Subprime Market

[Oldcoin]

I’ve been hearing a lot about the sub-prime mortgage market and how it could negatively impact the market. In the past couple of weeks we’ve had some lenders provide negative advice about earnings because of these lending practices. So here is a thread for us to learn about the sub-prime market.

[Show-me]

These lenders did it to themselves and we will pay for it. Same with the countries enormous credit card debit.

[Oldcoin]

Is the Sub-Prime “Garbage” 6% or Rather 50% of the Mortgage Market? And the Worst Housing Recession in Decades...
Nouriel Roubini | Feb 28, 2007
Now even mainstream media and mainstream analysts regularly speak of the sub-prime “meltdown” or “carnage” and refer to these sub-prime mortgages as “garbage” or “trash”. Since most of these sub-prime mortgages were junk that should have never been originated in the first place, now the new spin in financial markets is to minimize the nature of the problem by making two arguments: first, sub-prime loans are only a very small fraction of the housing market, specifically only 6% of it; second, sub-prime problems are a niche problem that is not affecting other parts of the mortgage market. Both arguments are utter spin without any basis. Let us see why.
Where did the Mortgage Bankers Association (MBA) get the “sub-prime is only 6%” figure that it is spinning around in every possible media? Their trick is to consider all homeowners, even the 35% of homeowners who do not have any mortgage and then argue that only 6% of homeowners are sub-prime borrowers. Why is this spin and why is the actual figure for “garbage” mortgages actually closer to 50% of the flow of new mortgages in 2005-2006 rather than the “6%” being spinned around? Several reasons.
http://www.rgemonitor.com/blog/roubini/180573/

Nouriel can be a pretty negative in his comments, but at least we know where he’s coming from and we don’t get the media “spin” we normally see in other e-rags.

[Oldcoin]

These lenders did it to themselves and we will pay for it. Same with the countries enormous credit card debit.

What was that theory in the 60’s…the domino effect. Can the weakness in sub-prime lead to weakness in other lending areas, credit cards which leads to something else?

But your right, we all end up paying for these screw ups, lets just hope we can afford the price tag.

[Oldcoin]

http://www.financialsense.com/editorials/williams/2007/0227.html

NEXT LEG DOWN IN HOUSING?
by Richard T. Williams, CFA, CMT
Director, ICAP Equity Research
February 27, 2007

The market amazed us for about 5 or 6 new highs along a progression that we thought would have been almost ideal for a turning point. But it was not to be. Even with the BOJ raising its lending rate to .5% from .25% didn’t have the expected impact on stock prices. The inflation figures came out worse than expected, at least nominally fulfilling Fed-head promises to hike rates if pricing doesn’t slow down and decline. But that was shrugged off as a rounding error! Now we are hearing that our thesis that housing price declines have not yet reached investors ears because of the 90-day delay in reporting home sales. That coupled with commentary from several housing stock mgmt teams points to another down leg in housing very much along the lines predicted in prior notes and comments.

[350zCommTech]

If this is not a dead cat bounce, then I don't know what is. Are people that stupid these days? Especially with the internet and all. This company is about to be investigated and they might be done with the real estate business. Heck, they might be done period.

1470

[350zCommTech]

"33
lenders have now gone kaput"

"Deep Thought Of The Week
~ Bear Stearns analysts upgraded New Century (NEW) one day before the company announced (http://www.marketwatch.com/news/story/new-century-says-faces-criminal/story.aspx?guid=%7BC13DE0D3%2D528C%2D4CD1%2DBAE0%2 D73BD1FC7D8F5%7D&siteid=yhoo&dist=yhoo) it was breaching covenants with its warehouse lenders, which was also the same day it came to light that NYSE and state criminal probes had been opened against the company for trading irregularities. Bear Stearns is itself heavily involved in mortgage lending at almost all levels. How credible does all this make Bear Stearns, I wonder? ~"

http://ml-implode.com/


The idiots that are buying New Century(up 30% today) are going to get spanked!

[Fivetears]

Oldcoin, So 6% is actually 50% of all mortgage loans issued. That seems a bit excessive in the industry. So what should be the correct lending rate?

[Fivetears]

Either that, or all that sidelined money is going to find its way into a cheap real estate mortgage lending company venture.

The idiots that are buying New Century(up 30% today) are going to get spanked!

[350zCommTech]

Either that, or all that sidelined money is going to find its way into a cheap real estate mortgage lending company venture.

But when it's all said and done, their stock might eventually be worth less than $1 a share. What was Enron's stock price after the blow-up?

[350zCommTech]

Oldcoin, So 6% is actually 50% of all mortgage loans issued. That seems a bit excessive in the industry. So what should be the correct lending rate?

Did you read the whole article? Here are his reasons why he thinks it should be closer to 50% of all mortgages:


Sub-prime are now 13% of the stock of mortgages, not 6%.
Sub-prime mortgages were at least 20% of mortgage originations in 2005 and 2006.
The same “monster” lending practices used for subprime mortgages were also used for most “near-prime” and “prime” mortgages.
Many pseudo “near-prime” mortgages (such as Alt-A) are undistinguishable from sub-prime ones and have now sharply rising default rates
What is defined as sub-prime is subject to highly cosmetic accounting by banks: the rule that FICO scores of 660 or below are sub-prime is often diluted down to 630 or even 620 to exclude many mortgages from a sub-prime classification.
Counting all of the categories above, subprime-like mortgages accounted for almost 50% of all originations in 2005 and 2006 not the 6% figure spinned by the industry lobbies.http://www.rgemonitor.com/blog/roubini/180573/

[Fivetears]

I did. I get that. Just what should the lending rate be? Prime? 1% over? 1% under? I'm just trying to understand this. I climb in jet fuel tanks for a living.
So is my taking advantage of a fixed 4.75% home mortgage offer, one those sub-prime mortgages talked about? Just curious, and need to understand.
Did you read the whole article? Here are his reasons why he thinks it should be closer to 50% of all mortgages:


Sub-prime are now 13% of the stock of mortgages, not 6%.
Sub-prime mortgages were at least 20% of mortgage originations in 2005 and 2006.
The same “monster” lending practices used for subprime mortgages were also used for most “near-prime” and “prime” mortgages.
Many pseudo “near-prime” mortgages (such as Alt-A) are undistinguishable from sub-prime ones and have now sharply rising default rates
What is defined as sub-prime is subject to highly cosmetic accounting by banks: the rule that FICO scores of 660 or below are sub-prime is often diluted down to 630 or even 620 to exclude many mortgages from a sub-prime classification.
Counting all of the categories above, subprime-like mortgages accounted for almost 50% of all originations in 2005 and 2006 not the 6% figure spinned by the industry lobbies.http://www.rgemonitor.com/blog/roubini/180573/

[Oldcoin]

I did. I get that. Just what should the lending rate be? Prime? 1% over? 1% under? I'm just trying to understand this. I climb in jet fuel tanks for a living.
So is my taking advantage of a fixed 4.75% home mortgage offer, one those sub-prime mortgages talked about? Just curious, and need to understand.

4.75% rates are still out there if you have a good credit rating and can qualify. The Sub-prime markets, with the rising interest rates, has set many people up for failure. These are the folks who couldn’t qualify for your 4.75% note. With more failures in this market lending practices will tighten up and fewer people will qualify for the loans. Many of the loans should not have been made in the first place.

Actually, money is still cheap even if you have to pay the Fed rate, what has been expensive is the real estate. With dropping real estate values the need for the sub-prime loans should diminish also, markets at work. But the potential carnage from a slowing economy and failing lenders scares me.

Aside from this stuff…..climbing into jet fuel tanks for a living….cool. Isn’t that JP-5 caustic?

[Rod]

Uncle Ben will be speaking this afternoon about mortgages...:worried:

Could that be a catalyst for the market to sell-off this afternoon?

[Rod]

Uncle Ben will be speaking this afternoon about mortgages...:worried:

Could that be a catalyst for the market to sell-off this afternoon?

Update:

Probably not since he's not speaking on current monetary policy or the economy.

[Oldcoin]

Uncle Ben will be speaking this afternoon about mortgages...:worried:

Could that be a catalyst for the market to sell-off this afternoon?

I don't think I posted that in the economy thread for this week. I can't wait to read his remarks, I'll bet he's not too pugnacious (<--for Birchtree:D) on the sub-prime market, that would scare to many people.

Thanks Rod

[Fivetears]

JP-8 now; Not as flamable as 4 or 5. Very oily residue. Still not the best working environment, but enjoyable to me. It beats the tar out of me these days in my mid 40's (bruises, bumps and cuts); but I enjoy doing it for our troops and Uncle Sam.
Aside from this stuff…..climbing into jet fuel tanks for a living….cool. Isn’t that JP-5 caustic?

[350zCommTech]

I did. I get that. Just what should the lending rate be? Prime? 1% over? 1% under? I'm just trying to understand this. I climb in jet fuel tanks for a living.
So is my taking advantage of a fixed 4.75% home mortgage offer, one those sub-prime mortgages talked about? Just curious, and need to understand.

Sub prime rates are usually above prime rates for a comparable loan, due to higher risks. That's why lenders came up with 0 down, interest only, negative amortization loans, ...etc. It is thought that these risky lending practices were strictly use by sub-prime borrowers, but Nouriel is arguing that prime borrowers were taking out these types of loans also, hens the 50% number.

Your loan is not sub-prime. Sub-prime borrowers would not qualify for that.

[ChemEng]

Perhaps Google is to blame??? :)

1475

These were the ads they had posted in this thread.

Although $381/month for a $150k loan sounds pretty good. Probably is an interest only, 3 month adjusting ARM with balloon and prepayment penalties. :sick:

[Oldcoin]

Perhaps Google is to blame??? :)

1475

These were the ads they had posted in this thread.

Although $381/month for a $150k loan sounds pretty good. Probably is an interest only, 3 month adjusting ARM with balloon and prepayment penalties. :sick:

Hey I just noticed that, pretty funny for this thread.

[350zCommTech]

Hey I just noticed that, pretty funny for this thread.

LOL! I just noticed that too. The ad below my previous post was a Countrywide ad. Countrywide might be going under also.:laugh:

[Oldcoin]

Global Central Bank Focus
Paul McCulley | March 2007


The Plankton Theory Meets Minsky

http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2007/GCBF-+March+2007.htm

Watching the on-going meltdown in the sub-prime mortgage market, which is triggering a sharp tightening of underwriting standards to these dicey credits, I was reminded of prescient writings by two serious thinkers: Bill Gross and Hyman Minsky. Both narratives go back a long ways, with something that Bill wrote in August 19801 – 27 years ago! – particularly poignant:

[Oldcoin]

United States
Will the Subprime Meltdown Trigger a Credit Crunch?

February 12, 2007

By Richard Berner | New York

Soaring defaults signal that the long-awaited meltdown in subprime mortgage lending is now underway, and it likely has further to go. Fears are rising that this so-far idiosyncratic credit bust will morph into a broader, systemic credit crunch as foreclosures rise, lenders grow cautious, and Congressional efforts to rein in predatory lending further choke off supply. A credit crunch occurs when lenders deny even creditworthy borrowers access to borrowing. What are the risks of such a scenario?

http://www.morganstanley.com/views/gef/archive/2007/20070212-Mon.html#anchor4374

[Oldcoin]

Here is a link to ABX Indices displayed by Markit.

http://www.markit.com/information/affiliations/abx.html

It is interesting to note that the A market has held up pretty well while the B market has dropped, in some cases significantly, but is now off the market bottom. I don’t know if these charts can help in the future, but interesting to look at how these things trade. It would be nice to overlay the charts on the S&P.

[Fivetears]

Thanks 350Z; I appreciate the explanation. :)
Sub prime rates are usually above prime rates for a comparable loan, due to higher risks. That's why lenders came up with 0 down, interest only, negative amortization loans, ...etc. It is thought that these risky lending practices were strictly use by sub-prime borrowers, but Nouriel is arguing that prime borrowers were taking out these types of loans also, hens the 50% number.

Your loan is not sub-prime. Sub-prime borrowers would not qualify for that.

[350zCommTech]

Financial stocks rally, New Century recovers a bit

EW YORK (MarketWatch) -- Financial stocks closed sharply higher Tuesday as buyers reemerged in most sectors following several days of declines. New Century shares were among the biggest gainers, as the troubled subprime mortgage lender rose about 25&#37; at the open, before falling back to end up about 10%.
The move was likely due in part to short covering, as investors who recently borrowed shares and sold them, bought them back at a lower price, and pocketed the difference as profit.
Shares of subprime lenders other than New Century

FMT (http://www.marketwatch.com/tools/quotes/quotes.asp?symb=FMT)6.78, +0.89, +15.1% ) also rose Tuesday, after sinking more than 25% in the previous session as investors dumped holdings in an industry rocked by tighter regulation and bad debts. See full story. (http://www.marketwatch.com/News/Story/subprime-panic-takes-hold-investors/story.aspx?guid=%7B75E1EE31%2D0F63%2D422D%2D8715%2 D2CB945DFF410%7D)

New Century shares fell about 60% on Monday, after a large short position had already been accumulated.

http://www.marketwatch.com/news/story/new-century-recovers-some-ground/story.aspx?guid=%7B73838DA4%2DD8D9%2D4C5F%2D8951%2 D55E373B270A4%7D

[350zCommTech]

Alt-A are a step above sub-prime. The consensus so far has been that sub-prime problems have not been spreading to Alt-A.


"Mortgage Defaults Start to Spread

by Ruth Simon and James R. Haggerty
Thursday, March 1, 2007


The mortgage market has been roiled by a sharp increase in bad loans made to borrowers with weak credit. Now there are signs that the pain is spreading upward.
At issue are mortgages made to people who fall in the gray area between "prime" (borrowers considered the best credit risks) and "subprime" (borrowers considered the greatest credit risks). A record $400 billion of these midlevel loans -- which are known in the industry as "Alt-A" mortgages -- were originated last year, up from $85 billion in 2003, according to Inside Mortgage Finance, a trade publication. Alt-A loans accounted for roughly 16&#37; of mortgage originations last year and subprime loans an additional 24%.

The catch-all Alt-A category includes many of the innovative products that helped fuel the housing boom, such as mortgages that carry little, if any, documentation of income or assets, and so-called option adjustable-rate mortgages, which give borrowers multiple payment choices but can lead to a rising loan balance. Loans taken by investors buying homes they don't plan to occupy themselves can also fall into the Alt-A category.Borrowers who take out Alt-A mortgages are considered less risky than subprime borrowers because of their higher credit scores. But as the housing market cooled and loan volume declined, some lenders lowered their standards for Alt-As. Now a rising number of borrowers who took out these loans are running into trouble."

Read the rest here:

http://finance.yahoo.com/loans/article/102536/mortgage_defaults_start_to_spread

[Oldcoin]

http://www.markit.com/information/affiliations/abx/history

Here is a link to some charts that reflect the AA, A and BBB markets. The BBB market has taken a huge hit.

[350zCommTech]

These sub-prime Google ads are killing me!!!:laugh::laugh::laugh:

[Oldcoin]

These sub-prime Google ads are killing me!!!:laugh::laugh::laugh:

Uncanny how they key in on the topic of the thread.....I think I'll go over to the monkey bar and see what their ads are like.

[Oldcoin]

Martini
Browse a huge selection now. Find exactly what you want today. Ultimate Bar Chef

Create ultimate cocktails just like a bar chef

I think I like their ads better :D

[Oldcoin]

FDIC Orders Fremont General to Halt Subprime Loans (Update3)

By Alison Vekshin and Bradley Keoun

March 7 (Bloomberg) -- Fremont General Corp., the California lender that's trying to sell its residential-mortgage unit, was ordered to halt making subprime loans that consumers can't repay and to correct deficiencies in its commercial real-estate lending.

http://www.bloomberg.com/apps/news?pid=20601103&sid=atgNvzV.UsLI&refer=us

I often wonder if there is a real problem with the subprime loans, or is this the flavor of the week. Seeing lending institutions going under and issuing earnings warnings because of these loans is startling, but will we really see a bank (lending institution) a day go under? You would think that these guys would have some way to hedge the risk.

[Oldcoin]

Defunct Subprime Firms

http://data.nationalmortgagenews.com/freedata/?what=special

16 firms with an estimate of 5% of the market share.

[Oldcoin]

http://www.stocktiming.com/Thursday-DailyMarketUpdate.htm

This guy was right on about the Shanghai 180 index.

Today he’s getting into the subprime market and the banking index. He is indicating that if the banking index goes below lower resistance the market will follow.

I'll have to find the symbol on stockcharts for the banking index. Any ideas?

[350zCommTech]

If this is not a dead cat bounce, then I don't know what is. Are people that stupid these days? Especially with the internet and all. This company is about to be investigated and they might be done with the real estate business. Heck, they might be done period.


The idiots that are buying New Century(up 30&#37; today) are going to get spanked!
NEW YORK (MarketWatch) -- Financial stocks closed sharply higher Tuesday as buyers reemerged in most sectors following several days of declines. New Century shares were among the biggest gainers, as the troubled subprime mortgage lender rose about 25% at the open, before falling back to end up about 10%.


