Multiple Control Failures To Blame For The Current Credit Crisis

New York, NY (PRWEB) February 25, 2009

The public has been quick to place sole responsibility for the crisis on the shoulders of bankers, and their perceived excesses. However in any crisis, be it a Depression, Fraud or Catastrophe such as the Three Mile Island Nuclear incident, it is not any one failure point, or person, that leads to a disaster but a confluence of more minor interlinked breakdowns.

A misplaced reliance and faith in mechanical risk models, possessing known flaws and weaknesses, were exploited throughout the mortgage chain.

Loan originators were actively encouraged to push high commission, high risk products, such as Adjustable Rate Mortgages, whilst at the same time over-inflating borrowers assets and under-stating borrowers expenses in order to generate mortgage flow for Wall Street. The controls in place designed to mitigate these abuses, such as obtaining substantiating documentation and 3rd party credit checks were often ignored, omitted or seldom verified.

Bankers packaged, split and combined these mortgages into Bonds backed by them. These bonds were subsequently securitized into Collateralized Debt Obligations (CDO) and then turned into ever more complex and esoteric products, such as CDO^2. These products were impossible to price given their complexity, lack of historic default & price performance information, thereby making management of the associated risks unattainable.

Bankers let the task of independently pricing and rating these securities prior to issuance with Rating Agencies leading to a conflict of interest as Rating agencies were paid for these ratings by the bond issuers. In addition to this moral hazard, Rating Agencies used overly simplistic risk and pricing models that did not take into account systemic risks, risks that the underlying assumptions used in their valuations would be moot due to “extraordinary” market conditions.

To protect themselves from unexpected losses on CDOs, sophisticated investors relied upon the purchase of a type of insurance contract, the Credit Default Swap which shared the same fundamental flaws in pricing and risk as the CDOs. Whilst the economic benefit of a CDS is sound in principle, the vast majority of these CDS were written and traded solely as a speculative play. As defaults increased to levels way beyond those used in the initial modeling of price and risk the perceived likelihood that the originating issuers of being burdened with “insurance” payouts that they will be unable to pay further added to market turmoil and systemic risk.

Industry regulators, bodies who’s task is to protect investors by maintaining the fairness of Capital Markets, must also bear a portion of the blame for the current crisis. Regulators were under staffed and over lobbied by financial institutions eager to remove rules designed to reduce the level of risk they could take on. In addition regulatory staff working at the coal face were seldom experienced and educated in the fields of risk management and were primarily concerned that the banks were following the rules set by the regulators, rules that possessed loopholes that institutions readily exploited.

In the end the credit crisis resulted from failures of many interrelated controls. Moral hazard over the way in which compensation was awarded, controls that were actively avoided, known flaws in risk models which were overlooked and the gatekeepers of the financial market were under funded and over lobbied. Such far ranging failures throughout the entire mortgage process demand a complete rethink on how financial products and markets are modeled, monitored and controlled.

About Crest Rider

Crest Rider Inc is a Management Consulting firm specializing in developing Risk & Governance solutions in the fields of Capital Markets, Investment Banking and Insurance

For more information, visit or contact Julian Fisher at 212 721 1580


Related Securitization Press Releases

Michael Birajiclian, Esq. Joins TitleVest as Managing Director of Business Development

New York, New York (PRWEB) March 9, 2009

TitleVest, a Manhattan-based provider of title insurance and related real estate services, announced today the hire of Michael Birajiclian, Esq. as Managing Director of Business Development.

Over the past decade, Birajiclian has closed more than $ 8 billion in real estate transactions in positions held at several leading investment banks including Bank of America, Nomura Credit & Capital and Morgan Stanley, and most recently as an attorney in private practice at Stark, Amron & Liner, LLP. In his new role as Managing Director of Business Development at TitleVest, he will leverage his vast industry experience and relationships to cultivate new sources of business for TitleVest.

During his tenure with the Bank of America, Birajiclian, a principal in the Real Estate Structured Finance Group, structured and closed in excess of $ 4 billion in conduit, leveraged finance and syndicated transactions; negotiated participation, intercreditor, pooling and servicing agreements and all related transfer documentation; and headed the deal team that closed Bank of America’s portion of the 2006 CMBS Deal of the Year: Toys ‘R Us.

