by Calculated Risk on 11/12/2007 12:19:00 AM

From Eric Dash at the NY Times: Some Wonder if the Banks’ Stabilization Fund Will Work

... Will it actually help?

The answer, some analysts and big investors say, is probably not much. The backup fund will not save troubled structured investment vehicles, or SIVs, that hold billions of dollars in packaged loans, though it could delay their demise. It may help calm the turbulent credit markets by preventing a sharp sell-off of securities ...

The hope is that the backup fund will allow time for asset prices to recover, although most market analysts call that improbable. But if the backup fund helps SIVs avoid sell-off, those investors may lose less money. Prices vary, but even amid a deteriorating market, some analysts say that the bulk of SIV assets are still fetching between 97 cents and 98 cents on the dollar.
...
The backup fund will not purchase the most distressed assets in the SIVs. Bank organizers agreed that it would not accept any subprime mortgage-related assets and only certain types of risky complex instruments like collateralized debt obligations.
...
“Will this resolve the basic issue of the assets of the SIV trading below what they were originally?” asked Steven Abrahams, the chief interest-rate strategist at Bear Stearns. “No, it defers the day of reckoning.”

It doesn't sound bad with assets "fetching between 97 cents and 98 cents on the dollar", however, because of leverage, this puts the SIVs right on the threshold of a possible enforcement event.

As noted in my earlier SIV post, Fitch rated SIVs average 14 times leverage. So, if an SIV had $1 Billion in capital, and an additional $14 Billion in leverage (mostly from selling commercial paper and medium-term notes), the SIV would hold $15 Billion in assets. If the typical asset was "fetching between 97 cents and 98 cents on the dollar", that would be a loss of $300M to $450M, or a loss of 30% to 45% of capital (from the $1 Billion) giving a NAV of 55% (97 cents on the dollar) to 70% (98 cents on the dollar).

According to Fitch, if the NAV for an SIV falls below 50%, then the fund might face an enforcement event, and it might have to be liquidated. Once the assets of one fund were liquidated - say at 96 cents on the dollar - that would mean the NAVs for other SIVs would probably fall below 50% - and they might also have to be liquidated, further depressing prices.

by Calculated Risk on 11/11/2007 10:09:00 AM

NOTE: See update on NAV in post.

From the NY Times: Banks Said to Agree on Credit Backup Fund

The country’s three biggest banks have reached agreement on the structure of a backup fund of at least $75 billion to help stabilize credit markets ...the proposed fund could begin operating by the end of December ...

Henry M. Paulson ... acknowledged that the proposed backup fund would not rescue troubled SIVs, only lead to a longer and more orderly demise.

Originally the Super Fund was going to buy only the best assets from the SIVs to provide liquidity - but I guess people realized that wouldn't help. Now, apparently, the Super Fund will buy anything:

... the fund will not distinguish between the assets it buys from each SIV; instead, it will assign the same risk level to all their troubled securities.

If the Super Fund will buy anthing, it will likely end up with the worst assets. From Reuters: Fitch may cut Citi's Sedna-managed SIV notes

Fitch Ratings on Friday said it may cut its ratings on notes from a structured investment vehicle managed by Citi Alternative Investments, called Sedna Finance ...

"The rating action reflects Fitch's view that significant refinancing requirements in the first quarter of 2008 might have to be covered by asset sales, leading to a realization of net asset value (NAV) losses," Fitch said in a statement.

The NAV of the notes is now 72.5 percent, Fitch said.

"Fitch recognizes that there is no imminent pressure for Sedna Finance to sell assets, as the vehicle is funded into January 2008," Fitch said. "However, significant amounts of funding mature in the first quarter of 2008."

This low NAV isn't unique to assets held by Citigroup managed SIVs. On a conference call on Thursday, Moody's says some SIV NAVs have fallen below 50%

... that the average NAV across the SIV sector has fallen from 101% at the beginning of July to 71% at the beginning of November

UPDATE: I misread the NAV here, and the difference is important. (hat tip jck at Alea Blog) From Fitch Ratings: Rating Performance of Structured Investment Vehicles (SIVs) in Times of Diminishing Liquidity for Assets & Liabilities See: NAV Deterioration on page 11.

As the prices of the underlying assets of the SIV decline the NAV of the capital note reduces at a magnified level due to the 14 times leverage found on average within the SIV market. Hence, a 0.5% price drop on all assets across the portfolio would result in the NAV declining by 7%.