Today from Marketwatch:http://www.marketwatch.com/news/story/new-century-stops-accepting-loan/story.aspx?guid=%7BA1787B0D%2D8729%2D44EB%2DA679%2 DE4FD70CEAB50%7D

"New Century stops accepting loan applications
Subprime specialist tries to maneuver as financial backers clamp down

SAN FRANCISCO (MarketWatch) -- New Century Financial Corp. said late Thursday that it has stopped accepting loan applications because some of the subprime-mortgage specialist's financial backers are refusing to provide access to financing.

New Century shares fell 4.4% to $3.70 during after-hours trading on Thursday. The stock slumped 25% to close at $3.87 during regular trading, leaving it down more than 85% so far this year."

I'd say the spanking is not yet over. Bend over and prepare for more!:D

[350zCommTech]

Today he’s getting into the subprime market and the banking index. He is indicating that if the banking index goes below lower resistance the market will follow.

I'll have to find the symbol on stockcharts for the banking index. Any ideas?


This might be it but I'm not sure.

1484

[budnipper1]

http://www.stocktiming.com/Thursday-DailyMarketUpdate.htm

This guy was right on about the Shanghai 180 index.

Today he’s getting into the subprime market and the banking index. He is indicating that if the banking index goes below lower resistance the market will follow.

I'll have to find the symbol on stockcharts for the banking index. Any ideas?

Maybe this is it..:confused:
http://finance.yahoo.com/q?s=KRE

or this? http://www.marketwatch.com/quotes/bkx

[The_Technician]

This might be it but I'm not sure.

1484
If you're referring to the Philadelphia Bank Index its $BKX


http://www.phlx.com/products/bkx.html

[Oldcoin]

Thanks I’m going to add KBE to my watch list. We’ll see if this pans out.

[Oldcoin]

http://www.bloomberg.com/apps/news?pid=20601109&sid=agBlUfdwU9l8&refer=home

Muhlenkamp Loses Ground in Mortgage-Market Shakeout (Update1)
By Danielle Kost

March 8 (Bloomberg) -- Ronald Muhlenkamp's $2.4 billion Muhlenkamp Fund, which lost value just once in the past 12 years, is getting hurt by the shakeout in the U.S. mortgage market.

Muhlenkamp's mutual fund dropped 4.8 percent since the start of the year, the worst performance of 90 competing funds tracked by Bloomberg that buy shares of companies perceived as being undervalued. The manager counts Countrywide Financial Corp., the biggest U.S. mortgage lender, among his 10 largest holdings.

[Oldcoin]

http://www.stocktiming.com/Friday-DailyMarketUpdate.htm

Mortgage company woes ...

Yesterday, we looked at the Banking Index. This morning, we will look at the trouble the mortgage market is in. For those who have not been looking at the charts of sub-prime lenders, today's charts will be an eye-opener.

After sub-prime loans surged to a seven-year high and even those with the poorest credit were finding waysto finance a home. In the past year, more than 20 lenders have closed or started looking for buyers.
Currently, about 10 percent of subprime loans are 60 days delinquent or in foreclosure.

The big news this morning is about the nation's third largest sub-prime lender ... New Century Financial. Last week, they stopped accepting loan applications. The fear now is, that they might file for bankruptcy as regulators initiate a criminal probe into their activities.

[Oldcoin]

Bies Says Subprime Defaults Are `Beginning of Wave' (Update1)
By Alison Vekshin

March 9 (Bloomberg) -- U.S. Federal Reserve Governor Susan Bies, formerly the U.S. central bank's top official on banking policy, said delinquencies from subprime loans made at a low introductory rates have just begun.

``What's happening is the front end of this wave of teaser- rate loans that are coming into full pricing,'' Bies said today at a risk-management forum in Charlotte, North Carolina. ``So what we're seeing in this narrow segment is the beginning of the wave -- this is not the end, this is the beginning.''

Bies's comments reflect growing attention among bank regulators to the turmoil in the subprime mortgage market and its impact on consumers and U.S. lenders. Many subprime borrowers facing large prepayment penalties are at risk since housing prices aren't growing and they can't refinance or sell their homes, she said.

http://quote.bloomberg.com/apps/news?pid=20601087&sid=aX7j51EwgKYY

[Oldcoin]

Subprime's Next Victims: Hedge Funds

By Doug Kass
Street Insight Contributor

http://www.thestreet.com/_tscrss/markets/activetraderupdate/10342448.html

The fallout in the subprime market won't be limited to the originators of these risky mortgages -- the next area to keep an eye on is hedge funds.

First, it's clear we haven't seen the worst of the subprime wreakage and that we'll soon see the hurt spread to the prime-mortgage arena, as I've argued recently.
-------------------------------------------------------------------------
I’m going to stick with my domino theory for the subprime market. I think we could get a cascade effect with the continued problems in this area.

[Oldcoin]

New Century Gets Default Claims, Says It Lacks Cash (Update2)

By Yalman Onaran

March 12 (Bloomberg) -- New Century Financial Corp., the nation's second-biggest subprime lender, said today it can't meet demands by its lenders for accelerated payments. The shares, already down 90 percent in 2007, lost half their remaining value.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aW8f7kW.nSzU&refer=home

[Oldcoin]

GE's WMC Mortgage loans hit subprime index

Mon Mar 12, 2007 8:02AM EDT

By Al Yoon - Analysis

NEW YORK (Reuters) - General Electric Co.'s (GE.N: Quote, Profile, Research) subprime mortgage unit is responsible for some of the worst-performing loans in the benchmark index for the $575 billion market for home equity asset-backed securities, showing few lenders are immune to recent U.S. housing sector problems.

http://tinyurl.com/2lg7gq

[James48843]

Sub-prime adjustables-

In my area, bankruptcies are up 120&#37; this year over last, and foreclosures are up 200%.

Just the beginning of the shakeout.

[Oldcoin]

Sub-prime adjustables-

In my area, bankruptcies are up 120% this year over last, and foreclosures are up 200%.

Just the beginning of the shakeout.

http://www.nuzmo.com/t68.html Partial quote from the article;

“So where do we go from here? As most of you know, since 1982, my specialty in real estate was foreclosures. I have never seen a cycle like this before so I have no historical comparison to draw from. All I can offer is some thoughts and points to ponder over:”

This guy specializes in real estate foreclosures and he’s blown away. I think your right, just the beginning. People are starting to compare this to the S&L fiasco.

[Oldcoin]

Will subprime mess ripple through economy?
Q&A: Looking at the impact of the mortgage meltdown

http://www.msnbc.msn.com/id/17584725/

Pretty good Q&A on the subprime lending market.

[Oldcoin]

http://tinyurl.com/3cojzc

New foreclosures at record high
Mortgage delinquencies rise across the board in fourth quarter


I wonder what the numbers in the first quarter of '07 wiil look like?

[Oldcoin]

Is this the subprime apocalypse? (Or is it just a scary story?)

In February, I posted here about Roubini Global Economics' prediction that defaults in subprime mortgages would ripple through the financial system and set off a recession. The next week, the stock market tanked, and lots people blamed subprimes. What's the link between subprimes and the rest of us? Here's how I summed it up last month:

http://money.cnn.com/blogs/generationrisk/?cnn=yes

[Oldcoin]

Alt-A mortgage losses accelerate, study says
Growing Alt-A problems could threaten some mortgage-backed securities

http://tinyurl.com/2fbooc

[Oldcoin]

You know I didn’t think the subprime meltdown would occur at this point in time. I was anticipating more collateral damage in other sectors before the market reacted. So I’m not sure that this was the cause of today’s action. Things are bad in the subprime area and I think it’s great that’s it in the news, but it really hasn’t reached its full potential yet. So I’m a bit suspect when the talking heads start doing their spin thing. There is more to this action than the subprime market.

[Oldcoin]

If you're referring to the Philadelphia Bank Index its $BKX


http://www.phlx.com/products/bkx.html

It appears that the Philly Bank Index $BKX went through its 200 day MA and appears to have gone through lower resistence set in Nov and Dec '06.

[Remo]

Here's one reason the Market reacted like it did....:notrust:

http://www.mortgagebankers.org/NewsandMedia/PressCenter/50974.htm

I need to know when and how often this report comes out to try and avoid future meltdowns like today.

[Show-me]

You know I didn’t think the subprime meltdown would occur at this point in time. I was anticipating more collateral damage in other sectors before the market reacted. So I’m not sure that this was the cause of today’s action. Things are bad in the subprime area and I think it’s great that’s it in the news, but it really hasn’t reached its full potential yet. So I’m a bit suspect when the talking heads start doing their spin thing. There is more to this action than the subprime market.

You bet there is more to it. Job market is weak, housing market weak, inflation higher, spending out of control, baby boomer's retiring, trade deficit, everyone in the world envies us/hates us, we become complacent, we let illegal immigrants work here while we pay U.S. citizens to not work. I'll stop now. You can still make a buck in the market.............wait for it.:D

[Oldcoin]

Home builders assess exposure to risky mortgages

http://news.yahoo.com/s/nm/20070314/bs_nm/usa_subprime_homebuilders_dc_1

NEW YORK (Reuters) - U.S. builders are assessing their exposure to home buyers with weak credit histories amid a subprime mortgage lender meltdown, while one analyst estimated the figure at 8 to 15 percent of their business on average.

"We think the discount ... is overdone," Rehaut said, adding that the U.S. housing industry and particularly the large home builders are seeing some signs of stabilization of supply and demand.

"Just because things are getting less worse, that means earnings are going up? No," said Alex Vallecillo, co-manager of the Allegiant Mid Cap Value Fund, which sold its holdings in home builders about two years ago.

[Oldcoin]

"Just because things are getting less worse,

For some reason I really liked that quote....so I had to throw it in :D

[Oldcoin]

'No Money Down' Falls Flat
By Steven Pearlstein

Wednesday, March 14, 2007; D01

Today's pop quiz involves some potentially exciting new products that mortgage bankers have come up with to make homeownership a reality for cash-strapped first-time buyers.

http://www.washingtonpost.com/wp-dyn/content/article/2007/03/13/AR2007031301733_pf.html

[Oldcoin]

Sub-prime adjustables-

In my area, bankruptcies are up 120% this year over last, and foreclosures are up 200%.

Just the beginning of the shakeout.

Housing woes deepen in U.S. industrial heartland
Thu Mar 15, 2007 8:24AM EDT

By Andrea Hopkins and Kevin Krolicki
DETROIT (Reuters) - Job losses in the U.S. industrial heartland have left states like Michigan and Ohio more vulnerable to mortgage defaults, as home finance costs rise amid often moribund real-estate markets.

http://www.reuters.com/article/domesticNews/idUSN1435600520070315?src=031507_0810_TOPSTORY_mor tgage_pain

At this time some regions are getting hit harder than others, as noted in this story. I have a family member who deals in Real Estate in Southern California; they have not had a serious problem…….so far.

[Oldcoin]

Greenspan Says He Expects Subprime-Mortgage Fallout to Spread
By Steve Matthews and Scott Lanman

March 15 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said he expects the fallout from subprime-mortgage defaults to spread to the broader economy, especially if home prices decline.

``If prices go down, we will have problems -- problems in the sense of spillover to other areas,'' Greenspan said in remarks to the Futures Industry Association meeting in Boca Raton, Florida today. While he hasn't seen such spreading yet, ``I expect to.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aMNo.k9C9eP8&refer=home

We’ve been Greenspanned again!

[Oldcoin]

Do you think the subprime mortgage market issue, and its potential impact on the economy, is being overblown?

Response Total Response Percent
Yes 130 51%
No 124 49%
Total Respondents 254



http://tinyurl.com/yuypyu

[tsptalk]

The bulls say yes, and the bears say no. :D

[weatherweenie]

Greenspan: Subprime Spillover Unlikely
Thursday March 15, 4:33 pm ET
By Brian Skoloff, Associated Press Writer Greenspan Sees Little Threat to Economy From Risky Mortgage Troubles, Unless Home Prices Drop

http://biz.yahoo.com/ap/070315/greenspan.html?.v=2



Greenspan Says He Expects Subprime-Mortgage Fallout to Spread
By Steve Matthews and Scott Lanman

March 15 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said he expects the fallout from subprime-mortgage defaults to spread to the broader economy, especially if home prices decline.

``If prices go down, we will have problems -- problems in the sense of spillover to other areas,'' Greenspan said in remarks to the Futures Industry Association meeting in Boca Raton, Florida today. While he hasn't seen such spreading yet, ``I expect to.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aMNo.k9C9eP8&refer=home

We’ve been Greenspanned again!

[Oldcoin]

Greenspan: Subprime Spillover Unlikely
Thursday March 15, 4:33 pm ET
By Brian Skoloff, Associated Press Writer Greenspan Sees Little Threat to Economy From Risky Mortgage Troubles, Unless Home Prices Drop

http://biz.yahoo.com/ap/070315/greenspan.html?.v=2

Thanks, this it is funny, same story, different headlines. Don't you just love the spin?

Prices in my part of the world have really been dropping. I don't know if it has slowed, but it's hard to imagine the 10% increase that Greenspud is talking about in todays market.

Do you suppose he got called on the carpet for using the R word?

[Wolverine]

Does Greenspan continue to think that he is a Legend in his own mind?

[Oldcoin]

http://tinyurl.com/2mjog5

Accredited Home selling loans at discount
Subprime lender's move prompted to meet margin calls

NEW YORK (MarketWatch) -- It's fire-sale time in the subprime mortgage sector.

Man can you imagine the deep discounts on these loans. I don’t know at what price I’d be a player, but they would have to be real cheap.

[Oldcoin]

Does Greenspan continue to think that he is a Legend in his own mind?


I think his influence is waning, but people still listen to him. I’ll bet he was very surprised to the markets reaction to his remarks about inflation and recession.

[Oldcoin]

As subprime crisis deepens, some fight back

http://www.reuters.com/article/topNews/idUSN1516483920070316?pageNumber=1

The real carnage in the subprime market will be people like these.

[Oldcoin]

http://tinyurl.com/2qugwe

Wall Street reassures on subprime, but there are skeptics

NEW YORK (MarketWatch) -- The U.S. subprime mortgage crisis hasn't spread to other fixed-income markets, investors still crave mortgage-backed securities because loan standards have tightened, and - why worry anyway? - since subprime loans are a mere cog in investment banks' profit machine.

[Oldcoin]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEBXaOLW5leE&refer=home

Worst of Subprime Rout Absorbed by Investors as Markets Rebound
By Shannon D. Harrington

March 23 (Bloomberg) -- Whatever scare rising defaults of subprime loans wreaked on stocks and bonds may already be on the wane.

``The troubles in the subprime market won't affect the rest of the world,''

Neil Jones, head of European hedge fund sales at Mizuho Financial Group Inc. in London, said in a March 20 interview.

While everyone from Alan Greenspan, the former chairman of the Federal Reserve, to Bill Gross, manager of the world's largest bond fund, have acknowledged that mortgage defaults may slow the economy, Wall Street's biggest securities firms aren't fretting. The ``subprime risk flare'' will likely subside by early April, said Jack Malvey, global head of fixed-income strategy at Lehman Brothers Holdings Inc.

[Oldcoin]

Subprime Foreclosures May Hit 2.4 Million, Group Says (Update1)

By Stefan Whitney

March 27 (Bloomberg) -- As many as 2.4 million Americans may lose their homes because of the collapse of subprime lenders, the Center for Responsible Lending said in testimony to Congress.

http://www.bloomberg.com/apps/news?pid=20601170&sid=a.j_Sz1mnTT4&refer=home

[Oldcoin]

Associated Press
Beazer Homes Faces FBI Investigation

Associated Press 03.27.07, 6:52 PM ET

Beazer Homes USA Inc., which has recently suffered hefty losses amid a downturn in the housing market, now faces a federal investigation of mortgage fraud and other allegations involving the homebuilder. Beazer shares plunged 15 percent in after-hours trading Tuesday

http://www.forbes.com/feeds/ap/2007/03/27/ap3557148.html

[James48843]

Subprime Foreclosures May Hit 2.4 Million, Group Says (Update1)

By Stefan Whitney

March 27 (Bloomberg) -- As many as 2.4 million Americans may lose their homes because of the collapse of subprime lenders, the Center for Responsible Lending said in testimony to Congress.

http://www.bloomberg.com/apps/news?pid=20601170&sid=a.j_Sz1mnTT4&refer=home


Now tell me that isn't going to be a big hit on the economy, if it reaches 2.4 million foreclosures.....

[The_Technician]

Now tell me that isn't going to be a big hit on the economy, if it reaches 2.4 million foreclosures.....
For some reason I would like to see Birchy's and the Sponsors faces right now.....reality really bites at times....

[ATCJeff]

Now tell me that isn't going to be a big hit on the economy, if it reaches 2.4 million foreclosures.....

You have to remember there are apprx. 100 million households in America. 2.4 mil represents a very small fraction of mortgages. I would think that most of these homeowners were already short of desposable income. I think the effect on the ecomony will be small.

However, the effect on housing could be huge. I am undecided if sub-prime problems will spill over into other areas.

