over the last five months were highest in California (142,000), Florida (92,000), and Michigan (60,000).  The highest inventories of pending foreclosures as a percentage of all mortgaged homes were in Florida (12.0 percent), New Jersey (6.7 percent), and Illinois (5.3 percent.)  Nevada, in fourth place at 5.0 percent was the only non-judicial foreclosure state out of the 12 jurisdictions with the highest inventories.

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Brookfield Wants Billions

Brookfield Asset Management is looking to raise one of the largest real-estate funds since the financial crisis. … And Fred Segal has left the real-estate business.

Deal Cut to Sell ResCap out of Bankruptcy Filed Today

Ally Financial, formerly known as GMAC, took its residential lending unit into bankruptcy this morning in federal court in Manhattan.  At the same time, Nationstar Mortgage Holdings has agreed to buy substantially all of the mortgage servicing and related assets from the unit known as ResCap for about $2.4 billion including debt.

According to Reuters, the bankruptcy filing has the support of some of ResCap’s creditors.  The unit has been a drag on Ally’s attempts to recover after the financial crisis during which it accepted $17 billion in federal bailout funds, ceding 74 percent of its stock to the U.S. Treasury.  Ally says it now owes the government about $12 billion and there is speculation that it was government pressure that finally forced Ally to file the court papers.  The bankruptcy and sale will now allow Ally to return to its main auto lending business and put together a plan to pay back Treasury.

ResCap, includes among its assets the company formerly known as Ditech, famous for its TV pitchman who concluded each ad with “Lost another deal to Ditech.”

The deal will give Nationstar first bidding rights in the auction that will be held under bankruptcy court rules and Reuters reports that the deal would be ‘transformative” for the company which would gain more the $370 billion in loans to service while any liabilities would stay with the estate.  The portfolio contains $201 billion in primary residential servicing rights and $173 billion in subservicing contracts as well as $1.8 billion of related servicing advance receivables and certain other complementary assets.

Of the proposed purchase price, about $700 million is for the servicing rights and $180 million for the advances.  Nationstar, whose principal shareholder is Fortress Investment Group will be putting up half of the cash while the remainder is expected to come from Newcastle Investment Corp, a mortgage REIT managed by Fortress.  If Nationstar does not win the auction there is a $72 million break-up fee and reimbursement of up to $10 million in transaction related expenses.  Other bidders are expected, however Nationstar’s positioning and its break-up fee are expected to lead to its success in the auction.

Other banks with troubled mortgage subsidiaries are expected to be watching the ResCap bankruptcy closely as it is a rare example of this type of subsidiary filing in which the holding company has been able to continue operations.

Ally will take a $1.3 billion charge, which covers its $400 million equity investment in ResCap, a $750 million settlement with ResCap to offset any future legal claims against it, and $130 million in reserves for claims related to mortgage-backed securities.

Ally is apparently also seeking buyers for some of its car finance and insurance related assets in Canada, Mexico, Europe, and South America.  Sale of any of these, the aggregate value of which is estimated at about $30 billion, would help it more quickly repay its debt to the Treasury

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