Click on graph for larger image.

During the past 10 weeks, Fitch has observed the NAV of each SIV to decline. The above chart presents the weighted-average NAV of the Fitch-rated SIVs. In early July, the weighted-average NAV was slightly above par. However, over the past ten weeks it has reduced down to 76%.

So, using a NAV decline to 71% (from Moody's), the underlying asset losses are around 2% for an average SIV. With the NAV at 50%, the loss would be closer to 3.5%.

This reminds me of when Bernanke talked about an "orderly" decline in the housing market:

... Federal Reserve Chairman Ben S. Bernanke said [May 18, 2006] that the U.S. housing market ... slowdown is "moderate" and "orderly" ...

Now Paulson is talking about an "orderly demise" for these SIVs.

Perhaps "Orderly" is the new "Contained".

by Calculated Risk on 11/07/2007 03:27:00 PM

From MarketWatch: Moody's cuts more SIV ratings (hat tip REBear, sr)

Moody's ... downgraded more ratings on structured investment vehicles on Wednesday and warned that the funds are in a more precarious position than they were in early September, previously considered the height of this year's credit crisis.

Moody's said it cut or may downgrade ratings on structured investment vehicles (SIVs) with roughly $33 billion in debt. ... More than 10% of all SIV debt was affected by the move. ...

"The situation has not yet stabilized and further rating actions could follow," Moody's said in a statement. "SIV senior note ratings continue to be vulnerable to the unprecedented large and sustained declines in portfolio value combined with a prolonged inability to refinance maturing debt."

From Bloomberg yesterday: Citigroup SIVs Draw $7.6 Billion of Emergency Funds

Citigroup Inc., the largest U.S. bank by assets, provided $7.6 billion of emergency financing to the seven structured investment vehicles it runs after they were unable to repay maturing debt.

The SIVs drew on the $10 billion of so-called committed liquidity provided by Citigroup ...

This is getting ugly. Also the MLEC SIV Superfund has apparently stalled as the SIV situation is deteriorating. (sorry for all the posts today - a lot of news and little analysis)

by Calculated Risk on 11/02/2007 04:29:00 PM

From WSJ: Citi to Hold Emergency Board Meeting

Citigroup Inc. board members are expected to gather for an emergency meeting this weekend ...

It wasn't immediately clear what the meeting would address, but the subject of further writedowns could come up.

The music has stopped.

by Tanta on 10/26/2007 12:00:00 PM

While we're on the subject of "price discovery," it appears that former Treasury Secretary Snow isn't impressed by Sivvie Mac ("The Knife"):

WASHINGTON, Oct 26 (Reuters) - Former U.S. Treasury Secretary John Snow on Friday said a proposed multibillion-dollar fund assembled by top banks to prevent a fire sale of shaky debts may cause problems by delaying inevitable losses.

"We've got all this paper out in the system, and my inclination is to say, let's accelerate the price discovery process on this paper," Snow said on CNBC Television.

"We know that when you prop things up artificially -- Japan -- we know when you prop things up artificially -- the (savings and loans) in the United States -- you get bigger adverse consequences," said Snow, the immediate predecessor of current Treasury Secretary Henry Paulson.

Snow, now chairman of private equity firm Cerberus Capital Management, said he has not discussed the fund with Paulson.

Is anyone else enjoying the spectacle of Snow sounding smarter than Paulson?

by Calculated Risk on 10/23/2007 07:34:00 PM

From Reuters: Moody's slashes Axon SIV as capital NAV plummets

Moody's Investors Service on Tuesday slashed its credit ratings on Axon Financial Funding, a structured investment vehicle (SIV), after its capital net asset value plummeted.

Moody's said in a statement it has cut Axon's commercial paper to Not Prime from Prime-1. It has cut its medium term notes to Ba3, three notches below investment-grade status, from triple-A. And it has cut its mezzanine capital notes to Ca, 10 notches below investment-grade, from A1.
...
Moody's said Axon's capital net asset value had fallen to 39 percent on Oct. 18 from 96 percent on July 27.

OUCH.