At Nomura Credit & Capital, Inc., Birajiclian managed the loan closing department from the group’s inception and worked directly with program counsel in developing Nomura’s fixed rate, floating rate and large loan form documentation; closed and structured in excess of $ 3.2 billion of fixed and floating rate conduit loans; and negotiated mortgage loan purchase agreements with third-party correspondents to build origination volume.

In the Securitized Products Group at Morgan Stanley, Birajiclian worked closely with the trading desk, originating bankers and outside counsel concerning the proper structure of commercial mortgage and franchise mortgage loans.

In his most recent position at Stark, Amron & Liner, LLP, a New York City based real estate and structured finance practice, Birajiclian represented commercial banks and mezzanine funds on loan closings, preferred equity investments, participations, workouts, foreclosures and general commercial litigation proceedings; advised clients regarding distressed debt and workout situations for sub and nonperforming loans focusing on maximizing asset value; and drafted and negotiated all related loan documentation with a focus on client relationship management.

“I am thrilled to be joining the TitleVest team,” said Michael Birajiclian. “Through my many years as a banker and attorney on numerous large, institutional deals, I know the type of service expected and what it takes to get deals closed. I look forward to working with my extensive base of real estate professionals, as well as developing new relationships and providing them with the very best service in the title industry.”

“Michael is an excellent addition to our team,” said Bill Baron, President of TitleVest. “His extensive experience closing large commercial transactions along with his close relationships with many top industry professionals will help expand TitleVest’s business and reputation as one of the preeminent title insurance providers. We look forward to working with Michael and anticipate great results.”

A resident of Brooklyn, Birajiclian holds a Juris Doctor from the University of Louisville School of Law and a Bachelor of Arts in English from the University of Vermont. He is a member of the American Bar Association, Kentucky Bar Association (Oct. 1997), New York Bar Association (Oct. 1999), Real Estate Lenders Association and Mortgage Banker’s Association.

Michael can be reached at 212.757.5800 ext. 248 or mike (at) titlevest (dot) com

About TitleVest

The TitleVest family of companies consists of TitleVest Agency, Inc., 1031Vest, LLC, and Vest Insurance Brokerage, LLC:

TitleVest (TitleVest Agency, Inc.) is a leading provider of title insurance, cooperative apartment lien searches, and related real estate services. TitleVest is a policy issuing agent for First American Title Insurance Company, Chicago Title Insurance Company, Fidelity National Title Insurance Company, Stewart Title Insurance Company, Old Republic National Title Insurance Company and Commonwealth Land Title Insurance Company.

1031Vest (1031Vest, LLC) is a leading Qualified Intermediary for IRC Section 1031 Tax-deferred Exchanges. A proud member of the Federation of Exchange Accommodators, 1031Vest is fully bonded and insured.

InsureVest (InsureVest Brokerage, LLC) is a full-service property and casualty insurance brokerage offering a full line of business and personal insurance products from its network of the leading and highest-rated insurance carriers.

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More Securitization Press Releases

UNIS LUMIN Refocuses on Core Values and Experience Excellence to Ensure Continued Growth

(PRWEB) March 13, 2009

As it celebrates its second decade in business, UNIS LUMIN ( has refocused its efforts on creating value, innovation and growth for customers. With offices now located in Vancouver, Calgary, Toronto, Montreal and Halifax and more expansion planned, the company decided the time was right to launch a new brand image that more closely represents its unique values and mission.

UNIS LUMIN’s positive momentum comes at a time when many customers are faced with business challenges arising from an uncertain economy. The good news is that technology can often help solve those challenges if it is properly aligned with an organizations business needs. UNIS LUMIN’s deep experience, extensive knowledge resources and flexibility in changing economic conditions makes it an ideal partner for customers wanting to leverage technology to optimize their business performance and create competitive advantage.

UNIS LUMIN is a Cisco Gold Partner, a Cisco Master’s Unified Communication Specialized Partner and a Microsoft Gold Partner and provides a complete life cycle of consulting, integration, support and managed services in application development, communications and collaboration (voice, video and data), security, storage and data centre management.

The company’s new brand image uses bold red and black colours and a strong upward arrow to symbolize UNIS LUMIN’s direction, energy and attitude. It is designed to represent the true essence of what UNIS LUMIN brings to customers – a unique blending of two decades of experience across a wide range of industries, organizations and technologies AND a dedication to excellence in every customer interaction. As the company enters its third decade, it is ideally positioned to help customers not only survive complex economic times but to thrive in them.