[The_Technician]

You have to remember there are apprx. 100 million households in America. 2.4 mil represents a very small fraction of mortgages. I would think that most of these homeowners were already short of desposable income. I think the effect on the ecomony will be small.

However, the effect on housing could be huge. I am undecided if sub-prime problems will spill over into other areas.
Combine those numbers with the dive in the number of construction permits and then the dive in the housing prices....along with the dive in auto sales, along with.....and so on ......avalanche could happen basically caused by the overgreediness of US corps over the last 10-15 years......would one expect that you could continue to sale items to consumers who haven't gotten a paralleled rise in income for the rise in the cost of living for the same period.....NOOOOOOOOOO!!!! DUHHH!!! The only hope you have is to continue to grow a new economy.....it would be smart for one to continue to look for new employment with raises to go along with the moves.....its the fastest way to "eqvacate" (is that a word??) the situation......of course the corporations could drop prices of the cheaply manufactured goods from overseas here locally, that would help.......

[Oldcoin]

For some reason I would like to see Birchy's and the Sponsors faces right now.....reality really bites at times....

Well for those folks that are hard core DCAers it gives them a chance to lower their average cost, of course.

On a longer view and in light of the durable goods report today, there appears to be a greater slowing of the economy from the Feds actions. I think we are all expecting the economy to slow this year, the question is how much? I’ve often compared the U.S. economy to a ship at sea, when you put on the brakes it takes a long time to get her stopped; over apply the brakes and you end up going backwards.

[ChemEng]

I’ve often compared the U.S. economy to a ship at sea, when you put on the brakes it takes a long time to get her stopped; over apply the brakes and you end up going backwards.

Interesting analogy. Although ships in general make me :sick:.

[Oldcoin]

Interesting analogy. Although ships in general make me :sick:.


I’m saving the Titanic analogy for later in the year :D

[Oldcoin]

http://ml-implode.com/

The Mortgage Lender Implode-O-Meter.

Interesting link to a site that tracks the fate of subprime lenders.

[James48843]

I like that implode-o-meter- it hs GREAT information.

Good link! Thanks!

[James48843]

More sub-prime news articles:

http://biz.yahoo.com/cnnm/070322/032207_toptips.html?.v=1&.pf=loans
Why you should care about the subprime fallout
Thursday March 22, 12:26 pm ET

By Gerri Willis, CNN


The Senate Banking Committee held hearings Thursday on the crisis in the subprime mortgage lending industry. But we're going to tell you why you should care about the subprime mortgage meltdown and how it's going to affect you.
1: As a homeowner

Even if you're sitting nice and cozy in your 30-year fixed mortgage rate home, this subprime lending mess could really put a dent in your home's value.

A recent study shows that about 1 in 5 subprime mortgages will go into foreclosure. And whether that foreclosed property is across the street, or in the same neighborhood, that is not going to reflect very well on your property value.

The Center for Responsible Lending estimates that one foreclosure in the neighborhood lowers the value of nearby single-family homes by about 1 percent. So, if there are 10 foreclosures in your area, you're talking about 10 percent dip in your home's value.

2: In the market

If you're in the market for a home, you're at an advantage. Sellers are becoming very competitive with each other since there are more houses on the market. And prices have come down in some areas too. That means you may be able to score your dream home at quite a bargain.

If you do have solid credit, the 30-year fixed interest rate is very attractive at just above 6 percent. If you don't have good credit however, you may find it more difficult to qualify for a loan.

3: Selling your home

It used to be that securing credit for just about anyone was a no-brainer, but those rules are changing. Lenders tightening their standards, so there may be fewer borrowers out there who qualify to get a mortgage. And that means that fewer people will have the means to buy a home.

That means if you want to sell your home, you need to price it right. You may also have to market your home more aggressively. Make low-cost improvements that can really help to sell your home like sprucing up the backyard or adding some fresh paint to the exterior.

4: In the market for a mortgage

With all the turmoil in the subprime market, it's more important now than ever that you find a mortgage lender that you trust and feel comfortable with. If you have good credit, you'll find that rates are in your favor. That's because there's a real demand now for homeowners that can make their monthly payments.

Make sure you get at least three mortgage rate quotes from banks and credit unions. You may also want to ask friends and family to recommend a lender. Don't fall for promises that seem too good to be true. The day of "low-low" rates and no money down are long gone.

What to do if your mortgage lender goes out of business

Subprime risk: Most vulnerable markets

[Oldcoin]

Subprime Woes Slow Down Harley Davidson

Posted on Mar 27th, 2007 with stocks: HOG

(MarketWatch) submits: Regarding subrpime woes at Harley Davidson (HOG): This has been a theme here and elsewhere for months. It started when S&P put one series of securitizations on Credit Watch with negative implications because of a looming loss. That issue resolved itself, and S&P called off the dogs.

But in a report today Lehman Brothers is less sanguine. Analyst Felicia Hendrix said that in the wake of the subprime mess, she's growing more concerned about a rise in credit losses and delinquencies at Harley, which could be compounded by tighter lending practices, which in turn could slow the bike maker's unit growth projections.

She adds that many of Harley Davidson Finance's securitized loans "have underperformed, posting higher than expected credit losses and delinquencies."

http://transport.seekingalpha.com/article/30840

Okay, now they’ve gone to far…….. :mad:

[Oldcoin]

I like that implode-o-meter- it hs GREAT information.

Good link! Thanks!

Glad you liked it, How could anyone resist an “Implode-O-Meter” :D

[Birchtree]

I shed no tears for the real estate speculator - for crisesakes if you can't afford to buy then save your money until you can. There are to many guppies in this world. At least they won't be riding this bull market for several years - that's a positive.

[Oldcoin]

Bear Growls at Subprime

By Mark DeCambre
TheStreet.com Senior Writer
3/29/2007 5:24 PM EDT

Bear Stearns (BSC) expects to put its subprime business on a diet in 2007.
At an annual investor conference at the company's Madison Avenue headquarters, Bear Stearns mortgage officials said Thursday the firm would be rolling back subprime lending activity within its mortgage division to 30% of its total business this year, from 50% in 2006.

http://www.thestreet.com/_dm/newsanalysis/wallstreet/10347585.html

[Oldcoin]

Over the past couple of days I was following a decrease in the commercial bank credit of 98 billion. I was a bit concerned at first since it appeared to be a significant drop. Come to find out the change was caused by a conversion of a commercial bank to a thrift. So….who converted. Turns out to be Countrywide.

http://data.nationalmortgagenews.com/freedata/?what=orig

Seems Countrywide is the top Subprime lender. So what’s the fallout from the conversion? I can only speculate, but maybe a takeover or liquidation. Another one for the implode-o-meter.

My post in the economic thread #s 482, 488 & 492.

[Oldcoin]

Bank of America Warns of New `Correlation Crisis' (Update1)
By Neil Unmack

March 30 (Bloomberg) -- U.S. homebuilders may trigger a ``correlation crisis'' similar to the credit sell off in 2005 when Ford Motor Co. and General Motors Corp. lost their investment-grade credit ratings, according to Bank of America Corp.'s securities unit.

The ratings cuts to the automakers triggered losses for banks and hedge funds holding the riskiest parts of collateralized debt obligations, securities that package bonds, loans and credit-default swaps and use the income to pay investors.

An increase in the perceived risk of default by homebuilders such as Dallas-based Centex Corp. and Lennar Corp. in Miami could cause similar losses this year, Banc of America Securities LLC analysts Glen Taksler and Jeffrey Rosenberg wrote in a report today. Construction company profits have plunged since the five- year U.S. housing boom ended a year ago. Rising inventories of unsold homes and reluctance by potential buyers wary of falling prices has stifled sales.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apl3CcA.P81M

[Oldcoin]

Mortgage crisis hits million-dollar homes
Thu Mar 29, 2007 2:48PM EDT

http://tinyurl.com/2f29yn

Oh the humanity…..when will it end? :D All kidding aside in some parts of So Cal a million dollar home really isn’t that unusual.

[Oldcoin]

Where and How will the sub-prime/ARM problems hurt other parts of the economy?

Who will get hurt first?
You are probably tired of hearing about the sub-prime problem by now. There is another aspect about sub-prime problems that the no one is talking about that has underlying implications regarding delinquent debts problems.

Larry Jeddoloh, of TIS Group, made a good observation about consumers caught in debt problems relative to their mortgage payments and losing their homes. He said that, " ... when a consumer is in deep debt, they always try to save their homes first. They will let their credit card payments go, stop payments on their car, and default on loans from a relative before they lose their house." What about those who are not in deep debt yet?

I thought about what Larry said this weekend ... and the problem is larger in another aspect. There are 700,000 ARM holders that will see their payments double this year. Let's assume for a moment, that all 700,000 three-year ARM mortgagees are paying all their debt, and credit cards on time. What happens when their $1,200 mortgage goes up to $2,400? They won't be able to make their credit card and auto payments the next month, and then ... after this problem, they will go into deep debt. This problem doesn't just affect the current consumers that are in default ... it will affect the majority of ARM mortgagees in the coming months and that will put a dent on banking financials and a dent on consumer spending.

We are now in April, when the first group of 3 year arms will have the monthly mortgage due amount go up about 100%. Even if these people refinance now, their payments will go up 60%. That means that in the coming months, these people will stop making payments on their credit cards and vehicles before they go into a mortgage default. So the sub-prime home default payment problem will only show up later ... after it shows up in credit card/auto delinquencies first. This also means that we should expect an increase in used car inventories, as well
as in increase in homes for sale.

This means that MasterCard, and other credit companies will face the problem of writing off debts before the mortgage companies foreclose on homes. While this problem builds up, it will be nearly invisible on banking financials. Why? Because the new bankruptcy law allows very few consumers to go bankrupt. Because of this, banks will be keeping these bad debts on their books as assets because consumers are required to pay off the credit over their lifetimes. As the problem gets worse, much of the related data won't show the increasing problem on an asset basis. But, it will show up as a decreased revenue problem for these lenders.

A canary in the mine?
http://www.stocktiming.com/Monday-DailyMarketUpdate.htm

[Oldcoin]

Mortgage crisis to hit holders of risky derivatives
Most hedge funds made money, but some lost; Asian investors fingered

SAN FRANCISCO (MarketWatch) -- The shakeout in the subprime-mortgage business is inexorably worming its way through the credit markets that fueled the sector's rapid growth.

As delinquencies and foreclosures rise, losses will likely hit some of the riskiest parts, or tranches, of subprime mortgage-backed securities, or MBS, experts say. Then collateralized debt obligations, which invested in some of the lowest-rated subprime MBS tranches, will feel the pain.

But who holds these securities?

Hedge funds have become big credit-market players in recent years, and many firms trade the riskiest bits of subprime MBS and CDOs.

But while some funds, such as Saye Capital's Tranquility fund and others managed by Cheyne Capital and Cambridge Place Investment Management, have suffered, most hedge funds made a lot of money in February betting that the subprime crisis would hit, according to several investors who didn't want to be identified.

http://tinyurl.com/yqvg46

[Oldcoin]

"33
lenders have now gone kaput"


The idiots that are buying New Century(up 30% today) are going to get spanked!


New Century files for bankruptcy; selling units
Subprime lender cuts 3,200 jobs; gets financing from CIT, Greenwich Capital

http://tinyurl.com/3cov95

[Griffin]

If they employee 6,400 people, they must have a couple hundred million worth of buildings and grounds just to fit those people. I suspect these companies are after the real-estate not the business. New Century is being pillaged.


New Century files for bankruptcy; selling units
Subprime lender cuts 3,200 jobs; gets financing from CIT, Greenwich Capital

http://tinyurl.com/3cov95

[Oldcoin]

M&T Bank Shares Sink on Lower Demand for Mortgages

Mon Apr 2, 2007 10:01 PM BST


By Jonathan Stempel

NEW YORK (Reuters) - Shares of M&T Bank Corp. (MTB.N: Quote, Profile , Research), whose largest outside shareholder is Berkshire Hathaway Inc., fell 8.5 percent to its lowest close in 17 months, on Monday after the Northeast U.S. regional bank cut its first-quarter profit forecast amid weak demand for mortgages.

The bank late on Friday projected earnings of $1.50 to $1.60 per share, as much as 19 percent below the average analyst forecast of $1.86 per share, according to Reuters Estimates.

Buffalo, New York-based M&T lowered its forecast by $11 million, or 10 cents per share, because it fetched low bids on some mortgages it tried to sell, and because rising defaults forced it to buy back some loans it had sold. It also said lower lending margins and rising expenses would hurt profit.

http://tinyurl.com/325dja

[Oldcoin]

H&R Block says subprime woes delaying unit sale

Fri Mar 30, 2007 2:05PM BST

NEW YORK (Reuters) - Tax preparation company H&R Block Inc. (HRB.N: Quote, Profile, Research) said on Friday it was still in talks to sell its subprime lending unit but that market conditions had affected its plan to conclude a deal by the end of March.

H&R Block cited "recent events in the subprime industry" for the delay. It did not say when it now expects to wrap up sale talks for its Option One Mortgage Corp. unit.

H&R Block shares were down 84 cents, or 4 percent, at $20 in electronic premarket trading.

http://uk.reuters.com/article/companyNews/idUKWEN594120070330

They’ve been trying to sell that turkey since November.

[Oldcoin]

U.S. MBA's Mortgage Applications Index Fell 3.2% Last Week

By Shobhana Chandra

April 4 (Bloomberg) -- Mortgage applications in the U.S. fell for the third consecutive week as purchases cooled and fewer homeowners refinanced, an industry report showed today.

The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped 3.2 percent last week to 649.5 from the prior week. Home-purchase applications and refinancing both declined to the lowest levels in five weeks.

http://www.bloomberg.com/apps/news?pid=20601170&sid=aBU4bG709pZs&refer=home

[Oldcoin]

NovaStar Cuts Off Credit Lines for Mortgage Bankers (Update2)
By Yalman Onaran

April 5 (Bloomberg) -- NovaStar Financial Inc., the subprime home lender whose stock has plunged 80 percent this year, will stop financing independent mortgage bankers.

WarehouseUSA Capital Corp., a unit of NovaStar, said on its Web site that as of March 30, it's no longer accepting applications from mortgage bankers for credit lines and that the so-called warehouse lending business will close. New loans under existing agreements are scheduled to end April 27, the notice said. The shutdown won't affect lending by NovaStar itself, said Roswell, Georgia-based WarehouseUSA.

http://www.bloomberg.com/apps/news?pid=20601170&sid=azYh0yJFpPD4&refer=home

[Oldcoin]

Nygren Says Market `Overreacting' to Subprime Crisis (Update2)
By Sree Vidya Bhaktavatsalam

April 5 (Bloomberg) -- Bill Nygren, manager of the top- performing Oakmark Fund, said investors are making a mistake by selling shares of banks such as Citigroup Inc. and Washington Mutual Inc.

Nygren has 13 percent of the $5.9 billion mutual fund's assets in financial stocks, which have declined on concern a rout in the market for subprime mortgages may spread to credit- card and car-loan companies. Shares of Washington Mutual, the fund's biggest holding, dropped 12 percent this year and Citigroup's stock fell 8 percent.

At least 30 U.S. home lenders have halted operations or sought buyers during the past 12 months as late payments on subprime mortgages made to people with poor or inadequate credit reached a four-year high in the fourth quarter.
``Investors are overreacting to the upturn in mortgage delinquencies,'' the 48-year-old Nygren said in an interview from his office in Chicago. ``As an investor who's committing money for five years or longer, I'm getting higher-quality companies than usual for less of a premium.''

http://www.bloomberg.com/apps/news?pid=20601170&sid=an7jdl.sCUGE&refer=home

[robo]

BEING STREET SMART

by Sy Harding

LENDERS HAVE TO LOVE THE NEW BANKRUPTCY LAW! April 13, 2007.

I began last week’s column with the statement that “Home foreclosures nationally hit their highest level ever in the last quarter of 2006, and rose still more in the quarter just ended.”

The column pointed out that many foreclosures could probably be avoided, or at least postponed, if troubled borrowers would contact their lenders for help before it’s too late.

Bankruptcies are also surging, the number of filings in the first three months of this year 70% higher than in the first quarter of last year. But that is a very misleading statistic. Bankruptcy filings hit an all-time low in 2006, so they are only 70% higher than in the lowest year ever, which is nowhere near as many as in normal years prior to last year.

That is because of the tough new bankruptcy law Congress passed in 2005, which made filing for bankruptcy protection much more difficult for those in financial trouble.

In this column I said at the time that it was sold to the public as a good idea, based on closing the door on the O.J. Simpsons and corrupt corporate chieftains who declare bankruptcy to shield themselves from judgments they could otherwise be forced to pay. But there are probably more folks who become hopelessly indebted through no fault of their own, due to accidents, medical bills, and loss of jobs.

I said in the column at the time that, “It disturbs me, but doesn’t surprise me, that those pushing the bill are powerful finance and credit-card companies and their lobbyists. I’d feel better about it if there was at least a companion bill making it illegal for those companies to indiscriminately stuff mailboxes with ‘pre-approved’ loan applications and credit-cards, many of which reach those who might be desperate.”