More from Bloomberg: SIV Defaults May Prompt Others to Close Their Doors

Axon Financial Funding Ltd. LLC, a SIV with $9.8 billion of debt, had its credit ratings cut by Moody's today after its net asset value fell by more than half. The SIV, set up by New York- based hedge fund TPG-Axon Capital Management LP, had the rankings of its medium-term notes lowered by 12 steps to Ba3, three levels below investment grade, from Aaa, the highest-possible rating.

by Calculated Risk on 10/21/2007 11:45:00 AM

From MarketWatch: More firms expected to join SIV fund: officials (hat tip Bob)

More financial firms are expected to join the "Super SIV" special fund to help guarantee liquidity in the commercial paper market, officials said Saturday.

"Participation is expected to broaden in the weeks ahead," said Robert Steel, the U.S. Treasury undersecretary ...

Bank of Italy Governor Mario Draghi told reporters on Friday that Treasury Secretary Henry Paulson had informed his G7 colleagues that Pacific Investment Management Co., the world's largest bond fund, and Fidelity Investment, the Boston-based mutual fund giant, have decided to join the SIV fund.

But a spokesman for PIMCO said Draghi was incorrect.

"PIMCO is not participating," PIMCO spokesman Mark Porterfield said in an email on Saturday.

PIMCO is smart to stay away from this mess.

by Calculated Risk on 10/20/2007 03:42:00 PM

by Calculated Risk on 10/20/2007 02:40:00 PM

From the WSJ: SIVs Pose Risks for Money-Market Funds

Complex investments known as SIVs are roiling Wall Street and the world of high finance. But the investment vehicles also are threatening trouble in a seemingly unlikely place: money-market funds, the choice for many individual investors seeking safety.

In recent years, the short-term debt issued by such structured investment vehicles, or SIVs, had become a favorite for many money-market funds, thanks to their attractive yields, high credit ratings and added diversification.

As a result, many money-market mutual funds were holding 10% to 20% of their portfolios in debt issued by SIVs. Funds overseen by Bank of America Corp.'s Columbia Management Group, Credit Suisse Group's Credit Suisse Asset Management, and Federated Investors Inc. recently held big stakes in SIVs, including some of the most troubled names.
...
Most important for money-fund investors, fund companies would almost certainly take steps to prevent losses from reaching shareholders -- such as absorbing the losses themselves by purchasing the money-losing securities from the fund at their full price.

SIVs really aren't that complicated. They borrow short (via commercial paper less than 9 months duration so the don't have to file with the SEC) and lend long. Money market funds buy the commercial paper with deposits from their customers. Here is a good description:

... bankers hatched the idea of setting up a fund that would issue short-term commercial paper and medium-term notes to investors, then use the money to buy higher-yielding assets, typically longer-term ones. The bank would profit by collecting fees for operating the fund. The fund's assets would belong to its investors, so they would stay off the bank's balance sheet. SIVs had an advantage over conduits, a similar structure that was already gaining popularity: They didn't require banks to cover fully the fund's debts if the commercial-paper market dried up.

The funds can be off balance sheet because - at least theoretically - the investors (like the money market funds) will take the losses, not the banks. What is complicated (really opaque to the investors) is the quality of the SIVs investments.

Usually the main concern with borrowing short and lending long is interest rate risk. In this case, the problem is more credit risk with poor performing longer term investments.

by Calculated Risk on 10/19/2007 09:31:00 PM

From Reuters: Pimco, Fidelity to join SIV rescue fund - Draghi

Investment fund giants PIMCO and Fidelity have joined the so-called super SIV fund set up by three big U.S. banks, boosting confidence in the plan, Bank of Italy Governor Mario Draghi said on Friday.

Draghi said U.S. Treasury Secretary Henry Paulson had discussed the fund with officials attending the G7 meeting of central bankers and finance ministers.

"Paulson has done a short briefing on the SIV fund," Draghi told journalists at the close of the G7 meeting. "PIMCO and Fidelity have joined."

From the WSJ: Banks May Pony Up $60 Billion for SIVs

Banks and other financial firms have expressed interest in putting up more than $60 billion toward a super-size investment fund...

If the expressions of interest turn into firm commitments in the next few weeks or months, the three U.S. banks organizing the fund would come close to their goal of raising a fund of $80 billion to $100 billion.