UNIS LUMIN Customer, Securit, discusses its long-standing relationship

“Securit helps companies manage and secure their greatest assets: their business information. With operations throughout North America and around the world, we were looking for a partner that had the experience and expertise to help us build out our IT infrastructure across branches in North America and the United Kingdom. UNIS LUMIN has been that partner since 2005 helping us establish a solid, scalable and reliable foundation for our branch and corporate IT architecture. We consider UNIS LUMIN to be a strategic business partner, their commitment to understanding our business and delivering a high quality solution has been exceptional. We look forward to our continued partnership as we move forward with our expansion and growth plans in the future,” Senior Vice President and CIO, Delvin Fletcher, Securit.

President and COO Glenn Mowat on the company and the future

“We find ourselves in very interesting times” says Glenn Mowat, President and COO, UNIS LUMIN. “We have extensive industry experience, knowledgeable, highly trained technical staff and a true dedication to our customers — a combination that results in unique solutions designed to address the very specific business challenges faced by our customers. Our new brand image is a real reflection of the company today and into the future – Experience Excellence is who we are and what we do.”

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Pedata RV Hopes The TALF Will Help The Industry

(Vocus) March 25, 2009

With spring break upon us and summer approaching, it’s traditionally a popular time in motorhome sales. However with credit still tight, RV sales are, and will be, tough. Proponents of the TALF (Term Asset-Backed Loan Facility) which rolls out this month, say this could be what opens credit markets and attracts more dollars to the industry.

“We are entering a popular season for RV sales,” says Clint Ethington of Pedata RV Center. “Our prices are at record lows. We are getting interested buyers left and right. However credit is still an issue.”

Overture Technologies Adds J. Barry Morrow to Board of Directors

Chevy Chase, MD (PRWEB) April 7, 2009

Bethesda, Maryland — Overture Technologies, the leading provider of decisioning software solutions that enable transparent, accurate and responsive lending processes for the mortgage and education finance industries, has announced the election of J. Barry Morrow to its Board of Directors.

“Barry brings tremendous experience in guiding companies through active stages of growth and a deep understanding of the perspectives of both lenders and schools in serving the higher education market,” said Bill Kelvie, CEO of Overture Technologies. “We’re pleased to attract such a well-respected industry leader to our Board.”

Morrow, an education finance industry veteran with 30 years of experience in business development, operations and technology, was president and CEO of Collegiate Funding Services, a leading student loan servicing company, until its acquisition by JP Morgan Chase Bank in 2006. Previously, Morrow was general manager of financial services for the U.S. Department of Education’s Office of Student Financial Assistance. Earlier, Morrow was vice president of regional operations with Sallie Mae, where he spent 17 years in various senior operating executive positions. He holds an M.A. in public administration from George Washington University and a B.A. from Virginia Tech.

“Overture’s solutions help schools to expand the way they engage students on the process of financing their education and enable lenders to serve students in a more transparent and efficient way,” said Barry Morrow, board director at Overture Technologies. “Overture’s enabling, web-based technologies could not come at a more critical time for students facing increasing tuition costs and challenging credit markets. I am excited to serve on the Board of this dynamic and innovative company.”

About Overture Technologies

Founded in 2000, Overture Technologies is the leading provider of decisioning software solutions that enable transparent, accurate and responsive lending processes for the mortgage and education finance industries. Overture’s customers are dedicated to providing superior mortgage underwriting, servicing and securitization services and to increasing students’ access to higher education financing alternatives. Our leadership team applies decades of experience from leading financial services and technology firms including Fannie Mae, Freddie Mac, Goldman Sachs, IBM, KPMG and Sallie Mae to help our customers achieve their goals. For further information, call (301) 492-2140 or visit


More Securitization Press Releases

Overture Technologies and the Association of Independent California Colleges and Universities (AICCU) Announce Marketing Partnership for Student Loan Marketplace

Bethesda, Maryland, and Sacramento, California (PRWEB) April 16, 2009

The Association of Independent California Colleges and Universities (AICCU), representing California’s 75 non-profit accredited colleges and universities with more than 289,000 students, and Overture Technologies, the leading provider of decisioning software solutions that enable transparent, accurate and responsive lending processes, announced today a marketing partnership to create the California Student Loan Marketplace. The California Student Loan Marketplace will be an online education financing resource that connects students and their families with lenders to encourage smart borrowing practices and compare reliable private student loan terms. Prager, Sealy, & Co., LLC, a leading higher education investment banking firm, will serve as the program manager for AICCU.

