Cleanup underway in subprime houses

This is a recap. Merrill Lynch & Co. Inc. said in a financial report that it has agreed to pay $550 million to settle separate class action lawsuits stemming from subprime loss disclosures. The Ohio State Teachers Retirement System, the lead plaintiff in one lawsuit brought on behalf of stock purchasers, agreed to a proposed settlement totaling $475 million in cash. The other suit was brought by employees, and was settled for $75 million.

On the issue of AIG and their parties, American International Group Inc. Chief Investment Officer Win Neuger, who presided over billions of dollars in losses tied to subprime mortgages, will step down from that post, according to a person familiar with the situation. Probably a good idea, this is happening too late to satisfy some investors.

Someone also discovered that taxpayers could see losses from loans made by the Fed. Some of the assets on the Fed’s balance sheet already lost substantial value over the past six months. No kidding? Maybe this has something to do with Citigroup scaring everyone last week. Citigroup cannot have all of the bailout money, even if that is what it takes.

Finally we have our favorite bunch of idiots – Saxon – and detrioration in their collection performance, as if they are not offensive enough to prompt homeowners. Moody’s Investors Service has downgraded Saxon Mortgage Services, Inc.’s (“Saxon”) Servicer Quality (“SQ”) rating as a Primary Servicer of subprime residential mortgage loans to SQ2 from SQ2+. Moody’s also has placed on review for downgrade the company’s SQ2 rating as a Special Servicer of residential mortgage loans.