The banks also are targeting several big institutions in Europe, such as HSBC Holdings PLC in London and Dresdner Bank AG in Germany. Both rank among the largest managers of the kind of structured investment vehicles, or SIVs, that the fund is intended to support. HSBC and Dresdner declined to comment.

by Calculated Risk on 10/19/2007 04:04:00 PM

From Bloomberg: Cheyne, IKB SIVs Default on Commercial Paper as Assets Fall (hat tip FFDIC)

Cheyne Finance Plc and IKB Deutsche Industriebank AG's Rhinebridge Plc, two structured investment vehicles that bought securities backed by home loans, defaulted on more than $7 billion of debt as the value of their holdings fell.
...
``The fallout from the credit crisis is far from over,'' said Jim Reid, head of fundamental credit strategy at Deutsche Bank AG in London. ``There are probably more skeletons in the closet. The problem is knowing when and where they are going to emerge.''

Rumors were flying during the last hour of trading of problems at Merrill and Bear. The Merrill rumor was of a special board meeting this weekend with possible additional writedowns - we will see.

by Calculated Risk on 10/19/2007 12:06:00 AM

From the WSJ: Citi's SIVs: Staving Off a Fire Sale

Executives of Citigroup Inc. say the giant bank has secured funding through year end for the $80 billion in structured investment vehicles it manages after selling $20 billion in assets since the midsummer credit crunch.

The steps taken by the bank's alternative-asset management unit ... mean the Citigroup SIVs can avoid the kind of forced selling at distressed prices begun by some other European SIV managers ...
...
Mr. Havens of Citigroup said in an interview the Citi SIVs have in the past week or so been able to sell "many billions of dollars" of short-term debt known as commercial paper "to top-tier-name institutions."

And the following article on SIVs is excellent: How London Created a Snarl In Global Markets

The ... bankers hatched the idea of setting up a fund that would issue short-term commercial paper and medium-term notes to investors, then use the money to buy higher-yielding assets, typically longer-term ones. The bank would profit by collecting fees for operating the fund. The fund's assets would belong to its investors, so they would stay off the bank's balance sheet. SIVs had an advantage over conduits, a similar structure that was already gaining popularity: They didn't require banks to cover fully the fund's debts if the commercial-paper market dried up.

by Calculated Risk on 10/18/2007 03:36:00 PM

From Bloomberg: Rhinebridge Commercial Paper SIV Says May Be Unable to Pay Debt (hat tip julian)

Rhinebridge Plc, a structured investment vehicle run by IKB Deutsche Industriebank AG, said it may not be able to pay back debt related to $23 billion in commercial paper programs.

Rhinebridge suffered a ``mandatory acceleration event'' after IKB's asset management arm determined the SIV may be unable to repay debt coming due, the Dublin-based fund said in a Regulatory News Service release. A mandatory acceleration event means all of the SIV's debt is now due...

Just yesterday, the Cheyne Finance receiver said: "In our view people should not take this as a precedent for other SIVs." Uh, nevermind.

by Calculated Risk on 10/17/2007 09:41:00 PM

From Bloomberg: Cheyne Finance SIV Won't Pay Debt as It Falls Due

Cheyne Finance Plc, the structured investment vehicle managed by hedge fund Cheyne Capital Management Ltd., will stop paying its debts, a receiver from Deloitte & Touche LLP said.

... Cheyne Finance's debt with different maturities will now be pooled together, rather than shorter term debt being repaid sooner, Neville Kahn, a receiver from Deloitte said today in a telephone interview.

``It doesn't mean we have to go out and fire-sell any assets, quite the opposite in fact,'' Kahn said. ``The paper that falls due today or tomorrow won't be paid as it falls due.''

Cheyne Finance appointed receivers in September to oversee the management of its assets after the SIV was forced to liquidate assets to repay maturing commercial paper.
...
Cheyne issued $8 billion of short-term debt to buy securities linked to home loans, according Moody's Investors Service.

The receivers declared an ``insolvency event,'' Deloitte said. That means the SIV is unable to pay its debts when they are due, according to its prospectus.

Borrow short, lend long, go broke; one of the oldest stories in lending, but somehow rediscovered by every generation. The new wrinkle here was to make some especially bad loans too.

by Tanta on 10/16/2007 09:22:00 AM

Looks like we're going to need a bigger microwave.

Orchestrating the pooling of hundreds of billions worth of illiquid assets into a single conduit strikes us as a bad move. In analytics, we call such proposals a "difference without distinction." Instead of seeking to restore the abnormal and manic market conditions that prevailed in the world of structured finance prior to Q2 2007, we think Secretary Paulson and his Street-wise colleagues should be trying to reach a more stable formulation.