I also said that “It bothers me even more that consumers didn’t get themselves in excessive debt entirely on their own. I remember 2001 very clearly. Two trillion dollars of investors’ savings and investments had been wiped out in the bear market, and consumers had pulled back on their spending. And then the terrorist attacks hit and it was feared that would be another serious blow to the economy. . . . Washington ’s immediate response was that the most important thing Americans could do was to get out and spend. It was the patriotic thing to do, as it would get the economy back on its feet, and show the terrorists that they could not destroy the spirit of the American people. . . . We were given tax rebates, and told not to squirrel them away but to get out and spend them to help the economy. Everyone got into the act of convincing Americans to spend, that even going in debt to do so was the patriotic thing to do. The Fed cut interest rates to 40-year lows. Banks and mortgage companies lowered their credit standards . . . Consumers were encouraged to refinance mortgages to take money out of the equity in their homes. Credit-card companies offered new cards with low introductory rates. Auto companies offered zero percent financing, and rebates that could be used as down-payments. . . . And Washington ’s plan worked. Consumers came through with flying colors. They did in fact spend the economy out of trouble. . . . And that’s what really bothers me about credit-card and finance companies pushing for, and Congress passing, severe revision of bankruptcy laws with this particular timing, after they enticed consumers into record levels of debt, with the most dangerous creative financing offers ever seen.”

Congress even had the nerve to call the new 2005 law ‘The Bankruptcy Prevention and Consumer Protection Act’. Certainly easier to sell under that name. But, the bill protected banks and credit-card companies, and promised consumers only a much more difficult time if they ever should need the protection of bankruptcy.

And sure enough, as mentioned, bankruptcies hit an all-time low the following year, 2006. So that they are running 70% higher so far this year compared to that all-time low year, is not terrible news for lenders. They remain well protected.

Consumer groups and bankruptcy attorney organizations are now trying to lobby Congress to fix the mistake. Don’t be surprised if lenders and their lobbyists lay low and don't fight back. They got what they wanted in 2005 and have it now when they no doubt anticipated they would need it. Given the current climate of complaints and investigations into their predatory lending practices in 2002 through 2006, it would not be smart of them to remind people of how hard they worked to get the bankruptcy laws changed to their advantage.

They also know consumers' groups don't have near the lobbying power the financial powerhouses had in getting the new law passed. So getting Congress to reverse the damage is not likely. And even if it were to take place, it would take years.

http://www.streetsmartreport.com/comm3.html

[robo]

How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000? The answer, say the experts, lies in a lending industry that got too innovative for its own good.

http://sfgate.com/cgi-bin/article.cgi?f=/g/a/2007/04/13/carollloyd.DTL

[Birchtree]

That reminds me, investors need to remember what might be the most important consideration when it comes to employing leverage. The underlying asset that is being leveraged should be undervalued. Using leverage to purchase overvalued assets has rarely been a successful strategy. It certainly looks like a secular correction in residential real estate prices is slowly unfolding. Maybe I can find someone to give me a summer home in the Blue Ridge Mountains if I pay the electric bill.

[nnuut]

How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000? The answer, say the experts, lies in a lending industry that got too innovative for its own good.

http://sfgate.com/cgi-bin/article.cgi?f=/g/a/2007/04/13/carollloyd.DTL
And by the way, the Strawberry Picker isn't the sharpest tool in the shed!!:blink:

[Oldcoin]

H&R Block to sell subprime unit

NEW YORK (Reuters) - H&R Block Inc. (NYSE:HRB - news) said on Friday it will sell its subprime lender Option One Mortgage Corp. to private equity firm Cerberus Capital Management L.P., sending the tax preparer's shares up nearly 9 percent.

The final price H&R Block will receive for Option One, which has been buffeted by a crisis sweeping providers of mortgages to less credit-worthy home buyers, remained unclear.

It will depend on the value of Option One's tangible net assets when the deal closes, expected to happen in H&R Block's quarter ended October 31. Cerberus will pay the value of those assets -- $1.27 billion as of January 31 -- less $300 million, H&R Block said.

http://news.yahoo.com/s/nm/20070420/bs_nm/handrblock_takeover_dc_4

[robo]

April 23, 2007

Mod Squad Containment
by Mike Shedlock


I recently talked about some of the bailout plans in The Fatal Flaw in Housing Bailout Plans. But somehow I missed the "Bear Stearns/EMC Mod Squad" to Help Keep Customers in Their Homes.



Should we bailout anyone?

The San Francisco Chronicle headline reads Why we shouldn't be bailing out subprime lenders or borrowers.

Dumb: Buying a house you can't afford with no down payment and a loan whose monthly payments will explode in a few years.

Dumber: Lending money to people who can't afford a traditional mortgage, especially when they have lousy credit ratings and don't substantiate their income.

Dumbest: Bailing out dumb and dumber, especially with taxpayer money.

State and federal lawmakers, community groups and housing advocates are proposing schemes to prevent the victims of the subprime loan crisis from losing their homes. I hate to sound callous, but it's hard for me to know who the victims are in this mess.

If mortgage brokers or lenders used inflated appraisals or made false or misleading statements, they should be prosecuted or at least forced to restructure the loans. If borrowers lied about their income or assets to get a bigger loan, they too should be prosecuted.

But many people got into the subprime mess because they were willing to believe a fast-talking broker who told them they could buy a home, or a bigger home, or take more cash out of their home than they could with a conventional mortgage.

Keeping people in homes they had no business buying is wrong in many ways.

For starters, there's no easy way to bail out homeowners without bailing out the lenders and investors who were largely responsible for the subprime mess.

Many experts say we are in the early innings of the foreclosure cycle. If we bail out people today, will we be willing and able to help people who fail later in the game?

Propping up borrowers who took a gamble on a house and lost reinforces gambling.

"If people think they can take out a bad mortgage and they get bailed out, that's called moral hazard in social insurance and it's a very bad thing," says Thomas Davidoff, an assistant professor in the Haas Real Estate Group at UC Berkeley.

Bailout advocates say they want to help people who were duped, not gamblers. But even if you could separate the swindled from the speculators, there's no guarantee that people who get a bailout will keep their homes. It could be an expensive form of life support.

Nobody offered to bail out investors who bought tech stocks in 1999. Nobody bailed out Enron employees who lost their jobs and chunks of their 401(k) plans because the company was a fraud. Nobody offers to bail out credit card abusers.

http://www.safehaven.com/article-7415.htm

[Birchtree]

Will some kind souls bail me out when I'm buying high on a Dow of 15,000? I think not - we all take our own risks - and the subprimer will actually help this bull market by not being able to participate. That's the best deal of all.

[Oldcoin]

Senators urge Fed to protect subprime borrowers

WASHINGTON (MarketWatch) -- Senators including presidential hopeful Christopher Dodd urged the Federal Reserve on Monday to protect borrowers in the subprime mortgage market by toughening rules on both bank and nonbank lenders and restricting some loans.

Joined by nine other Senate Banking Committee Democrats, Dodd, D-Conn., said that the Fed should require all mortgage originators to evaluate a borrower's ability to repay a loan before making a mortgage loan

Dodd and the other members also wrote to Fed Chairman Ben Bernanke that the central bank should use existing authority to restrict the use of low- and no-documentation loans and should designate the failure to escrow taxes and insurance as "unfair and deceptive."

"Quick action on these items by the Federal Reserve Board under its [legal] authority would be extremely helpful in extending important consumer protections to homeowners and buyers," wrote Dodd and the other senators.

The letter to Bernanke said the senators are concerned that the Fed hasn't exercised its obligations under the Home Ownership and Equity Protection Act of 1994 to combat predatory lending.
Dodd, who chairs the Senate Banking Committee, said that action by the Fed under this statute is "crucial" since it applies to both bank and non-bank lenders. Neither recently proposed subprime guidance nor nontraditional mortgage guidance apply to nonbank lenders.

Subprime mortgages are offered to borrowers with below-average credit. They generally carry higher interest rates and higher fees than loans made to prime borrowers. This corner of the home-loan business descended into crisis this year as delinquencies have risen sharply and several subprime lenders have been forced to close their doors.

"The board is reviewing these issues as the chairman said in his March 28 testimony to the Joint Economic Committee" of Congress, said Fed spokeswoman Susan Stawick.

Late last month, a Fed official said borrowers with recently originated adjustable-rate mortgages are likely to experience more delinquencies and foreclosures. But Sandra Braunstein, the director of the Fed's division of consumer and community affairs, also told a congressional committee that existing laws are adequate to clamp down on problems in the subprime market.

The letter was signed by Sens. Dodd, Charles Schumer of New York, Thomas Carper of Delaware, Daniel Akaka of Hawaii, Robert Casey of Pennsylvania, Jack Reed of Rhode Island, Evan Bayh of Indiana, Robert Menendez of New Jersey, Sherrod Brown of Ohio and Jon Tester of Montana.

http://tinyurl.com/24g868

Doesn’t look like anyone is being bailed out just yet; Although I was irked by the headline.

[Show-me]

How about expanding it to the credit card industry. LOL

[Oldcoin]

Subprime `Liar Loans' Fuel Housing Bust With $1 Billion Fraud
By Bob Ivry

April 25 (Bloomberg) -- Cheating on mortgage applications is so widespread and so seldom punished that it's fueling an increase in foreclosures that will prolong the housing slump, said Robert W. Russell, counsel to the director of the Office of Thrift Supervision, which oversees savings and loans.

Borrowers and brokers commit fraud when they exaggerate the applicant's income, qualifying the borrower for a home he otherwise couldn't afford. Such fraud robbed lenders of an estimated $1 billion last year, according to data collected by the Washington-based Mortgage Bankers Association and the Federal Bureau of Investigation.

``Misstatements about employment and income are being made every day,'' Russell said. ``The brokers are just putting down on paper what the underwriters would require. There are borrowers providing false information as well.''

http://www.bloomberg.com/apps/news?pid=20601109&sid=aonxuz3OYwLg&refer=home

Isn’t this bank fraud?

[Oldcoin]

U.S. Foreclosures Jumped 35 Percent in First Quarter (Update1)
By Bob Ivry


April 25 (Bloomberg) -- Late payments on subprime mortgages drove up U.S. foreclosure filings in the first quarter of 2007 by more than a third over the same period last year, according to research company RealtyTrac Inc.

Almost 437,500 foreclosure filings were reported, a jump of 35 percent from the first three months of 2006, Irvine, California-based RealtyTrac said.

``We estimate that more than 50 percent of the foreclosure activity we charted in the first quarter was from subprime loans,'' RealtyTrac Chief Executive Officer James Saccacio said in a statement.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_O6BkA4vBMA&refer=home

[Oldcoin]

Opinion
Subprime home loans: don't panic

By Milton Ezrati, Thu Apr 26, 4:00 AM ET

While it's tempting to amplify these understandable concerns, as so many did during last month's panic, investors can gain much from a look beyond the river of fearful adjectives and innuendo that has flowed so freely over this subject.

It might help, for instance, to note that few delinquent mortgages ever see foreclosure. According to the National Association of Realtors, a mortgage is delinquent if it is 30 days overdue. History shows that most of those whose payments are 30, 60, or even 90 days overdue will eventually pay up and never see foreclosure.

What is more, mortgage bankers are more reluctant to foreclose than ever before. They claim to have learned their lesson during the last real estate crunch in the early 1990s. Back then, they found themselves stuck with properties on which the best they could do was break even. Better, they say today, to rewrite terms so that the original borrower can stay in the property and keep making payments – at least of a sort.

What is more, subprime mortgages remain a relatively small part of the overall mortgage market. To be sure, subprime lending amounted to more than 13 percent of all new mortgages issued in 2005 and 2006, but still, even according to the most pessimistic of calculations, these lesser credits fall short of 10 percent of the dollar value of all outstanding mortgages in the United States.

http://news.yahoo.com/s/csm/20070426/cm_csm/yezrati

[Oldcoin]

Countrywide Financial earnings down 22%
By Steve Gelsi, MarketWatch
Last Update: 11:22 AM ET Apr 26, 2007


NEW YORK (MarketWatch) --Woes in the subprime market amid the overall housing slowdown subtracted 22% from Countrywide Financial Corp.'s first-quarter earnings, the mortgage giant said Thursday.

Countrywide Financial (CFC

CFC ) said earnings drooped to $434 million, or 72 cents a share in the three months ended March 31, from $684 million, or $1.10 a share in the year-ago period.
Revenue fell to $2.4 billion from $2.8 billion.

Analysts surveyed by Thomson Financial forecast earnings of 77 cents a share and revenue of $2.58 billion, on average.

Shares fell 25 to $36.96 in Thursday trades.

The Calabasas, Calif. lender cited adverse subprime and housing market conditions.
"While the company's core operations delivered what was otherwise a strong quarter, earnings were impacted by charges relating to our subprime activities as well as increases to our loss reserves and related asset valuation adjustments stemming from higher delinquencies and softer housing markets" Chairman and Chief Executive Officer Angelo Mozilo said.

http://tinyurl.com/2kkzoo

[Oldcoin]

GMAC posts loss, hurt by mortgage unit

DETROIT (Reuters) - General Motors Corp.'s former finance arm, GMAC, posted a first-quarter loss on Wednesday as pressure on the U.S. mortgage market forced the company to take charges at its housing finance unit.

GMAC, in which GM retains a 49 percent stake, posted a net loss of $305 million, compared with a profit of $495 million a year earlier.
GMAC's mortgage unit, ResCap, posted a quarterly loss of $910 million, more than offsetting gains from its insurance and auto finance divisions, which earned $605 million.

GMAC said it had taken steps to lower the risks for ResCap by selling off subprime mortgages at a loss, marking down the value of its remaining portfolio and curtailing new loans to borrowers with weaker credit.

http://news.yahoo.com/s/nm/20070502/bs_nm/gmac_results_dc_4

[Show-me]

Buffett sees no threat in subprimes

Monday, May 07, 2007

Berkshire Hathaway chairman Warren Buffett said problems in the US subprime lending industry were unlikely to pose a major threat to the overall US economy.

"I don't think there's going to be any huge danger to the economy," although the crisis is a "very big problem" to many in the industry, Buffett said at the annual meeting of his insurance and investment company in Omaha.
As long as unemployment and interest rates did not rise significantly, Buffett said "it's unlikely that that factor triggers anything of a massive nature in the general economy."
Buffett said the US housing downturn was hurting results at Berkshire's residential construction businesses.
Buffet also said he envisioned an acquisition so big that he would have to sell some stocks to free up funds. "We're as prepared as we've ever been to buy a big business outright."
The tycoon added trains have become more competitive against trucks with fuel prices high.
Berkshire recently disclosed a 10.9 percent stake in Burlington Northern Santa Fe Corp.
"As oil prices go up, higher diesel fuel raises costs for rails, but it raises costs for its competitors, truckers, roughly by a factor of four," Buffett said.
The stake in Burlington Northern Santa Fe Corp, the second-largest US railroad, is valued at US$3.5 billion (HK$27.3 billion).
Rails have become a better business because of deregulation, Buffett said.
Burlington Northern, based in Fort Worth, Texas, enables Buffett to benefit from increases in Asian imports to the United States, which surged 67 percent from 2001 through 2006. Burlington Northern and larger rival Union Pacific Corp are the biggest railroads serving the US West Coast ports where most of those goods arrive by sea.
Burlington Northern shares have gained 9.3 percent since Berkshire disclosed its holding, and 23 percent this year.
Buffett also said he might hire up to four people to succeed him as chief investment officer of Berkshire, and cautioned that recent strong results from the company's insurance operations were unsustainable. He said he has received 600 to 700 inquiries for the job.
REUTERS, BLOOMBERG

[Oldcoin]

U.S. Foreclosure Filings Rise 62% in April, RealtyTrac Says
By Hui-yong Yu

May 15 (Bloomberg) -- U.S. foreclosure filings jumped 62 percent in April from a year earlier and the number of households falling behind on mortgages probably will climb further this year as home prices fall and lending standards rise, RealtyTrac Inc. said.

California, Florida and Ohio led the U.S. in filings. There were 147,708 default notices, auction sale letters and bank repossessions last month as declining prices made it harder to refinance, particularly for borrowers with poor or limited credit, the Irvine, California-based seller of foreclosure data said today. April's total compares with 91,168 filings a year earlier.

Foreclosures are being ``fueled by a combustible mix of risky loans taken out in the last few years -- many in the subprime market -- and slowing home price appreciation,'' said James Saccacio, chief executive officer of RealtyTrac, in a statement.

Mortgage lenders are raising credit standards after the number of loans entering foreclosure rose to an all-time high in the fourth quarter. The 2007 median price for an existing home likely will decline 1 percent to $219,800, the National Association of Realtors said last month, the first drop since the real estate group began keeping records in 1968 and probably the first decline since the Great Depression.

