GLG News by Title Insurance Experts: Mortgage Professionals

Brian HershkowitzChief Executive OfficerMaximum Value Group

Good for today, uncertain for the future

January 23, 2008

Analysis of:Asian markets rebound after Fed cut | news.yahoo.com

It is terrific that one day gains reclaimed much of the territory lost over the various Asian exchanges on Tuesday.  The significance of the instant reaction to the price cut at the Fed's lending window was one of timing.  The question is whether this particular means for economic stimulus will have a long lasting effect.

Brian HershkowitzChief Executive OfficerMaximum Value Group

US Subprime Issues Affect Asian Growth

January 16, 2008

Analysis of:Goldman lowers Asia growth forecast | www.ft.com

The reduction in US consumer spending is hopelessly enmeshed in the availability of mortgage credit, housing prices, and generalized consumer confidence.  The slowdown in the US economy, tied to these three macro forces, will greatly affect both established and emerging markets across the globe.  No where will this be more felt than in Asia.

Joseph SmithPresident and CEODefault Mitigation Management

BOA and Operational Risk

January 15, 2008

Analysis of:Countrywide rescue: $4 billion | money.cnn.com

Over valued versus the risk of litigation, talent flight, legislative constraints, portfolio loss and about every other imaginable variable. Overvalued servicing rights with disappointed servicing investors. Average industry systems, nothing great. Short staffed already. More leaving. Mozillio defineltly a liability and not an asset.

Joseph SmithPresident and CEODefault Mitigation Management

B of A acquires a stomach ache

January 15, 2008

Analysis of:Countrywide rescue: $4 billion | money.cnn.com

While on paper the acquisition versus the valuation of loan servicing looks good, the reality is a whole mess of operational and regulatory risk. The Countrywide CIO was just announced leaving for FIS (Fidelity) and the state of the art systems was one of the selling points in the acquisition. An asset sale will probably be the answer.

Brian HershkowitzChief Executive OfficerMaximum Value Group

Who gets the bigger benefit - Countrywide or the rescuer?

January 14, 2008

Analysis of:Countrywide rescue: $4 billion | money.cnn.com

While many eyes are on the transaction as a proposed bailout for Countrywide, Bank of America will be solving a good many problems for themselves, while purchasing the fuel for tremendous growth.  The advantages for Bank of America are many but the largest are the resolution of their August 2007 investment of 2 billion in Countrywide for a 16% stake now devalued by the market, the availability of a full functioning nationwide sales and fulfillment channel for mortgage loans, the acquisition of a large and highly profitable servicing portfolio, advanced technology, and a top notch executive and management team.

Joseph SmithPresident and CEODefault Mitigation Management

Risk - Reward investments/endeavors require active investors

December 31, 2007

Analysis of:Hedge funds assess exposure to banks | www.ft.com

While it is true that investors risk money on potential returns and soundness of the underlying assets, it is also true that both the packager and the investor have analytical staff whose job it is to understand the investment. The underlying collateral of mortgages does have the value of the stream of mortgagors' payments; the key is that the stream be maximized to create the fullest return. Once the value of the stream is established then the pool will have worth and a basis for a market value. Instead of sitting back and bemoaning the investment banks who merely provided an investment option with very clear indications of the types of loans in the prospectus. Belittle the society that endorses short cuts to sound business.

Joseph SmithPresident and CEODefault Mitigation Management

Law of Unintended Consequences is at work again.

December 10, 2007

Analysis of:Llenders Agree to Freeze Rates on Some Loans | www.nytimes.com

Potential Lawsuits, repurchase demands and flawed collateral documentation will cause many more problems than the intended solution will solve. The limited nature of the eligible loans will be far less than the 1,000,000 loans identified by the administration. The parties making the agreement do not have the right to do so.

Joseph SmithPresident and CEODefault Mitigation Management

HSBC as a Bellweather Indicator

November 13, 2007

Analysis of:HSBC, the Subprime Seer:Sanguine View Isn't Likely | online.wsj.com

HSBC's indications do not necessarily indicate the extent of change in the market. Since HSBC is very forthcoming with their news, they do not capture some lenders who have not been in the past. These other lenders, some of whom are significantly larger than HSBC, have been deferring some wirte offs and will take larger positions of loss going forward. HSBC does indicate the trend but not the severity.

Joseph SmithPresident and CEODefault Mitigation Management

Hidden losses to come

October 10, 2007

Analysis of:Unlikely Mortgage Winner | online.wsj.com

The problem with programs of this type is flight from debt. For many of the lenders for which we work, we can not find a high number of these foriegn buyers. if they have any problem with their financial situation they leave the country. Numerous principal residences are vacant and we have tracked them to housing scams where the refinance or purchase was related and inflated.

Joseph SmithPresident and CEODefault Mitigation Management

It is more than liquidity and perception - the Housing Crisis

September 20, 2007

Analysis of:Financial crisis triggers first stress test | investing.reuters.co.uk

Stress is yet to be seen, early indicators are bad, the future is going to be worse. The actions to date have failed the test for working out of the mortgage crisis. What is yet to come on the mortgage market can be changed if acted on, current trends are leading to disaster.

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