The subsidiary banks of C, for example, have about $112 billion in Tier One Risk Based Capital supporting 10x that in "on balance sheet" assets, assets which typically throw off 3x the charge offs of C's large bank peers. A modest haircut of C's total conduit exposure of $400 billion could leave that capital decimated, forcing C into the hands of the New York Fed and FDIC. Of note, looks like the ratio of Economic Capital to Tier One RBC for C at 3.75:1 calculated by the IRA Bank Monitor was not so severe as some Citibankers previously have suggested.

The fact that much of the debt issued by C-controlled SIV's was maturing in November seems to have prompted the Treasury to act, yet another example of "limited government" under President George W. Bush. Apparently there are some people at the Treasury who think that aggregating large bank conduit risk into a single subprime burrito will somehow draw foreign and domestic investors back to the structured asset trough. This notion would be laughable were the situation not so perilous.

(For you beginners, "C" is the ticker symbol for Citicorp, not 983,571,056 feet per second.)

Hat tip to Clyde!

by Tanta on 10/15/2007 08:44:00 AM

Yves at naked capitalism has a post up this morning on the Citicorp-Related Asset Conduit Kerfuffle (MLEC), which I recommend.

There's also this charming bit from this morning's New York Times:

The problems raised alarms immediately in Washington, because commercial paper is a critical financial pillar for the economy, helping to provide money for home loans, credit cards and airplane leases. At the Treasury, Robert Steel, deputy under secretary for domestic finance, and Anthony Ryan, assistant secretary for financial markets, called top executives from about 30 banks to a meeting in Washington after realizing that the banks were not talking to one another about the crisis, people familiar with the talks said.

As a long-time observer of the banking industry, allow me to observe that one of our major problems has always been that we don't talk to anybody except each other. Trust a reporter to publish talking points about "pillars of the economy" and the Treasury just doin' a little healthy fostering of interbank communication skills.

From where I sit, it seems like a lot of investors no longer want to be the bagholder of the "pillars" of this economy, thanks. And Citicorp doesn't want to honor the guarantees it made to those SIVs in the first place, either. So instead of letting Citi take the consequences of having provided financial backstops to these things, the Treasury department thinks its a good idea to just "square" them (hey! it worked so well with CDOs!).

by Calculated Risk on 10/13/2007 04:31:00 PM

From the NY Times: Banks May Pool Billions to Avert Securities Sell-off

... Citigroup, Bank of America and JPMorgan Chase, along with several other financial institutions, have been meeting to come up with a plan to create a fund that could prevent a sharp sell-off in securities owned by bank-affiliated investment vehicles. The meetings, which began three weeks ago, have been orchestrated by senior officials at the Treasury Department, and the discussions have intensified in the last few days.

A broad framework for an agreement could be reached as early as tomorrow ... but many important details still need to be hammered out. Another round of discussions is taking place this weekend, and it still possible that the parties will not reach agreement.

See the article for a few more details. Here is the Reuters take: Treasury officials seek to help battered SIVs

One plan that was discussed at the meeting involved setting up a "super fund" where "each SIV in the market could pledge up to one-third of its assets and get financing," the source said.

The WSJ reported on this last night: Big Banks Push $100 Billion Plan To Avert Crunch

If the banks agree, the plan could be announced as early as Monday, people familiar with the matter said. Citigroup announces third-quarter earnings Monday. The tentative name for the fund is Master-Liquidity Enhancement Conduit, or M-LEC.

by Calculated Risk on 10/12/2007 10:33:00 PM

Here is more on the Citi SIV bailout plan from the WSJ: Big Banks Push $100 Billion Plan To Avert Crunch

The plan could be announced on Monday:

If the banks agree, the plan could be announced as early as Monday, people familiar with the matter said. Citigroup announces third-quarter earnings Monday. The tentative name for the fund is Master-Liquidity Enhancement Conduit, or M-LEC.

Some banks aren't happy with the plan (does this mean Treasury is trying to strong arm other banks into participating?):

The plan is encountering resistance from some big banks. They argue that Citigroup is asking others to help bail out its affiliates and an industry-wide bailout isn't needed.

Some banks are just eyeing the fees:

Two banks in the discussions with Citigroup, Bank of America Corp. and J.P. Morgan Chase & Co., would participate not because they have SIVs -- they don't -- but because they would earn fees for helping arrange the superconduit, according to people briefed on the discussions. The superconduit's debt would be fully backed by participating banks, they said.