More than 50 subprime lenders have folded, filed for bankruptcy protection or sought a buyer since January 2006.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8IPzXdjD06o&refer=home

[Oldcoin]

THE FED

Bernanke sees limited impact from subprime

Fed looking at new rules, but favors market forces to fix problems

By Rex Nutting, MarketWatch
Last Update: 9:43 AM ET May 17, 2007


WASHINGTON (MarketWatch) -- The slowdown in the housing market probably has further to run, but it won't have a significant impact on the rest of the economy, Federal Reserve Chairman Ben Bernanke said Thursday.

Addressing a conference on bank structure at the Chicago Federal Reserve Bank, Bernanke promised that the Fed and other federal bank regulators have been actively looking at tightening up the rules for mortgage lending to prevent the kinds of abuses that have been seen in the past few years.
"Combating bad lending practices, including deliberate fraud or abuse, may require additional measures," he said.

"Markets can overshoot, but, ultimately, market forces also work to rein in excesses," the top central banker said. "In the long run, markets are better than regulators at allocating credit."

A copy of his remarks was made available in Washington.

Bernanke said the cooling in the housing markets has been an "important source" of the slowdown in the economy. And he gave no assurances that housing has hit the bottom.

The latest readings on home sales "indicate a further stepdown in the first quarter."

http://tinyurl.com/2l38qw

[Oldcoin]

Foreclosures Spur States to Rescue Homes From Default (Update1)
By Brian Louis

May 17 (Bloomberg) -- Willis Blackshear combs through Ohio mortgage filings looking for time bombs to defuse.

The Montgomery County recorder, who oversees real estate filings in Dayton, is searching for loans with balloon payments, or interest rates that may soon rise to unaffordable levels. He has found more than 3,100 in Montgomery where 540,000 residents possessed the state's second-highest foreclosure rate last year.

``It's crazy,'' said the 46-year-old Blackshear. ``I knew it was bad, but I didn't know it was this bad.''

The worst housing slump since the Great Depression is driving Ohio and 20 other states to propose consumer protection laws and bond sales that would help homeowners stem the escalating defaults. Ohio, with the third-highest foreclosure total in the U.S. last month, is raising $100 million to help homeowners refinance risky mortgages. New York, New Jersey and Pennsylvania are planning similar sales.

``We don't have much time to lose,'' said Ohio Governor Ted Strickland, in an interview. The foreclosure rate has ``escalated rather dramatically.''
Strickland, the former Democratic congressman from Lisbon, Ohio, who became governor in January, created a task force of public and private officials to keep borrowers solvent.

Foreclosures Rise

Mortgages in foreclosure across the country rose 62 percent to 147,708 in April from a year earlier, according to a May 15 report by Irvine, California-based RealtyTrac Inc., which sells information on defaults. The median U.S. home price fell 1.8 percent in the first quarter, according to the Chicago-based National Association of Realtors.

As many as 2.2 million Americans are at risk of losing their homes, the Center for Responsible Lending in Durham, North Carolina, said in a December study.

http://www.bloomberg.com/apps/news?pid=20601109&sid=agJcJoWYtKEM&refer=home

[Oldcoin]

Fremont Sells Commercial Lending Unit, Replaces CEO (Update2)
By Bradley Keoun

May 22 (Bloomberg) -- Fremont General Corp., barred by U.S. regulators from offering mortgages to borrowers with poor credit, agreed to sell its commercial real-estate unit for $1.9 billion and replaced its top three executives.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ayLx3HI0QiGs&refer=home

Looks like another one for the Implode-O-Meter.

[Oldcoin]

Pershing's Ackman knocks MBIA, Ambac
Bond guarantors exposed to subprime fallout, hedge fund manager says

By Alistair Barr, MarketWatch
Last Update: 4:52 PM ET May 24, 2007

SAN FRANCISCO (MarketWatch) -- MBIA Inc. and Ambac Financial Group are exposed to the fallout in the subprime mortgage sector and that may prove costly for the bond guarantors' policyholders who are probably holding the ultimate risk and could end up with big losses, Bill Ackman, president of hedge fund firm Pershing Square Capital Management, said during a presentation this week.

Ackman spoke on Wednesday at a conference organized by the Ira Sohn Research Conference Foundation, which funds the treatment and cure of pediatric cancer and other childhood diseases.
Now in its 12th year, the annual conference brings together some of the leading investors in the world. This year, other speakers included Jim Chanos, managing partner of short selling giant Kynikos Associates, Steve Mandel, founder of Lone Pine Capital, Peter Briger, co-president of Fortress Investment Group

In a presentation entitled "Who's Holding the Bag?" Pershing's Ackman focused on the shakeout in the subprime mortgage sector and which companies and investors might be hurt most by the trend. MarketWatch obtained a copy of the presentation on Thursday.

Subprime mortgages are offered to poorer home buyers with blemished credit records. Rising interest rates and flat house prices have sparked a jump in delinquencies and foreclosures.

http://tinyurl.com/ytjub8

[robo]

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around [the banks], will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."


"I place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt."

--Thomas Jefferson

[Spaf]

Maybe, maybe one should see:

http://www.realityzone.com/creature.html

[Oldcoin]

Safety first
As lenders tighten standards, borrowers go with fixed-rate mortgages
By Amy Hoak, MarketWatch
Last Update: 10:16 AM ET Jun 2, 2007


PHILADELPHIA (MarketWatch) -- Defaults in subprime mortgages have led some lenders to adopt stricter standards in approving loans, imposing more discipline on borrowers and the lending industry alike. But the biggest shift in mortgage trends has come from consumers themselves, who have been fleeing to the relative safety of fixed-rate loans over the last 15 months.

Adjustable-rate mortgages that enjoyed popularity during the housing boom aren't nearly as attractive nowadays, Doug Duncan, chief economist for the Mortgage Bankers Association, said at a conference of the National Association of Real Estate Editors this week.

http://tinyurl.com/26hsxd

Okay, when I read this it was kinda duh, but I thought it was interesting to note that there are still subprime loans out there. So, now they just require more documentation from the guy getting the loan. Could be a real tripping point for that strawberry picker!

[Oldcoin]

Fannie, Freddie May Enrich Shareholders in Subprime's Shakeout

By Jody Shenn and James Tyson

June 5 (Bloomberg) -- Fannie Mae and Freddie Mac, the once- derided white elephants of the mortgage market, are benefiting from the subprime lending debacle and trampling just about anything in their way.

The government-chartered companies, the biggest source of money for Americans buying houses, accounted for 46.9 percent of all mortgage bonds sold through April, newsletter Inside Mortgage Finance says. Their share rose from a record low 37.3 percent in last year's second quarter.

The biggest slump in U.S. home prices since 1991 is reviving Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac, after $11.3 billion of accounting errors led to the ousters of their chief executive officers and the threat of tighter government regulation. Now, the companies are getting praised in Congress after promising to spend at least $20 billion to keep the mortgage market afloat by purchasing loans made to people with poor credit histories or high debt burdens.

``The political tide is definitely running in their favor,'' said David Dreman, who oversees $22 billion, including 12.8 million Freddie Mac shares, at Dreman Value Management in Jersey City, New Jersey. The companies ``are re-establishing their credibility,'' he said.

http://www.bloomberg.com/apps/news?pid=20601109&sid=axfeEvVeLwww&refer=home

[Oldcoin]

Ohio Sues Real Estate Firms for Pressuring Appraisers (Update2)
By Brian Louis and Sharon L. Crenson

June 7 (Bloomberg) -- Ohio, the state with the third highest number of foreclosures, sued 10 real estate companies for improperly pressuring appraisers to inflate home values.

The companies, based in Ohio, California, Arizona and New York, set specific estimated values on properties and communicated a desired price to appraisers, according to the lawsuits filed by Attorney General Marc Dann today. In Ohio, it's illegal to influence an appraiser. Those sued include seven mortgage brokers, two lenders and an appraiser.

Foreclosure filings in Ohio jumped 135 percent in April from a year ago, pushing the state's rate to almost two times the national average, according to RealtyTrac Inc. States have opened investigations of mortgage brokers, lenders and appraisers as delinquencies rise across the U.S., led by subprime borrowers.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a16zEJ5yMe3Q&refer=home

I can see going after the brokers and lenders; they are the ones that can commit the bank fraud, but that poor appraiser; he must have really screwed up. From the appraisals I’ve reviewed you can generate just about any price under the sun to justify a valuation!

[Oldcoin]

Reuters
Stocks flat as subprime worries offset takeovers
Monday June 18, 10:26 am ET
By Kristina Cooke


NEW YORK (Reuters) - Stocks were little changed on Monday as lingering worries about the subprime mortgage market offset optimism about corporate takeovers.

Money still seems to be plentiful, and you are still seeing multiple potential acquirers for businesses," said Craig Hester, CEO of Hester Capital Management in Austin, Texas.

"But the Bear Stearns story is indicative that we have not seen the end of the problems in the subprime market and its impact on the economy and financial markets," Hester said. "I think the market will continue to be choppy."

The troubled subprime mortgage market offers risky loans to borrowers with poor credit histories.

http://biz.yahoo.com/rb/070618/markets_stocks.html?.v=8

[Oldcoin]

Bear Stearns Fund Collapse Sends Shock Through CDOs (Update2)

By Mark Pittman

June 21 (Bloomberg) -- Merrill Lynch & Co.'s threat to sell $800 million of mortgage securities seized from Bear Stearns Cos. hedge funds is sending shudders across Wall Street.

A sale would give banks, brokerages and investors the one thing they want to avoid: a real price on the bonds in the fund that could serve as a benchmark. The securities are known as collateralized debt obligations, which exceed $1 trillion and comprise the fastest-growing part of the bond market.

Because there is little trading in the securities, prices may not reflect the highest rate of mortgage delinquencies in 13 years. An auction that confirms concerns that CDOs are overvalued may spark a chain reaction of writedowns that causes billions of dollars in losses for everyone from hedge funds to pension funds to foreign banks. Bear Stearns, the second-biggest mortgage bond underwriter, also is the biggest broker to hedge funds.

``More than a Bear Stearns issue, it's an industry issue,'' said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. Hintz was chief financial officer of Lehman Brothers Holdings Inc., the largest mortgage underwriter, for three years before becoming an analyst in 2001. ``How many other hedge funds are holding similar, illiquid, esoteric securities? What are their true prices? What will happen if more blow up?''

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7LCp2Acv2aw

[robo]

BEING STREET SMART

By Sy Harding

WHAT'S UNDER THAT ROCK? June 22, 2007.

Merrill Lynch tugged at the corner of a rock this week and it looked like something began to crawl out. They immediately dropped the rock back in place, with help from J.P. Morgan, Blackstone Group, and Bear Stearns.

Of course, I'm talking about how close two hedge funds operated by Bear Stearns came to going belly-up this week, and what was revealed in their skate to the edge.

The largest of the funds was launched ten-months ago, after taking in $600 million of investors' money. As most hedge funds do, the fund then leveraged that capital ten to one by borrowing $6 billion from major institutions including Barclays Bank, J.P. Morgan, and Merrill Lynch. The fund then invested heavily, as have many hedge funds, in collateralized debt obligations, or CDOs.

http://www.decisionpoint.com/TAC/HARDING.html

[robo]

Friday, June 22, 2007
Black(stone) Friday! Oh Oh, Credit Markets Come Home To Roost!

Let's dispense with the silly first - BX (Blackstone) looks to be opening up in the $37 range. That's not awful, but its hardly the huge pop that people were talking about with the oversubscription ratio.

The Dow, S&P and Nasdaq all opened up moderately down. The 10 is up again, opening up 0.7%, which puts us back in the groove on interest rates - going higher. The markets are doing the "inverse of the 10" deal again this morning; the charts on my 9-pane are interesting; near perfect inverses for the first few minutes, but then they appear to have decoupled a bit. It will be interesting to see how this plays out over the remainder of the day - my guess is that the "Blackstone fever" has infested traders - at least for a while. Certainly, its all CNBS was talking about for the first half-hour!

As I noted last night, we got the Hindenburg Omen confirmation. Asian markets were down last night; I wonder how much of that was people paying attention and how much was just plain old-fashioned exhaustion.

It looks like the market is starting to consider risk once again:


"June 22 (Bloomberg) -- U.S. stocks fell on concern hedge- fund losses at Bear Stearns Cos. may signal wider problems in credit markets.

Bear Stearns, the second-biggest U.S. underwriter of mortgage bonds, dropped after people with knowledge of the company's proposal said it plans to take on $3.2 billion of loans to stave off the collapse of a hedge fund. Citigroup Inc., JPMorgan Chase & Co. and Moody's Corp. also declined. "

No, you think?

$3.2 billion? For guys that had $6b in leverage out against $600m in collateral?

So what's the truth here guys? The claim was that they lost "20%"? Really? Or was it 50%? Or was the leverage ratio more like 25:1, not 10:1?

And better - why do you flush $3.2 billion down the toilet if you're Bear Stearns? There is only one reason to do that - you're afraid of the explosion that will result if you don't do it - that is, the blast will be even bigger in its impact on your bottom line.

CNBC is also reporting that Cantor Fitzgerald is getting bids as low as ten cents on the dollar for some of the CDOs they're trying to sell! That's a ninety percent haircut!

There are a lot of liars out here on the street right now, and sooner or later, they're going to have to fess up. If the real loss was 50%, that's horrendous. It also tells you a lot about the exposure on the street to this issue and points out the fact that there is absolutely no way that this will be, or can be, contained. It simply doesn't matter whether people want it to be or not - there is some $2-3 trillion in losses out there that are being hidden under the carpet at the present time!

This can and WILL come out, and if I'm right about the magnitude of this "crash" isn't the right word for what's coming. More like catastrophe. This pile of paper is what supports the consumer credit markets! If it implodes, and it looks like that's exactly what's happening, the damage, given the leverage being employed, will be tremendous.

http://market-ticker.denninger.net/

[robo]

Bob Brinker is talking about the Subprime problem on his show right now. Plenty of problems ahead, but he commented the Fed should cut rates next week to help us out of this mess. However, he does not think they will. He commented no end in sight for this housing problem. No one knows for sure how bad it really is. Getting lots of callers, it should be a interesting day in the Subprime Market talk. Bob thinks it's much uglier then most think and wall street knows it. Other wise you would see more stepping up to buy these notes. Not many buyers.

Oh BOY!

This will put pressure on stocks thru the summer in my opinion. Bad news is now bad news in the stock market and the risk reward level is getting higher. The Bulls and CNBC will spin it next week, dont worry be happy and buy stocks. They are cheap.

Robo

[tsptalk]

Bob Brinker is talking about the Subprime problem on his show right now. Plenty of problems ahead... All this going on and all 4 of Fox's Saturday bulls and bears type shows this weekend were talking about Israel using models to attract tourism, Bloomberg running for president, illegal immigration taking away jobs, and paying inner city people $50 to sign up for a library card.

Sheesh! All I wanted was info on the market from "the experts."

[robo]

All this going on and all 4 of Fox's Saturday bulls and bears type shows this weekend were talking about Israel using models to attract tourism, Bloomberg running for president, illegal immigration taking away jobs, and paying inner city people $50 to sign up for a library card.

Sheesh! All I wanted was info on the market from "the experts."


Tom,

That two hour block is terrible. At one time it was pretty good, but now very bad. Same old guests arguing about things the show host picks. Fox needs to fire the whole bunch and have one quality hour program.

Bring back the shows like Louis Rukeyser had.

http://www.imdb.com/title/tt0255766/news

I never leave the volume on CNBC much any more. I have several good Blog sites I read daily and TSP talk is on my list. To much Bull out their.


That is why I like systems like Trader Fred is using. No spin from the CNBC talking heads. I'll stick with TA work and the trend.

I get money talk on demand and enjoy the special guest Bob Brinker has on weekly. They talk about investments and many other economic subjects and problems that could affect the stock market..

They have an expert on right now talking about Washington, China, and what to do about China's currency. This should be good.

China and Japan are currency manipulators for sure. Lets see what the expert has to say about it.

Look for Chinese dollars to start buying more stock and fewer Bonds in the near future. Black Stone is just the beginning.



The final thoughts on Subprime is more too come!

[nnuut]

May be a rough week, some think it will be an UP week, looks tight to me!

Wall Street awaits Fed's rate decision this week

After weeks of market turbulence, investors look for clues

http://msnbcmedia1.msn.com/i/msnbc/Components/Sources/sourceAP.gif Updated: 2 hours, 44 minutes ago
NEW YORK - After weeks of stock market turbulence caused by soaring bond yields, Wall Street will now be able to gauge the chance of an interest rate hike straight from the source: the Federal Reserve (http://www.msnbc.msn.com/id/19376990/#).

On Wednesday and Thursday, the central bank’s Federal Open Market Committee (http://www.msnbc.msn.com/id/19376990/#) meets to discuss interest rates. The Fed is widely expected to keep the benchmark rate steady at 5.25 percent, as it has done since last summer, but the policy statement it releases Thursday will be parsed for clues about future moves.
For months, policy makers have stated they expect the economy to recover, and that curbing costs is their primary concern in light of uncomfortably high inflation. Any change in that stance could rile the stock market.


