Fannie Mae Ties 3Q Losses to Alt A Mortgage Market

Over 25% of Fannie Mae’s credit losses in the third quarter came from its book of guaranteed alternative A mortgages, according to the company’s president and chief executive officer, Daniel Mudd.

The giant secondary market agency has guarantees on $324.7 billion in alt A mortgage backed securities, which had a serious mortgage delinquency rate of 1.36% as of Sept. 30.

“Alt A drove about 28% of Fannie Mae’s total credit losses in the most recent period,” Mr. Mudd told a Goldman Sachs investor conference. “this book gets an awful lot of attention”.

Only 40% of its guaranteed alt A loans have credit enhancements, which suggests many are piggy backed with second liens. The weighted average credit score is 719.

Fannie took $1.2 billion in credit related expenses in the third quarter, including a $670 provision for credit losses on delinquent loans it purchased out of Fannie-guaranteed MBS.

Bear Stearns Hedge Fund Losses Lead to Arbitration Claims, According to Law Firms Representing Investors — BSC

NEW YORK, Dec. 5, 2007 (PRIME NEWSWIRE) — A four-law firm legal team, with nationally recognized securities law experience, has filed investor claims against two subsidiaries of Bear Stearns Companies, Inc. (NYSE:BSC) — Bear Stearns & Co., Inc. and Bear Stearns Securities
Corp. — over the recent collapse of a Bear Stearns hedge fund.

Arbitration claims were filed this week with Financial Industry Regulatory Authority (FINRA) by the law firms of Maddox, Hargett & Caruso, P.C., of New York, New York and Indianapolis, Ind.; Aidikoff, Uhl & Bakhtiari, of Beverly Hills, Calif.; Page Perry, LLC, of Atlanta, Ga.; and David P. Meyer & Associates Co., LPA, of Columbus, Ohio.

Forseeing Subprime: State-Run Investment Pools Hit by Mortgage Contagion. Analysis and Discussion with Mike Verano of PFM Asset Managment: Disposed of $3 Billion of Commercial Paper Before Subprime Implosion.

Subprime in the Schoolhouse. Interview with Hal Wilson, CFO of Jefferson County School Board; Mortgage Contagion Hits State Run Investment Pools, Nobody Has Told Taxpayers; Wilson Placed $2.7 Million Taxpayer Funds in Florida Local Government Investment Pools.

Barclays Bank reports a $2.7 billion write down.

Citigroup - Citi Sold $4 Billion of 10 Year Notes, Highest Relative Yield in Bank’s History; Investors Cash Out of GE Bond Fund After Subprime Mortgage Implosion.

HSBC Takes $3.4B Hit

HSBC Holdings is taking a larger than expected $3.4 billion third quarter loan impairment charge, $700 million of which is related to unanticipated U.S. real estate secured declines, but the company says the negative developments would be “more than offset” by revenue growth in other areas. U.S. subsidiary HSBC Finance, said in a Nov. 14 report that it has seen a “marked increase in delinquencies” in mortgages originated by its retail branches.

The non-mortgage portion of HSBC Holdings’ overall loan impairment charge was “largely due to branch unsecured loan and cards portfolios,” according to the company.

Merrill Lynch Officially Names John Thain as New Chairman/CEO.

More Credit Writedowns for Financials Arena. Financials Group and Credit Risk - Analysis and Discussion with Daniel Castro of CSG Group