The timing is interesting since Citi and JPMorgan are expected to sell some $5 billion of loans on Monday to help finance the TXU LBO.

by Calculated Risk on 10/12/2007 04:21:00 PM

From the WSJ: Banks Discuss Solution To Liquidity Problem

The largest U.S. banks along with financial regulators are in confidential discussions to find a solution for a lack of cash liquidity ... [for] bank-affiliated investment vehicles that issued tens of billions of dollars in short-term debt ... the plan would be to create a "super conduit" that would issue short-term debt and serve as a buyer of assets currently held by so-called SIVs. [Structured investment vehicles] ...

Citigroup Inc., the world's largest bank in terms of market value, is one leader of the proposed plan. Citigroup has some seven affiliated SIVs with nearly $100 billion in assets.

But who would fund the "super conduit"?

by Calculated Risk on 9/11/2007 09:35:00 PM

From Bill Fleckenstein: Leveraged Black Boxes (Fleck's Site):

Note: Excerpted with permission. SIV: Structured Investment Vehicles.

"... though London appears to be the epicenter of conduit angst these days, our homegrown Citicorp appears to have plenty of exposure. That, according to the Lord of the Dark Matter, who in an email to me rattled off the following list of its SIVs: Beta Finance, Centauri, Dorada, Five Finance, Sedna Finance, Vetra Finance, and Zela Finance. He was able to obtain a portfolio commentary for Beta Finance ...

First of all, for those folks who can't quite wrap their arms around what an SIV, SPIV, or conduit is, those names all stand for pretty much the same thing -- special-purpose entities that reside off balance sheet. Think of them as virtual S&Ls, which can be quite sizable. ... And, because they're off-balance-sheet, they operate with little regulation.

The better question is: why these entities exist in the first place, and in such size. I think we know the pat answer -- so that financial institutions can employ them and utilize even more leverage than they are legally allowed to. ... Citicorp notes that the leverage in this particular vehicle, Beta Finance, is "only 14.24 times." Thus, Citicorp, a leveraged entity, owns a gaggle of leveraged S&Ls. ...

Next, Citicorp says: "We highlight that all US CMBS exposure is super-senior." What I find interesting in that comment: They've taken pains to note that their commercial mortgage-backed paper is the highest rated -- implying that there might be a problem with lesser-rated tranches of commercial mortgaged-backed paper.

That echoes a data point provided by someone wishing to remain anonymous, who resides near the top of the lending food chain at one of the world's largest banks. The source indicated to me that commercial mortgage-backed securities will also see problems. Though I did not get the impression from her that the timing was imminent, the weakness in the commercial version of the ABX index indicates that some pain is already being dispensed, even if there has been little spilled on this subject."

Note: According to Goldman Sachs, the problem is more acute in Europe, because the European regulations allow SIVs that would be on balance sheet in the U.S., to stay off balance sheet in Europe.

Earlier this year from Fleck:
January 14, 2007:

... a former top executive at a subprime lender (whose chronicling of the unwind has been amazingly accurate and timely), told me that serious issues are developing, and that large companies like New Century Financial (NEW, news, msgs), Accredited Home Lenders (LEND, news, msgs) and NovaStar Financial (NFI, news, msgs) will, in his words, "hit the wall" very soon.

January 30, 2007:

Turning to the subprime industry, once again I heard from my friend who has been staggeringly accurate. He continues to feel that things are about to really get worse. In an email to me, he wrote: "Scratch and dent loans are killing everybody. Bids that were 92 or 93 are now low to mid-80s. It is a bloodbath, and is pressuring even strong companies to buckle. NO ONE is making any money in the market right now. We are at a point of no return for many. The next two weeks will be wild."

Note: A wild two weeks indeed as subprime blew up in early February.

March 14, 2007:

My friend in subprime updated me last night, as follows: "The Alt a space has deteriorated very quickly, but not yet public. $40 billion in subprime still waiting to find a home. No loans will be bought at attractive prices until May production as it will be underwritten to new guidelines. The triple bbb's are a mess. The hedge funds that bought it are all in trouble. ... warehouse guys and Alt a guys are now next. Alt a guys may be worse as less insurance on those loans to protect them. The loan sizes are bigger as well."