Other data that could help investors decide whether inflation is rising at a worrisome pace is the Commerce Department’s Friday report on personal income and spending, which includes a reading on core personal consumption expenditures — or core PCE inflation. The year-over-year PCE figure is the Fed’s preferred inflation gauge, and is expected to have risen to 2.1 percent in May from 2.0 percent in April, according to the median estimate of economists surveyed Friday by Thomson Financial (http://www.msnbc.msn.com/id/19376990/#).

Personal income is expected to have risen 0.6 percent in May, up from a decline of 0.1 percent in April, and spending is expected to have increased 0.6 percent, slightly higher than the 0.5 percent rise in April.

Major indexes fell last week, with the Dow Jones industrials down 2.1 percent, the Standard & Poor’s 500 index down 2 percent and the Nasdaq composite index off 1.4 percent.
A heavy week for economic data

On Monday, the National Association of Realtors reports on existing home sales. The market expects the data to show a rise of 5.97 million in May, a similar increase to April’s 5.99 million.

Tuesday, the Conference Board issues its June consumer confidence index. The market predicts the index will slip to 105.3 from 108.0 in May.
Also Tuesday, the Commerce Department releases data on new home sales, which analysts expect to have gained by 920,000 units in May, slightly less than April’s rise of 981,000.

The Commerce Department reports Wednesday on orders of durable goods. Analysts predict that May durable goods will have fallen 1.0 percent after rising 0.8 percent in April.

On Thursday, the Commerce Department releases its final reading on first-quarter gross domestic product, which the market expects to come in at 0.6 percent, the same as the estimate made in May.

In addition to the personal spending data on Friday, investors will be watching for the Chicago Purchasing Managers’ index, a precursor to the Institute for Supply Management’s manufacturing index. The market forecasts a decline in the June index to 58.0 from 61.7 in May.
Also Friday, the University of Michigan releases its revised June sentiment index, which is expected to show a slight uptick.

The pace of earnings starts to pick up
On Tuesday, Lennar Corp. and Oracle Corp. release their quarterly results.
Analysts forecast Lennar’s second-quarter profit to come in at 8 cents a share. The homebuilder’s stock closed at $39.73 last Friday, at the low end of its 52-week range of $38.66 to $56.54.
Oracle is expected to post a fourth-quarter profit of 35 cents a share. The software company closed at $19.39 last Friday, at the high end of its 52-week range of $14.22 to $19.96.
On Wednesday, Bed Bath & Beyond Inc., which issued a profit warning earlier this month, reports its fiscal first-quarter results Wednesday. Profit is expected to come in at 37 cents a share. The stock closed last Friday at $37.14, in the middle of its 52-week range of $30.92 to $43.32.
General Mills Inc., Palm Inc. and Research in Motion Ltd. report on Thursday.
General Mills is expected to show fourth-quarter profit of 63 cents a share. The stock closed at $58.46 last Friday, in the top end of its 52-week range of $51.34 to $61.52.
Analysts anticipate Palm will post fourth-quarter profit of 15 cents a share. The stock closed at $16.80 last Friday, in the middle of its 52-week range of $13.51 to $19.50.
The market expects Research in Motion to report a second-quarter profit of $1.05 a share. The stock closed at $170.65 last Friday, near the upper end of its 52-week range of $62.12 to $177.42.
http://www.msnbc.msn.com/id/19376990/

[rokid]

Bill Gross doesn't think the sub-prime crisis is over. He sees the resets coming due in 2007-2008 and the empty homes outside of Chicago, Las Vegas, and in Miami as a potentially big problem for the economy, i.e. negative impact on growth and short term yields.

http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2007/IO+July+2007.htm

[Birchtree]

As long as the sub-prime crises continues it will keep the speculators buried under their flip properties. When they finally dig out - guess where they'll head to spend their money? We don't want these folks in this market, at least not yet anyway. They can join the party at Dow 17,000 when I'll start getting out. Watch for classic signs. Keep'em thinking the Fed will increase rates - oh the pain will be envious. I'm such a renegade contrarian finding joy in all this pain.

[robo]

Banks 'set to call in a swathe of loans'
By Ambrose Evans-Pritchard
Last Updated: 7:25am BST 26/06/2007



The United States faces a severe credit crunch as mounting losses on risky forms of debt catch up with the banks and force them to curb lending and call in existing loans, according to a report by Lombard Street Research.


Bear Stearns headquarters in New York


The group said the fast-moving crisis at two Bear Stearns hedge funds had exposed the underlying rot in the US sub-prime mortgage market, and the vast nexus of collateralised debt obligations known as CDOs.

"Excess liquidity in the global system will be slashed," it said. "Banks' capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing."

Charles Dumas, the group's global strategist, said the failed auction of assets seized from one of the Bear Stearns funds by Merrill Lynch had revealed the dark secret of the CDO debt market. The sale had to be called off after buyers took just $200m of the $850m mix.

"The banks were not prepared to bid over 85pc of face value for CDOs rated "A" or better," he said.

"God knows how low the price would have dropped if they had kept on going. We hear buyers were lobbing bids at just 30pc.

"We don't know what the value of this debt is because the investment banks shut down the market in a cover-up so that nobody would know. There is $750bn of dubious paper out there in the form of CDOs held by banks that have a total capitalisation of $850bn."

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/26/cnusecon126.xml

[350zCommTech]

Subprime shakeout claims another fund
Caliber Global, which controlled almost $1 bln in assets, to shut down

SAN FRANCISCO (MarketWatch) -- Caliber Global Investment Ltd., a London-listed fund that controlled almost $1 billion of mortgage assets, said on Thursday that it's shutting down after turmoil in the subprime market cut demand for its shares.

Caliber, run by Cambridge Place Investment Management, plans to sell all of its assets over the next 12 months and return as much money as possible to shareholders, the fund said in a statement. The plan needs to be approved by investors at an extraordinary meeting in August, Caliber added.

The rest:http://www.marketwatch.com/News/Story/subprime-mortgage-shakeout-claims-another/story.aspx?guid=%7B0D2A07EF%2DB2E6%2D423A%2D89C1%2 DE4F1B19AA164%7D&dist=RNPullDown

[wht00ss]

Another look

Most of the foreclosures happening are with prime borrowers, which is a much bigger chunk of the mortgage market. Prime borrowers are also affected by ARM resets over the next few years and falling home prices. This also means that delinquencies are rising among prime borrowers and that means their credit will be damaged. They may have to re-finance at a higher sub-prime rate. This creates a whole new market for subprime loans right at a time where most of the sub-prime lenders have gone away.

In addition, if interest rates continue to rise, aside from the subprime market benefitting from the wider interest rate spread, it will cause less people to qualify for prime mortgages and further expand the subprime market. My Lord, what a perfect storm for well positioned subprime companies which have been crushed recently to grab market share!

[weatherweenie]

Subprime lending: Business as usual
Wednesday June 27, 4:27 pm ET
By Les Christie, CNNMoney.com staff writer

It would appear that subprime lenders have yet to learn from their mistakes. According to a consumer advocate group, abuses persist industry wide, despite the recent subprime mortgage meltdown. At a Senate subcommittee hearing on ending mortgage abuse this week, the Center for Responsible Lending (CRL) presented its findings on subprime loans included in 10 recent packages of mortgage backed securities.

http://biz.yahoo.com/cnnm/070627/062707_subprime_abuses_may_persist.html?.v=2&.pf=loans

[350zCommTech]

I think we're going to be seeing more of this. I think it explains last weeks' afternoon sell-offs.

United Capital suspends redemptions on Horizon hedge funds

By Alistair Barr
Last Update: 1:04 PM ET Jul 3, 2007


SAN FRANCISCO (MarketWatch) -- United Capital Markets, a leading broker in the asset-backed securities market, said on Tuesday that it suspended investor redemptions on four of its Horizon hedge funds after suffering losses. United Capital said the redemption halts for the Horizon Fund L.P., Horizon ABS Fund L.P., Horizon ABS Fund Ltd. and Horizon ABS Master Fund Ltd. funds are temporary and it does not plan to liquidate them. Credit spreads have widened dramatically across asset-backed securities, mortgage-backed securities and collateralized debt obligations as news broke about significant losses in a large hedge fund focused on the space, United Capital explained. The Horizon funds have cut their leverage and sold "a large amount" of cash securities in the market. United Capital said it has also stopped trading in the synthetic structured finance markets completely because they are "highly volatile." The Horizon funds had $145 million in cash as of July 3 and United Capital is working to satisfy redemption requests quickly. Trading losses and market repricing will leave the funds down in June and for the year, United Capital added.

http://www.marketwatch.com/news/story/united-capital-suspends-redemptions-horizon/story.aspx?guid=%7B6DDCCACA-7CAA-47D2-AE96-D9DC5B8E109A%7D (http://www.marketwatch.com/news/story/united-capital-suspends-redemptions-horizon/story.aspx?guid=&#37;7B6DDCCACA-7CAA-47D2-AE96-D9DC5B8E109A%7D)

[350zCommTech]

Subprime contagion?

Ohio's attorney general is investigating the role that credit-rating agencies like Moody's played in rubberstamping dicey bonds, report Fortune's Katie Benner and Adam Lashinsky.


By Katie Benner (kbenner@fortunemail.com) and Adam Lashinsky (alashinsky@fortunemail.com), Fortune
July 5 2007: 11:16 AM EDT

(Fortune Magazine) -- While Bear Stearns is the most recent financial institution to find itself caught up in the subprime-mortgage quagmire, the three credit-rating agencies - Standard & Poor's, Moody's (http://money.cnn.com/quote/quote.html?symb=MCO&source=story_quote_link) (Charts (http://money.cnn.com/quote/chart/chart.html?symb=MCO&source=story_charts_link)), and Fitch - may be the next ones to see their good names dragged through the mud.
The reason? Ohio attorney general Marc Dann is building a case against them based on the role he believes their ratings played in the marketing of risky mortgage-related securities.

"The ratings agencies cashed a check every time one of these subprime pools was created and an offering was made," Dann told Fortune, referring to the way the bond issuers paid to get their asset-backed securities (ABSs) and collateralized debt obligations (CDOs) rated by the agencies. These ratings run from AAA for debt with the lowest risk of default all the way down to noninvestment- grade bonds, which many pension funds are prohibited from purchasing in their charters. "[The agencies] continued to rate these things AAA . [So they are] among the people who aided and abetted this continuing fraud," adds Dann.
Ohio has the third-largest group of public pensions in the United States, and they've got exposure: The Ohio Police & Fire Pension Fund has nearly 7 percent of its portfolio in mortgage- and asset-backed obligations.
Moody's says that Dann's accusations are nonsense. "We perform a very significant but extremely limited role in the credit markets. We issue reasoned, forward-looking opinions about credit risk," says Fran Laserson, vice president of corporate communications at Moody's. "Our opinions are objective and not tied to any recommendations to buy and sell." She further points out that while some securities have lost significant value, none have actually defaulted. (S&P and Fitch declined to comment.)

Read the rest here:http://money.cnn.com/2007/07/05/news/economy/subprime.fortune/index.htm

It's about time! Remember all the headlines about $40-50M Christmas bonuses??:D

[Birchtree]

It's all enough to make a grown bull cry with joy - bring'em down.

[350zCommTech]

Braddock's Galena mortgage hedge fund to liquidate -CEO


NEW YORK, July 5 (Reuters) - Braddock Financial Corp., a top performing hedge fund manager, on Thursday said it will liquidate its $300 million Galena Street Fund after concerns of subprime mortgage exposure triggered investor redemptions.
Redemptions from investors nervous about subprime mortgage crisis increased after the fund posted a loss of about 3 percent in the first quarter, Chief Executive Officer Harvey Allon said in an interview.
Given the performance, "people voted with their redemption requests," he said.

http://www.reuters.com/article/fundsFundsNews/idUSN0537985520070705

I hope they all lose everything. They made tons of money on these so called "financial instruments". They're nothing but scams.

[Oldcoin]

CDO Losses May Be $52 Billion, Credit Suisse Says (Update1)

By Neil Unmack and Sebastian Boyd

July 9 (Bloomberg) -- Credit Suisse Group said losses on bonds backed by U.S. subprime mortgages will total as much as $52 billion, less than estimates of the fallout from Deutsche Bank and Pacific Investment Management Co.

Subprime defaults are ``clearly a huge problem'' for investors in collateralized debt obligations, Credit Suisse analysts led by Ivan Vatchkov in London wrote in a report. ``But we do not think that they are a systemic one.''

No one knows how much money is at risk from subprime defaults because CDOs made up of the loans aren't required to publicly disclose holdings. Deutsche Bank AG says losses from subprime mortgages issued last year may reach $90 billion. Pacific Investment Management Co. in Newport Beach, California, in April estimated the fallout at as much as $75 billion.

``Investment banks operate in this market day and night and they know it better than most,'' Vatchkov said in an interview today. ``The market's been turning for the past 12 months, so I think they saw it coming.''

The maximum potential losses for investors in CDOS is equivalent to about a tenth of the $513 billion of equity capital for the world's biggest 10 investment banks, according to Zurich-based Credit Suisse. It's less than a quarter of the $227 billion that flowed in to hedge funds and mutual funds in the first three months of this year, Switzerland's second- largest bank said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYI2UsYtBtQU&refer=home

[FundSurfer]

http://money.cnn.com/2007/07/09/real_estate/resets_are_coming/index.htm

Mortgage resets: Record bill coming due

Billions in subprime ARMs will be subject to higher payments.

By Les Christie, CNNMoney.com staff writer
July 9 2007: 5:20 PM EDT


NEW YORK (CNNMoney.com) -- More than two million subprime adjustable rate mortgages (ARMs) are poised to reset at much higher rates in coming months, worsening an already suffering housing market.
Borrowers who took out hybrid ARMs in 2004 and 2005 to secure low "teaser" rates for the first two or three years of the loan may see their monthly mortgage payments climb by35 percentor more.

[350zCommTech]

I saw something strange yesterday.

I'm on vacation in West Melbourne, FL and decided to do some sight seeing. I was driving south on 1A1 along the beach. I started from 192 west on drove south for about an hour. What I saw along the way was very strange. I saw a lot of for sale signs. It looked like every other property was for sale. I've never been in this part of the country before so I don't know whether it was normal or not.

[Oldcoin]

I saw something strange yesterday.

I'm on vacation in West Melbourne, FL and decided to do some sight seeing. I was driving south on 1A1 along the beach. I started from 192 west on drove south for about an hour. What I saw along the way was very strange. I saw a lot of for sale signs. It looked like every other property was for sale. I've never been in this part of the country before so I don't know whether it was normal or not.

A buyer’s market with no buyers.

[nnuut]

Good Info!

Q&A: What's weighing on the markets?

Stock markets and bond Markets around the world are wobbling over the impact of higher interest rates. But why are financial markets so rattled?

What is happening to interest rates?
The last few years have seen very low interest rates around the world.
Central banks have kept short-term interest rates low as inflation seemed contained and growth was modest, especially in Europe and Japan.
And the bond markets, which set long-term interest rates, have also kept long-term rates - which normally are higher because of worries about future inflation - near the same low levels.
This has allowed companies and individuals to borrow more money than usual.
But now the era of low rates may be coming to an end.
Central banks around the world are raising rates, worried about growing inflationary pressures.
And bond markets have fallen sharply, raising the cost of long-term borrowing, as investors feel that risks have been under-priced.

What has been the effect of low interest rates on markets?
Low interest rates have helped to fuel a stock market takeover boom in the last few years.
Private equity firms found that they could borrow money cheaply on capital markets in order to buy up under-valued companies and take them private.
They funded such purchases by loading up the companies with debt.
More than a third of the record $1 trillion (&#163;500bn) in takeover activity this year has been funded by private equity. And cheap rates also allowed speculation in currency markets as investors borrowed in currencies with low interest rates, such as the yen, in order to buy those with higher rates. Banks and other financial institutions have been able to make large profits by taking in share in these activities. (more)
http://news.bbc.co.uk/2/hi/business/6294624.stm

[budnipper1]

Real estate people I know in Tennessee tell me that they have seen an increase in prospective buyers here from Florida, interested in rural areas. Some of those buyers say they are tired of dealing with hurricanes. Not to imply that this specifically relates to W. Melbourne, but from Florida in general.


I saw something strange yesterday.

I'm on vacation in West Melbourne, FL and decided to do some sight seeing. I was driving south on 1A1 along the beach. I started from 192 west on drove south for about an hour. What I saw along the way was very strange. I saw a lot of for sale signs. It looked like every other property was for sale. I've never been in this part of the country before so I don't know whether it was normal or not.

[offtrack]

Real estate people I know in Tennessee tell me that they have seen an increase in prospective buyers here from Florida, interested in rural areas. Some of those buyers say they are tired of dealing with hurricanes.

I thought it was just because folks in Tennessee are just a whole lot more pleasant. :cheesy:

[Birchtree]

http://www.redtailmountain.com

[Oldcoin]

A few months ago, the sub-prime problem seemed to be a mammoth problem to many investors.
But ... nothing bad happened, so investors thought that this was another over-hyped problem that really amounted to nothing. Besides, the Fed was being proactive as our big market-protectors, so there was nothing to worry about ... Mighty Mouse was here to save the day.