“It is more important than ever for families to have clear, accurate, and easy-to-understand information about alternatives for financing college costs,” said Jonathan Brown, AICCU president. “The California Student Loan Marketplace will help provide students with affordable higher education at top institutions.”

The California Student Loan Marketplace will allow schools to provide students and their families with access to unbiased information on financing higher education. The Marketplace will offer students, families, counselors, and institutions the following:

*Reliable loan terms from multiple lenders: The Marketplace will provide what students need – the ability to compare and select reliable financing options – not “as low as” advertisements – with a complete listing of reliable loan terms.

*Preservation of borrower credit scores and privacy: The Marketplace will provide a more efficient, safer loan shopping experience for students by pulling a single credit report to match borrower information with multiple lenders’ student loan products and allowing borrowers to choose which lender receives their information.

*Smart borrowing practices: The Marketplace will provide information on how to borrow wisely, including exhausting federal loan options before turning to private loans, and using a co-signer to achieve the best rates and fees.

*Guiding students to make informed decisions: The Marketplace can be configured with school-specific information about policies, deadlines, academic programs, and grade-levels to assure that students receive custom-tailored loan options.

*Enhanced transparency: The Marketplace will be an open network of lenders that allows schools to provide students with meaningful guidance in a safe and trustworthy environment.

“Overture is pleased to work with AICCU, a trusted group that is dedicated to connecting students with lenders for smarter financing of their education at private, non-profit colleges in California,” said Peter Carroll, Overture Technologies’ vice president, product marketing.


Since 1955, the Association of Independent California Colleges and Universities is the voice of California’s private, non-profit, WASC accredited colleges and universities for state and federal issues. AICCU schools enroll over 280,000 students annually. Founded in 1955, AICCU offers research, consolidated purchasing, and professional development opportunities to member schools; it also provides information to counselors, students, and parents about higher education in California.

About Overture Technologies

Founded in 2000, Overture Technologies is the leading provider of decisioning software solutions that enable the transparent, accurate and responsive lending processes required in today’s mortgage and higher education industries. Overture’s customers are dedicated to providing superior mortgage underwriting, servicing and securitization services and to increasing students’ access to higher education financing alternatives. Our leadership team applies decades of industry experience from leading financial services and technology firms to help our customers achieve their goals.

About Prager, Sealy & Co., LLC

Since Prager, Sealy & Co. was founded in 1987 with the assistance of two universities, higher education finance has remained a primary focus and strength. The firm’s mission is to provide clients with unparalleled personal and professional service, approaching each engagement with integrity, innovation, and insight. Prager, Sealy is committed to redefining investment banking by offering broad strategic advice with expert market execution.

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Overture Technologies Develops Online Service to Provide Students with More Secure, Reliable Way to Shop for Private Student Loans

Bethesda, Maryland (PRWEB) April 16, 2009

Overture Technologies, the leading provider of decisioning software solutions that enable transparent, accurate and responsive lending processes for the mortgage and education finance industries, has announced the development of an online service that will be able to provide a more secure, reliable way for students to shop for private student loans. The Student Loan Marketplace is an innovative education financing tool that can help students and their families learn about and compare loan terms in an open and transparent network of lenders.

Overture plans to launch the service through marketing partners, such as associations of colleges and universities, and with participating lenders. The Student Loan Marketplace is the first multi-lender platform that allows students to review reliable private student loan terms based on their own personal and financial information instead of “as low as” advertisements for rates.

Amid the current rising costs of college and challenging economic environment, U.S. Department of Education data indicates applications for federal student aid in 2009 have increased by more than 20 percent over the same period last year. After exhausting all available scholarships, grants, work-study and low-cost federal loans, many students often must consider private student loans to finance part of the cost of education. This search has proven to be a challenge for many students, particularly those with little or no credit record, as the strain on credit markets has also resulted in a contraction of lending sources.

