Over 5% of EBS mortgages now in arrears: Tribune

[kerrynorth]

Emerald Mortgages, the securitised vehicle for the building society’s home loans, recorded an arrears rate of 5.16% of mortgages in April, up from 4.79% in the previous month. The building society has 19,226 loans in the pool and about 1,000 of these loans are in arrears.

The vast majority of arrears are for periods of between one and three months, although there were 96 loans with arrears running to over a year. The value of the loans in arrears was €117m. The building society has a loan-to-value ratio on average in the pool of 78.84%.

tribune.ie/business/news/art … loan-pool/

That LTV ratio is probably a work of fiction as well in the present environment.

[2Pack]

Well there are 5 of these Emerald mortgages pools on issue that I know of Emerald Mortgages Number 1 was punted in 2001 for €500m and Emerald Mortgages Number 4 in around 2007 for €1.5bn and Emerald Mortgages Number 5 in 2008 for €2.5bn and where the underlying loans would be Top of the Market vintage from 2006 or so .

The earlier ones may all have been redeemed and resecuritised , eg

The article mentions the "Main Pool "which is Number 5 , when you search Pat Nearys website for the prospectus you are unceremoniously told that

EMERALD MORTGAGES NO. 5 Limited - Secured Floating Rate Bonds due 2050 Debt 20/03/2008
**The Issuer has requested that the above Prospectus should not be published on the Financial Regulator’s website. **
The Prospectus is available in printed form, free of charge, at the offices of the Irish Stock Exchange, pursuant to Regulation 45(1)(b) of the Prospectus (Directive 2003/71/EC) Regulations 2005. Debt 20/03/2008

Feckers

[yoganmahew]

Here are the documents relating to Emerald covered bonds - I believe they are covered bonds and not securitizations, so I believe there is scope for them to be returned by the investors in the event that they cease to perform well… are either of these true?

Ooops. Forgot the link.
ebs.ie/site/all/Emerald+Reports?Opendocument

Just read the Emerald 3 last report (April 2008) which has this footnote on the first page:
online.ebs.ie/internet/pdffiles/ … .v2pdf.pdf

In the event that total arrears exceeds 5.5% or arrears greater than 3 months exceeds 1.75% all available principal is repaid to the A note holders. As at the 31.03.2008 while total arrears were 4.21% (under the overall limit, arrears greater than 3 months were 2.15%).

Emerald 2 has the same end date with total arrears 4.2% and > 3 months 2.38%
Emerald 1 doesn’t have the note, but also seems to have ended in April 2008 with total arrears of 5.91%

I don’t know much about covered bonds. I know only anecdotal evidence of mortgage stress in 2007, but it looks like all of EBSs existing covered bonds went boom towards the end of 2007; either that or they went boom earlier, but the investors pulled out in April 2008?

[Larry]

5% seems like a massive number to me this early in the crash, especially considering many more people must be teetering on the brink.

If 1/20 mortgage holders had to put their properties up for sale tomorrow, would that not be a tsunami hitting the market? I think about all those sprawling housing estates in Dublin and imagine on every Everygreen Road and Oakdale Crescent and Springfield Park - each consisting of 20 or 30 or 40 semi-d’s - there being 2 houses for sale by stressed sellers, another 2 through a desire to be rid of the gruelling mortgage repayments, 2 through a desire to simply move house, with perhaps 2 others for various other reasons like divorce or emmigration. Suddenly you have 20% or 30% of the houses on a road for sale. Scary stuff.

[yoganmahew]

Given that there were 5%ish in arrears in each of the three busted earlier bonds, the question then becomes what has happened to these mortgages? Are they still on the EBS books? I haven’t seen many repossessions with EBS’s name on them, so I guess they must be? Is EBS resecuritising the remaining good stuff that they have at a higher and higher price each time?

Fuggin’ hell, I’m going to have to up my 3% loss figure on residential

[2Pack]

The Bond was issued a year back

Note that none were in arrears when the bond was issued and the number of borrowers in arrears rose the most the month after the bond was issued, it went from 0 - 500 in month ONE and is 940 now a year later.

See Page 3 Of

Then

online.ebs.ie/internet/pdffiles/ … .05.08.pdf

and today

online.ebs.ie/internet/pdffiles/ … .04.09.pdf

and the reserves seem OK , also page 3 although there is a strange difference in reserves beween each of those reports .

[Sidewinder]

@yoganmahew

Fuggin’ hell, I’m going to have to up my 3% loss figure on residential

Double it and add one or two points for luck!

While total residential losses (when all is said and done in about 15 years time) will be constrained to a very large degree by our bankruptcy laws and the historical court reluctance to grant repossession orders, the number of defaulting mortgages will still be flippin massive. Over 5% in trouble before mass unemployment and a series of vicious budgets kicks in? 50%+ write-offs for a large chunk of the distressed mortgages?
About 7-8% for residential losses all in, sez Sidey’s Random Number Generator. Ye also have to remember pre-bubble mortgages, which are not likely to default, are a tiny fraction of the size of bubble-era mortgages. So the riskiest mortgages are also the biggest in monetary value and also, possibly, the most numerous category of mortgages, which will all skew the losses upwards a bit.

A bit on the high side on the global comparative bubble/bust scale yeah, but really not excessively so, all things considered.

[yoganmahew]

It looks to me, Mr. Sidewinder, as if we are going to run at twice the historical average loss rates for a financial crisis:
C&D - 40%
Commercial - 26%
Corporate - 18%
Consumer - 12%
Residential - 7%

Still, every cloud has a silver lining, it makes the sums easy - €100 bn cost…

[CaveCanem]

@yoganmahew

Given that there were 5%ish in arrears in each of the three busted earlier bonds, the question then becomes what has happened to these mortgages?

Most ended up in Emerald 5 (well €862m did). They redeemed Emerald 1,2 & 3, I’m guessing they didn’t have a call option for Emmerald 4.

In the event that total arrears exceeds 5.5% or arrears greater than 3 months exceeds 1.75% all available principal is repaid to the A note holders. As at the 31.03.2008 while total arrears were 4.21% (under the overall limit, arrears greater than 3 months were 2.15%).

I wouldn’t worry about this. This is a protection mechanism for the Class A noteholders. It looks like the both note classes were paying down together. However if arrears hit a trigger level, available funds will be used to pay down the Class A noteholders.

Fuggin’ hell, I’m going to have to up my 3% loss figure on residential

The monthly rate of arrears increase is concerning in Emerald 5. I noticed that all loans contained in Emerald 5 were owner occupied at the mortgage completion date. I’m sure their BTL book is performing better