A week ago, Bloomberg had a little news items that was hardly noticed. In the article, they described how our US Dept. of Housing and Urban Development Secretary (Alphonso Jackson) was in Beijing. His US Government mission was to meet with Chinese banking authorities and ask them to BUY U.S. Mortgage backed securities.

That should have been a "red flag" to American investors. For our government to try and sell our sub-prime mortgages to China suggested that "they are scared as hell" and that they know the sub-prime problems are finally starting to filter down at a visible level.

The first sub-prime bomb went off last night. Bear Sterns announced that their was "little value left in its two failed hedge funds" ... zero value in one, and about 9% left in the other.

Think about it ... Bear Sterns is the second largest underwriter of mortgage backed securities and a very sharp investment house, and they still couldn't control the risk or unwinding of these assets until they went to zero?

Like it or not, Bear Sterns is the tip of the iceberg. Secretary Jackson didn't go to China and beg them to buy our sub-prime problems because he thought it was a good deal for them. He did it because our government knows that we are sitting on a mountain of trouble related to mortgage problems.

It bugs me, that I had to go to the India Daily this morning to find out how much was lost. They reported that 20 billion dollars went to almost zero in value. You would have expected that our media would be screaming about the amount and we should be asking why it wasn't headline news when the two hedge funds had dropped 50% and lost 10 billion.

The incubation time is about done on the sub-primes, and in the next 30, 60, to 90 days ... these problems will begin to unfold and become visible to the public.

For a couple of weeks, I have been mentioning that the Financial sector is in trouble and that this was a problem because the Financial sector represents 20.77% of the S&P 500.

If you recall, last Wednesday we said, "One of the things worrying large investors is fallout from sub-prime loan problems. This concern is reducing investor interest in banking stocks."

Obviously, our stock market won't be happy about it today. As I have mentioned before, the thing to keep an eye on is the Banking Index. See today's update on what to look for on its chart and what the symbol is for the Banking Index.


Please click this link to go to your Analyses and Recommendations at this link:
http://www.stocktiming.com/Wednesday-DailyMarketUpdate.htm
(If you are having trouble with the link, copy and paste it in your browser.)

[Oldcoin]

http://bigpicture.typepad.com/

Weak Home Sales, Tightening Credit Standards = Multiple Mortgage Apps
Wednesday, July 25, 2007 | 12:03 PM
in Credit | Economy | Markets | Psychology/Sentiment | Real Estate | Valuation
Earlier today on Real Money's columnist conversation, Tony Crescenzi noted earlier that "It would be extraordinarily unusual for the combined figures on new and existing home sales to continue falling in the face of increases in mortgage applications."
I have to disagree.
Based on our interviews with our Real Estate clients (commercial builders, RE brokers) and especially residential Mortgage Brokers, there appears to be a dramatic rise in multiple applications for both new purchases, refis, and home equity lines.
As many of the ARM resets come up over the next 18 months, I would surmise these multiple mortgage apps will increase -- especially amongst the more desperate marginal homeowners.
Meanwhile, we see Defaults on 'Alt A' loans surpassing Subprime ones, according to Citibank:
"Defaults on some so-called Alt A mortgages packaged into bonds last year are now outpacing those from subprime loans, according to Citigroup Inc.
The three-month constant default rate for 2006 Alt A hybrid adjustable-rate mortgages is 2.3 percent, compared with 2.2 percent for subprime ARMs, New York-based Citigroup analysts led by Rahul Parulekar wrote in a July 20 report. . . "
More than $800 billion of subprime mortgage bonds and $700 billion of Alt A bonds are outstanding, with ARM bonds totaling more than $600 billion and $450 billion, respectively, according to a March report by Zurich-based Credit Suisse Group."

[Oldcoin]

http://ml-implode.com/

A quick check of the Implode-O-Meter shows that 102 U.S. lenders have imploded.

[Fivetears]

103 now.
They got sued for posting the information. Anti-SLAPPed.
http://ml-implode.com/viewnews/2007-07-26_JudgeFranklinR.TaftDeniesMlImplodeMotionToStrik eviaAntiSLAPP.html

Anti-SLAPP - http://en.wikipedia.org/wiki/SLAPP



http://ml-implode.com/

A quick check of the Implode-O-Meter shows that 102 U.S. lenders have imploded.

[Oldcoin]

103 now.
They got sued for posting the information. Anti-SLAPPed.
http://ml-implode.com/viewnews/2007-07-26_JudgeFranklinR.TaftDeniesMlImplodeMotionToStrik eviaAntiSLAPP.html

Anti-SLAPP - http://en.wikipedia.org/wiki/SLAPP

You mean the implode-o-meter imploded too! It’s almost too much.

[saturneptune]

We are all paying for those who have no sense of what it means to live on a budget and live according to what one makes. For years, people with uncontrolled appetites for houses they could not afford, combined with greedy lenders who were more than happy to lend them money based on bogus mortgages and smoke and mirrors math, created a lot of pseudo pricing in the housing market. Now payday has come, and we all pay. If I had my way, all of us who are losing TSP money or any other kind of 401K assets because of such nonsense should be allowed to take them to court and sue them.

[budnipper1]

Wall Street often shelved damaging subprime reports
Fri Jul 27, 2007 12:34PM EDT
By Patrick Rucker

WASHINGTON (Reuters) - Investment banks that bundle and sell home mortgages often commissioned reports showing growing risks in subprime loans to less creditworthy borrowers but did not pass much of the information to credit rating agencies or investors, Wall Street sources said.

The mortgage consultants, known as "due-diligence firms", were hired by investment banks to make sure blocks of mortgages conform to the mortgage seller's own standards. The studies provided a first glimpse of loan quality for ratings agencies and investors who do not normally see the full reports.

As the U.S. housing boom reached its crescendo in 2006 and investors showed a strong appetite for mortgages, lenders relaxed their underwriting standards, and millions of borrowers with poor credit records were able to obtain subprime mortgages as a result.
Default rates on many of those subprime mortgages are now rising, some borrowers face foreclosure on their homes, and investors in the mortgages face losses.

"If all the information about these investments was properly disclosed, our client would have made different decisions...and, specifically, not bought these investments," said Dale Ledbetter, a Florida attorney suing Credit Suisse Group on behalf of an insurer that lost money on mortgage bond investments.

Now some of the firms that prepared those damaging due-diligence reports say their work should be turned over to investors so they understand the underlying assets better.

"I am sure there is a value in those reports," said Joe Andrea, a partner with Opus Capital Markets Consultants of Chicago but due diligence firms like his are not empowered to release the reports, he added.

While subprime mortgage security prospectuses warned about the perils of such loans in recent years, they did not enumerate the findings of due diligence reports.

Ledbetter's suit, filed on behalf of Bankers Life Insurance Co., claims that the investment bank failed to perform or disclose proper due diligence on the mortgages it sold to investors. One of those investments was downgraded five times from early 2005 to late 2006.

Credit-Suisse has filed a motion to dismiss the case said a spokesman, Bruce Corwin.

Several due diligence firm executives said that they reported a slide in loan quality to their investment bank clients but that those mortgages were still bought up and passed on to investors.
"In some cases we felt that we were potted plants," said Keith Johnson, president of Clayton Holdings, Inc., a large due-diligence firm based in Connecticut.

During the housing frenzy, many Wall Street firms appear to have overlooked due diligence warnings about problem mortgages in order to keep up with the market, due diligence executives said.

"Twelve months ago there was a lot of competition for newly originated loans and the buyer who would purchase more of the (loan) pool was more likely to win that bid. The choices sometimes were business choices," said Bruce Watterson, the president of Watterson Prime LLC of Bellevue, Washington. Watterson Prime is owned by Fidelity National Information Service Inc., Watterson said.

LOAN STANDARDS EASE

As lenders relaxed their underwriting standards during the recent housing boom, Wall Street firms followed suit by easing the guidelines that due diligence companies followed, several executives said.

"We got away from where we were in the late 90s," Clayton's Johnson said, referring to a time that due diligence firms were expected to give full-throated opinions on the safety of mortgage loans.

In the last two weeks, major ratings agencies have downgraded subprime mortgage investments and said they expect more such loans to borrowers with shaky credit will fail.

Moody's customarily receives summaries of due-diligence studies but not the full reports which might have helped the ratings agency evaluate now-troubled mortgage securities, said Nicolas Weill, chief credit officer for Moody's asset finance team.

"It's difficult to know what would have happened if we had gotten that information," he said.

Weill said Moody's would have welcomed due diligence reports if they had helped them learn something new about the mortgages.

Standard & Poor's relies on lenders and mortgage securitizers to conduct their own due-diligence and does not have access to such reports "generally speaking," said spokesman Christopher Atkins.

Lehman Brothers Holdings and Bear Stearns Cos, two major underwriters of mortgage bonds, declined to comment on how they handle due diligence reports.

However, while due-diligence reports may contain facts that ratings agencies seek, they might not be interested in seeing the reports, said Josh Rosner, a housing analyst with independent research firm Graham Fisher & Co. in New York.

"The International Organization of Securities Commissions code of conduct requires that they use all available information in their ratings process," he said. "To require them to look at due diligence would move them to another level of responsibility."

Mortgage securitizers relaxed their due-diligence tests during the housing boom just as lenders loosened their loan standards in that time but all sectors of the market are retrenching now, Clayton's Johnson said.

"We are in a correction process right now," he said.

Deutsche Bank and Morgan Stanley accounted for nearly a quarter of Clayton revenue in 2006, according to the company annual report. Both firms declined to comment on what they do with due-diligence reports. http://www.reuters.com/article/reutersEdge/idUSN2743515820070727?sp=true (http://www.reuters.com/article/reutersEdge/idUSN2743515820070727?sp=true)

[Oldcoin]

U.S. Stocks Retreat on Subprime Concern; Banking Shares Fall
By Eric Martin

July 31 (Bloomberg) -- U.S. stocks declined, erasing a rally, on concern losses from subprime mortgages are worsening.

Banking shares fell after American Home Mortgage Investment Corp. said it's unable to fund loans and may have to liquidate assets. MGIC Investment Corp. and Radian Group Inc. tumbled after the two home-loan insurers said their combined stakes of more than $1 billion in a subprime mortgage company may be worthless.

``On American Home Mortgage, the news is pretty bleak,'' said Michael James, senior equity trader at Wedbush Morgan Securities in Los Angeles. ``That's lent some renewed concerns about whether we have in fact gotten to the bottom of this subprime mortgage crisis.''

The Standard & Poor's 500 Index slipped 4.37, or 0.3 percent, to 1469.54 at 2:49 p.m. in New York. The Dow Jones Industrial Average fell 41.62, or 0.3 percent, to 13,316.69. The Nasdaq Composite Index slumped 22.52, or 0.9 percent, to 2560.76.

American Home Mortgage Investment Corp. plummeted 88 percent to $1.22. The lender, whose shares stopped trading at $10.47 yesterday after it disclosed a cash shortage, has been cut off from credit and didn't have money yesterday to make $300 million of mortgages it had already agreed to provide, the Melville, New York-based company said today in a statement. American Home said it anticipates $450 million to $500 million of loans probably won't get funded today.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7WYTtlwYrlQ&refer=home

[robo]

Report: 3rd Bear Stearns fund in jeopardy

Hedge fund with $900 million in mortgage investments reportedly face huge losses, according to newspaper.
July 31 2007: 6:56 PM EDT


NEW YORK (CNNMoney.com) -- A Bear Stearns' hedge fund with about $900 million in mortgage investments is reportedly facing huge losses and is refusing to return investors' money, according to a news report published online Tuesday.

Revelations of the imperiled hedge fund comes weeks after the investment bank closed two hedge funds that suffered losses arising from the subprime-mortgage market.

http://money.cnn.com/2007/07/31/news/companies/bear_stearns/index.htm?source=yahoo_quote

[budnipper1]

http://216.77.188.54/coDataImages/p/Groups/27/27299/folders/216042/2194445AmHomeMortcrash.gif
http://www.marketwatch.com/news/story/american-home-mortgage-falls-wall/story.aspx?guid=%7bBE51427C-5C18-44C3-811B-7CCC6BFFAC2A%7d&dist=TNMostRead&print=true&dist=printBottom

[budnipper1]

Asian stocks may fall; Japanese banks may lead
By Moming Zhou, MarketWatch
Last Update: 7:09 PM ET Jul 31, 2007

SAN FRANCISCO (MarketWatch) -- Asian stocks are expected to fall on Wednesday, pacing the U.S. downturn. Banking giants Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. may lead decliners on weak earnings reports.

Shares of oil companies may rise following a historical intraday high in crude-oil futures prices. NEC Corp. may rise on strong earnings. Australia's Macquarie Bank Ltd. may fall after the company said two of its funds could lose a quarter of their value.

Nikkei 225 Stock Average futures expiring in September last traded at 17,145 on Chicago Mercantile Exchange, down from Monday's close of 17,280 in Osaka Stock Exchange and 17,350 on the Singapore Exchange, suggesting a weak start for their underlying index on Wednesday.

New Zealand's NZX 50 index fell 8.9 points in Wednesday's early morning trading.

Mitsubishi UFJ Financial, Japan's largest bank by market value, said late Tuesday in a news release its group profit for the first quarter declined 31% from a year ago, citing higher operating costs.

Mizuho Financial, the second largest, posted a 50% drop in profit, citing weak performance at its trading operations and its non-interest income business.

Share prices of Japanese major banks "are likely to correlate to changes in net profit over the near term," said Merrill Lynch analysts Yoshinobu Yamada and Tatsuya Kubo in a research note. They also said lower first-quarter profits from major banks are "generally negative".

Shares of Nippon Oil Corp. may rise. Japan's largest oil company reported an 84% jump in April-June profit, helped by crude oil inventory valuation profits and cost-cutting, according to Dow Jones Newswires.

Shares of other oil companies may also rise after September crude climbed as high as $78.25 a barrel in New York, sending the contract to a record intraday level.

Shares of NEC Corp. may rise after it said late Tuesday in a news release that its group profit in the April-June period more than tripled on year, citing its reform efforts in the overseas mobile phone operations.

Macquarie Bank, Australia's largest securities firm, said retail investors of two of its high-yield investment funds faced losses of up to 25%, or more than $300 million, as fallout from the U.S. subprime loan crises worsened, Dow Jones reported.

The Dow Jones Asia/Pacific Index closed down to 161.74 points on Tuesday, while the Nikkei 225 closed down 40.41 to 17,248.89 in Tokyo, the lowest since May 1.

The broader Topix index (JP:1804609) , which tracks shares of over 1,700 large-cap domestic companies, slightly rose to 1,706.18, with roughly two stocks advanced for every one that declined.

The Bank of New York Asia ADR Index, which tracks Asia's American Depositary Receipts, fell 0.1% to 180.81. The Japan ADR Index was down 1% to 117.33. Those of Mizuho Financial lost 0.6% to $14.1.

On Wall Street, the Dow Jones Industrial Average ended with a near 150-point loss, and a monthly decline of 1.5%.

Moming Zhou is a MarketWatch reporter, based in San Francisco.
http://www.marketwatch.com/News/Story/asian-stocks-may-fall-japanese/story.aspx?guid=%7B28C0D418%2D991E%2D4264%2D9F49%2 D21C11C744ED4%7D&dist=RNPullDown (http://www.marketwatch.com/News/Story/asian-stocks-may-fall-japanese/story.aspx?guid=%7B28C0D418%2D991E%2D4264%2D9F49%2 D21C11C744ED4%7D&dist=RNPullDown)

[Show-me]

Reuters
Accredited Home says survival in doubt
Thursday August 2, 12:08 pm ET

NEW YORK (Reuters) - Accredited Home Lenders Holding Co. (NasdaqGS:LEND (http://finance.yahoo.com/q?s=lend) - News (http://finance.yahoo.com/q/h?s=lend)), a subprime mortgage lender in the process of being sold, said on Thursday its ability to survive was in doubt, sending its shares down by about half.
In its delayed 2006 annual report filed with the U.S. Securities and Exchange Commission, Accredited said because of adverse conditions in the subprime mortgage industry, it could not give assurance that it would continue to operate as a "going concern."
Accredited shares plunged $4.01, or 48.8 percent, to $4.20 in late morning trading on the Nasdaq.
The decline put the shares well below the $15.10 level that private equity firm Lone Star agreed two months ago to pay for San Diego-based Accredited. That transaction valued Accredited at $400 million.
"It's not going to be $15.10," said Theodore Kovaleff, a senior bank and thrift analyst at Sky Capital LLC in New York. "My expectation is there will be a renegotiation of the merger, for a price much closer to the market price now."
Accredited spokesman Rick Howe did not immediately return a call seeking comment. Ed Trissel, a spokesman for Lone Star, declined to comment.
Like many rivals, Accredited has struggled with rising losses and mounting defaults among subprime borrowers, who have weaker credit histories.

[Show-me]

On the other hand AHM is up over 100&#37; today. Dead kitty.