According to a College Board report on student borrowing trends, private student loan volume accounts for almost 25 percent of total education loan volume. The Student Loan Marketplace has been created to give students a secure, transparent resource where they can be matched with lenders to choose a loan based on the criteria that is most important to their individual situations.

*More Secure, Reliable Comparison Shopping for Students Who Are New to Borrowing

Currently, students new to borrowing are faced with a very confusing and time-consuming process to make apples-to-apples comparisons of private student loan terms from multiple lenders. If a student wishes to compare accurate rates and terms, he or she must enter personal information at each lender’s web site and consent to a credit pull before obtaining information suitable for comparison shopping, and then determine how to interpret calculations of APR and other costs across various loan products. With just one credit pull, The Student Loan Marketplace presents a side-by-side comparison of reliable loan products and terms on one page, and provides helpful explanations of terms.

“We built the Marketplace to put students in control of their private loans, giving them unprecedented insight into the details of the loan options available to them,” said David Kirby, general manager of Overture Technologies’ Education Finance Solutions group. “The Marketplace platform enables reliable comparisons of multiple private student loans in minutes – until now, no resource like this has been available.”

Commercial Real Estate: A Rose Among Thorns? John B. Levy & Company Finds Few Positives Budding in Today’s Commercial Real Estate Market

Richmond, VA (PRWEB) April 19, 2009

Conditions that scorched the commercial real estate market in fourth quarter 2008 showed no signs of abating in January and February of 2009, dashing hopes among developers and investors alike that there might be an uptick in sales and refinancing activity in the new year. Market watchers in the crowd longing for the days of 2007 discovered the disappointment of looking at the world through rose-colored glasses.

“Every Thorn Has Its Rose” is the latest in a series of timely, informative podcasts produced by John B. Levy & Company, and it provides clients and analysts with a sobering vision of what they can expect in today’s commercial real estate market. This new podcast is available online at

“Any hint of rosy optimism has been overrun with thorns,” says John Levy, founder of John B. Levy & Company. “Most real estate owners, developers, and investors are beginning to realize that commercial real estate isn’t going to recover in 2009, and probably not in 2010.” He adds, “we’re looking toward 2011.”

Levy offers a couple reasons for his assessment. First, of the top one hundred largest markets in the United States, ninety are still showing job losses, indicating that the current recession is both deep and wide. Jobs drive the demand for multifamily housing, and they create the need for retail and office space. In addition, commercial real estate is a lagging, not leading sector.

“When the subprime financial market was going over Niagara Falls backward in a canoe in 2007,” Levy says, “those of us in the commercial sector were doing just fine. That said, we shouldn’t expect commercial real estate to lead us out of this recession.”

While it’s difficult to be optimistic about today’s market, Levy says there is a rose among the thorns, but it is in the budding stage. First, the federal government is pushing massive liquidity into the commercial real estate market via TARP and TALF, and these programs are starting to show promise. For example, spreads on commercial mortgage backed securities (CMBS) have tightened more than 500 basis points. Levy also believes we might see the rebirth of CMBS securitization by the end of the year, and the prospect of rejoining securitization and commercial real estate is a huge step in the right direction.

“In the meantime,” Levy says, “the biggest problem owners and developers face today is that their loans are maturing and they lack financing opportunities. Almost $ 300 billion in commercial real estate loans is coming due in 2009, and more than $ 200 billion comes from bank loans. This situation creates a major challenge.”

Levy suggests that owners and developers hire experts to assemble a financial package and help with strategy and negotiations. He also recommends that those with properties suffering from negative cash flow avoid using personal cash to keep the note current. Instead, that cash can be used as a principal payment or as additional collateral for negotiations and loan extensions.

Finally, Levy suggests, those with a CMBS loan should ask in writing – not over the phone – for their loan to be transferred from the master servicer to the special service. This strategy is helpful because only the special servicer can extend the loan or offer forbearance.

“Now is not a good time to be out there all alone,” Levy says. “We’re in uncharted waters right now, and a lot of owners and developers need help. This market is dicey.”

Firm Background

John B. Levy & Company, Inc. is a real estate investment-banking firm headquartered in Richmond, Virginia. Since John Levy founded the company in 1995, the firm has structured over $ 3.5 billion in financing for developers and owners of commercial and multi-family projects nationwide, often investing its own proprietary funds into transactions with its clients. Mr. Levy is an expert on commercial real estate financing and the effects of interest rates on commercial real estate markets. He is the originator and author of the Barron’s/John B. Levy & Company National Mortgage Survey, a monthly survey of more than 30 of the country’s largest institutional investors, as well as buyers and sellers of commercial mortgage-backed securities, which Barron’s published for over 23 years. Mr. Levy is also co-creator of The Giliberto-Levy Commercial Mortgage Performance Index (sm), the first and pre-eminent index to measure and analyze the performance of investments in the commercial mortgage industry. Additionally, he is a member of the Board of Directors of Anthracite Capital Inc. (NYSE: AHR), a New York Stock Exchange REIT managed by BlackRock, Inc and a former director of Value Property Trust.

For more information about John B. Levy & Company, please visit the firm’s website at or call Andrew Little at 804-644-2000, extension 260.


Related Securitization Press Releases

Woodbridge Investments LLC Announces Auction Site for Investments in Structured Settlement and Lottery Receivables

New York, NY (PRWEB) April 27, 2009

Scott Schwartz, Vice President of Woodbridge Investments has today announced the launch of a new auction site to bring high yield investment opportunities to investors nationwide. Schwartz stated, “Up to now we would have never offered these investments to individual investors since our institutional demand was so strong.” But he added, “Due to the recent financial crisis and lack of a dependable securitization market, we are now offering these high yield investment opportunities to private investors in an auction format.”

Lottery winners and Structured Settlement recipients are usually paid in long, drawn-out monthly or annual payments. Woodbridge goes to court and gets a court-ordered assignment of these payments paid directly to the investors by either the state lottery commissions or by major insurance companies such as Allstate, Hartford, AIG or others.

Schwartz further added, “What better opportunity is there out there today? Court ordered directly into the investors name paid directly by insurance companies yielding up to 11%. I have never ever seen a default of a lottery payment by a state agency.”

Woodbridge and its predecessor companies have been purchasing lotteries and structured settlements since 1993. Woodbridge has helped thousands of people gain access to their future payments, allowing them to sell their annuity payments, structured settlements or lottery payments for cash now.

For more information about Woodbridge Investments, LLC or to make a high yield investment, contact Scott Schwartz at 866-865-7044.


AuthenWare Adds Financial Sector Expert to Management Team

Miami, FL (PRWEB) May 8, 2009

AuthenWare, a leader in keystroke dynamics software, today announced that Andre De Castro has joined the company as Vice President of Pre-Sales and Professional Services. In this role, he will be instrumental in positioning and aggressively marketing AuthenWare’s end-to-end solutions across the globe. Hailing from Citigroup’s Fixed Income Technology division, Mr. De Castro will leverage his expertise in financial services to help organizations minimize the impact of cybercrime.

“Authenware is excited to have Andre as part of the team,” said Tom Helou, AuthenWare president. “As online transactions grow, hackers become a greater predator, attacking our credit cards as well as our individual identities. Andre’s strong financial background offers a unique set of skills to properly service today and tomorrow’s banking sector clients. We are proud to welcome Andre to AuthenWare.”

At AuthenWare, Mr. De Castro will be responsible for supporting sales initiatives and defining various metrics and processes. Further, Mr. De Castro will delineate the professional services strategy, sketching plans for consulting, customer support, and other elements of service. In addition, he will cultivate key partnerships with business leaders, analysts, associations and industry federations, in related disciplines.

Prior to joining AuthenWare, Mr. De Castro built and directed software development teams, managed the business process automation across global securitized markets, and acted as the point person across all commercial and residential mortgage backed securities hardware, storage and virtualization at Citigroup. His accomplished background also includes sales and software experience at BEA Systems and Plumtree Software.

About AuthenWare

Headquartered in Miami, AuthenWare is a leading innovator and producer of keystroke dynamics software. Its identity authentication product, AuthenWare, recognizes valid users by calculating the unique rhythm and beat with which the typist keys in data (i.e. their username and password) on their computer keyboard. AuthenWare evaluates this information along with behavioral and environmental characteristics to keep hackers out and let authorized personnel in. The company services customers that span across international borders and business sectors, effectively providing security to industries such as financial services, government, transportation and logistics, manufacturing, and retail.

For more information, please visit our website at

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