[Fivetears]

You nailed it Show.
American Home Mortgage Investment Corp. plans to close most operations on Friday and said nearly 7,000 employees will lose their jobs as the lender becomes one of the biggest casualties of the U.S. housing downturn.
http://news.yahoo.com/s/nm/20070803/bs_nm/americanhomemortgage_closing_dc_2;_ylt=AjiHDn7PGpx dYIrFBuK8I3AE1vAI

I wonder how many investors it took down?
That's alot of jobs. :(

[Fivetears]

Accredited Home Lenders is next at the guillotine.

[Show-me]

Stick a fork in AHM they are DONE! Poor lending practices did them in and they deserve it. Bad thing is all the folks that lost their jobs and the folks that did not get the money after finding the house they wanted.

[350zCommTech]

Union Investment Halts Redemptions From Bond Fund

By David Clarke
Aug. 3 (Bloomberg) -- Union Investment Asset Management Holding AG, Germany's third-largest mutual fund manager, halted redemptions from a fund holding subprime mortgages after clients withdrew 100 million euros ($137 million) in the past month.
The Frankfurt-based company also closed the 950 million-euro ABS-Invest Fund to new investments, spokesman Markus Temme said today. The fund, sold to institutional investors across Europe, has about 6 percent of its assets in securities related to subprime mortgage loans, Temme said.
Defaults on U.S. housing loans to subprime borrowers, those with patchy credit histories, have reached a 10-year high, driving down the value of bonds backed by mortgages and leading to losses at funds run by companies such as New York-based Bear Stearns Cos. and Oddo & Cie., a Paris-based stockbroker and money manager.
``A lot of the subprime debt lies with European managers,'' said Iain Beattie, a consultant at Watson Wyatt Worldwide Inc. in London who advises pension funds. ``There could be more news to drip out on this.''



The rest here:http://www.bloomberg.com/apps/news?pid=20601087&sid=ar2xfdz.XNPY&refer=home

[James48843]

Here's another article I found this morning-from:
http://www.mortgagenewsdaily.com/7132007_Subprime_Disaster.asp
++++++++++++++++++++++++++++++++++++++++++++



Subprime Disaster Continues To Unfold



It seems that nary a week can pass without a subprime disaster of some type. This week is no exception although there was at least a bit of variety due to bad news coming from other parts of the housing industry. Here is the rundown.

On Tuesday Moody's Investors Service announced it was downgrading its ratings on 399 bonds backed by subprime mortgages because of higher than expected delinquencies in the loans. These residential mortgage-backed securities (RMBS) were largely underwritten by loans issued in 2006 and over 60 percent of the underlying loans were sold by GE, Washington Mutual (now known as WaMu), Fremont General Corporation, and New Century Mortgage which filed for bankruptcy several months ago. Moody's said it may add another 32 bonds to the list.



At about the same time Standard & Poors (S&P) said it would probably follow suit before the end of the week, downgrading about $12 billion of subprime RMBS. Most of the S&P targets are also tied to the four lenders downgraded by Moody's although S&P is also looking at other players such as Merrill Lynch & Company.

Several analysts said that they expected the big rating services would soon start looking at those lenders that deal in so-called Alt-A mortgages (http://www.mortgagenewsdaily.com/672007_GreenPoint.asp) which are tailored to borrowers who lack the documentation to obtain conventional or prime mortgages or may have slightly damaged credit. As we reported earlier, American Home Mortgage (AHM) one of the larger Alt-A lenders (http://www.mortgagenewsdaily.com/752007_Alt_A_Loans.asp) announced it was withdrawing earlier estimates of second quarter performance because of a contractual necessity to redeem many of the mortgages it had sold to investors because of elevated delinquencies. The price of stocks of Alt-A lenders such as AHM and IMPAC Mortgage Holdings fell on Wednesday and Thursday with AHM reaching the mid-$14 range from recent highs in the mid-$30s.

Rex Nutting, in a strongly worded commentary for MarketWatch accused S&P of having been among the enablers of the wildly active subprime market but said that "S&P isn't going along with the charade anymore."
Nutting predicted that a lot of subprime debt will be downgraded to junk status. "A lot of that debt will have to be sold at fire-sale prices. A lot of pension funds and hedge funds that once thrived on the high returns they could get from investing in subprime junk will now lose a lot of money." He predicted that the S&P notice that they were re-evaluating the bonds "is a death warrant for the subprime industry. No longer will mortgage brokers be able to help buyers lie their way into a home" and fewer homeowners will be able to refinance themselves out of trouble, thus extending and exacerbating housing problems.

Wow!

In related news, two major builders announced that they expected to post quarterly losses. Ryland Group and D.H. Horton both announced that heavy cancellations of home-building contracts and the necessity of opting out of agreements to buy land would cause their most recent quarterly figures to slip into the red zone. Ryland expects to book charges of $145 to $155 million and Horton said quarterly orders for new homes fell 40&#37; from a year earlier

A smaller Ohio based builder, M/I Homes, also backed off of earlier earnings projections saying its orders for new homes and deliveries both fell in the second quarter; new contracts by 10 percent year-over-year and deliveries 24 percent to a total of 755 homes.

Another sector beginning to feel the pinch from the declining housing market is home improvement stores. Home Depot said that it is lowering its year-long profit forecast because the weakening housing market is dampening earnings more than anticipated.

HD executives said they expect adjusted earnings per share to drop 15 to 18 percent to a range of $2.30 to 2.36. Two months ago the corporation said it anticipated a drop in income of 15% but that things would pick up in the second half of the year.

The monthly forecast by the National Association of Realtors? issued on Wednesday was among the more pessimistic we have seen. It projected that new home sales will total 865,000 this year and 878,000 next year compared to 1.05 million in 2006. In more bad news for builders, the forecast projected housing starts at 1.43 million units this year and 1.44 million next. This is a substantial drop from the 1.80 million starts last year.
Lawrence Yun, NAR senior economist projected that existing home sales will pick up late this year and will total 6.11 million in 2007 and 6.37 million in 2008.

If the projections hold this would bring the 2008 figures back close to the 6.48 million sales recorded in 2006.
Existing home prices are also expected to recover, rising 1.8 percent to a median price of $222,700 next year, offsetting the 1.4 percent decline expected this year. The median new-home price should rise 2.2 percent to $245,400 in 2008 following a 2.6 percent drop this year.

Finally, Thursday the NAACP filed a class action suit against 14 of the nation's largest subprime lenders to stop these lenders from engaging in systematic, institutionalized racism in making home mortgage loans. We will have more information on this suit in the next few days.

Source:
http://www.mortgagenewsdaily.com/7132007_Subprime_Disaster.asp

[Fivetears]

And now... the new sub-soap opera; The Race Card. :rolleyes:

According to the lawsuit, African American homeowners who received sub-prime mortgage loans from these lenders were more than 30 percent more likely to be issued a higher rate loan than Caucasian borrowers with the same qualifications.
http://www.naacp.org/news/press/2007-07-11/index.htm

Incredible. I wonder if the "CLASS" will be able to squeeze the blood from a collapsed sub-prime turnip? :confused:

[Oldcoin]

Just when you thought it was safe to go back into the water…….

ECB Offers Unlimited Cash as Bank Lending Costs Soar (Update3)
By Gavin Finch and Steve Rothwell

Aug. 9 (Bloomberg) -- The European Central Bank, in an unprecedented response to a sudden demand for cash from banks roiled by the subprime mortgage collapse in the U.S., loaned 94.8 billion euros ($130.2 billion) to assuage a credit crunch.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFJrebey5MPE&refer=home

Treasuries Rise as Money Market Rates Surge, ECB Provides Funds
By Elizabeth Stanton

Aug. 9 (Bloomberg) -- Treasuries rose, led by short- maturity notes, after European money market rates surged and the European Central Bank said it would provide unlimited funds at a below-market rate of 4 percent to avert a liquidity crisis.

Investors are demanding more compensation in the form of higher yields to provide funds to non-government borrowers after losses in bonds backed by subprime mortgages. Futures traders fully priced in a quarter percentage point cut in borrowing costs by the Federal Reserve at its next meeting on Sept. 18 to assure the smooth functioning of financial markets.

http://www.bloomberg.com/apps/news?pid=20601087&sid=azrR8VsSaWEA&refer=home

BNP Paribas Freezes Funds as Loan Losses Roil Markets (Update3)
By Sebastian Boyd

Aug. 9 (Bloomberg) -- BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings after U.S. subprime mortgage losses roiled credit markets.
The funds had about 1.6 billion euros ($2.2 billion) of assets on Aug. 7, after declining 20 percent in less than two weeks, spokesman Jonathan Mullen said today. The bank will stop calculating a net asset value for the funds, which have about a third of their money in subprime securities rated AA or higher.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aahfnvp_J_84&refer=home

Top three headlines at Bloomberg this morning. With as shaky as investors have been of late, this may help us start another leg down to retest the lows we put in last week.

[Fivetears]

115 subpime lenders down to date:

#115 Deutsche Bank Correspondent Lending Group (CLG)
60 Wall Street
NEW YORK, NY 10005
USA
http://ml-implode.com/imploded.html#lender_DeutscheBankCorrespondentLend ingGroup(CLG)_2007-08-09

[DAWG51]

Interesting read from The New York Times on Sunday by Ben Stein.


"The total mortgage market in the United States is roughly $10.4 trillion. Of that, a little over 13 percent, or about $1.35 trillion, is subprime-certainly a large sum. Of this, nearly 14 percent is delinquent, meaning late in payment or in foreclosure. Of this amount, about 5 percent is actually in foreclosure, or about $67 billion. Of this amount, according to my friends in real estate, at least about half will be recovered in foreclosure. So now we are down to losses of about $33 billion to $34 billion. The rate of loss in subprime mortgages keeps climbing. In time, perhaps it will double, maybe back to $67 billion. This is a large sum by absolute standards, and I would sure like to have it in my bank account. But by the metrics of a large economy, it is nothing. The total wealth of the United States is about $70 trillion. The value of stocks listed in the United States is very roughly $15 trillion to $20 trillion. The bond market is even larger. Much more to the point, the fears and terrors about subprime mortgages have helped knock off 6.7 percent of the stock market's value in recent weeks. This amounts to about $1.1 trillion, or more than 30 times the losses so far in the subprime market. In other words, these subprime losses are wildly out of all proportion to the likely damage to the economy from subprime problems."

[oreo]

I found this really good article on the internet. It may be old news to a lot a people but it put a lot of things together for me that I didn't either know or realize. If this has been posted before, please forgive me.

Greenspan, Bush errors finally home to roost

http://www.shanghaidaily.com/sp/article/2007/200708/20070809/article_326522_1.htm

[nnuut]

Yen Gains to Highest Since 2006 as Investors Exit Carry Trades

By Min Zeng and Kim-Mai Cutler
A monitor displays the activity of the yen


Aug. 16 (Bloomberg) -- The yen rose to the highest since July 2006 versus the dollar as a global rout of stocks and credit markets pushed investors to sell riskier assets funded by loans in Japan.
The yen is the strongest most-actively traded currency today and reached the highest since March versus the euro as the so- called carry trades unwound. Global stocks fell and companies from Australia to Canada sought emergency funds as they were unable to refinance debt. Currencies in New Zealand and Australia led the decline versus the yen, both falling more than 5 percent.
``The market is in panic mode,'' said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon in New York, the world's largest custodian bank with over $20 trillion in assets under administration. ``It is a full-blown unwinding of the carry trade. This is just the beginning.'' (more)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_U7IR0YSWuk&refer=home

[Oldcoin]

This is a Credit Suisse article written in March 2007. It outlines the ARM resets in the coming months and years. Looking at the graph indicates that we could have further problems in subprime and alt A loans when they reset.

Mortgage Liquidity du Jour:
Underestimated No More

http://www.recharts.com/reports/CSHB031207/CSHB031207.pdf

Tightening the Housing Food Chain

In response to the recent turmoil in the mortgage market, we surveyed our
private homebuilders and their mortgage lenders to asses the new home
market’s exposure to mortgage products that are at greatest risk for tightening and increased regulation in the coming months --- it’s not just a subprime issue.

We believe that 40% of the market (share of subprime and Alt-A) is at risk of
significant fallout from tightening credit and increased regulatory scrutiny. In
particular, we believe the most pressing areas of concern should be stated
income (49% of originations), high CLTV/piggyback (39%), and interest
only/negative amortizing loans (23%). The proliferation of these exotic mortgage products has been disproportionately weighted to former hotbeds such as California, Nevada, Arizona and Florida, which have accounted for the lion share of builder profits.


Some interesting info in the report if you want to wade through the 67 pages.

[Oldcoin]

http://www.bloomberg.com/apps/news?pid=20601109&sid=aAalytB0T5VQ&refer=exclusive

Bonuses on Wall Street Threatened by Credit Crunch (Update1)
By Jenny Strasburg and Christine Harper
Aug. 22 (Bloomberg) -- The credit-market freeze that's paralyzing leveraged buyouts, mergers and myriad computer- driven trading strategies may cut Wall Street bonuses for the first time in five years.
``There's a lot of pessimism out there,'' said Gary Goldstein, chief executive officer of executive-search firm Whitney Group in New York. ``Looking at the world today as we see it and the impact the crunch is likely to have, it looks like bonus pools will decline.''
Bonuses, the financial industry's annual rite of compensation typically calculated as a multiple of salary, probably will decline as much as 5 percent from 2006, according to Options Group, the New York-based firm that has tracked pay and hiring trends for more than a decade. While the payouts often far exceeded the average of $220,650 at the biggest U.S. securities firms last year and increased as much as 20 percent from 2005, the subprime-mortgage collapse already has drained the punch bowl.

What next…….are these guys going to have to give up their Bentleys?

[Fivetears]

OH NO! NOT THE BENTLEYS! IT'S ARMAGEDDON! :nuts: :D
What next…….are these guys going to have to give up their Bentleys?

[Fivetears]

135 subpime lenders down to date.
#135 Amstar Mortgage Corporation is located in 31 States and Washington, D.C. :sick: :suspicious:

http://ml-implode.com/imploded/lender_AmstarMortgageCorp_2007-08-22.html

[James48843]

And now....the "Decider" is weighing in.

Lord help us all.

the "Decider's " solution?
Why, cut their taxes, of course!.

http://news.yahoo.com/s/nm/20070831/bs_nm/bush_subprime_dc_7;_ylt=ApRMyothJMbABcdecAbYnFgE1v AI


Bush to outline subprime initiative
By Tabassum Zakaria and Glenn Somerville
Fri Aug 31, 3:50 AM ET


President George W. Bush will propose reforms on Friday intended to help homeowners with subprime mortgages avoid default, his first public step to address a crisis that has created turmoil in financial markets around the world.

"He will also discuss reform efforts to prevent these kinds of problems from arising in the future," a senior administration official told Reuters on condition of anonymity.

Many analysts warn that a spreading credit crisis could drag the U.S. economy into recession but the Bush administration has repeatedly said that U.S. economic fundamentals are healthy and that global growth is robust.

Financial markets in the United States and abroad have been volatile in recent weeks as U.S. defaults have risen on so-called subprime mortgages to less credit-worthy borrowers, and questions have arisen about whether loans that have been bundled into securities sold overseas may also fail.

The Federal Reserve has taken steps to increase liquidity in markets and faces calls for interest-rate cuts to head off a broader credit squeeze that could drag economic growth down.

Bush, in a statement scheduled for 11:10 a.m. EDT in the White House Rose Garden, will discuss the need for Congress to pass Federal Housing Administration reform legislation aimed at giving the agency the flexibility to help subprime mortgage borrowers, two administration officials told Reuters.

One move will be an administrative change to allow the Federal Housing Administration to guarantee loans for borrowers at least 90 days behind in mortgage payments to help them avoid foreclosure, the Wall Street Journal reported from a briefing given to a few newspapers.

The Federal Housing Administration was founded in the 1930s Depression years after the U.S. banking system failed and millions of Americans were made homeless. Now its mission is to foster home ownership by insuring mortgage loans, especially for poorer Americans who face difficulty meeting terms for conventional loans.
The risk of a credit squeeze stemming from rising defaults on subprime mortgages has fueled worry that consumers will trim spending at a rate that could tip the economy into recession.

Bush will urge the Democratic-led Congress to work with him in a bipartisan way to reform the tax code to help troubled borrowers revise their loans, administration officials said.

Bush will ask Congress to temporarily suspend a tax provision that has left some troubled homeowners with large tax bills, the Wall Street Journal reported.

Bush is also expected to direct Treasury Secretary Henry Paulson and Housing Secretary Alphonso Jackson to work on an initiative to help troubled mortgage holders obtain services and products needed to prevent default, officials said.

He will discuss the need for rigorous enforcement of predatory lending laws and strengthening lending practices, they said.

Stock prices fell on Thursday on concern that credit market upheaval was spreading, with the Dow Jones industrial average ((.DJI)) down 50.56 points to close at 13,238.73.

The rising home-mortgage default rate has been seized upon by Democrats who say the Bush administration failed to make sure that regulators enforced rules that oblige lenders to make sure that borrowers could repay their loans.

Hundreds of billions of dollars worth of the riskiest subprime loans carry low initial rates that will adjust, or "reset" at higher rates, between now and the end of 2008.

That is expected to push the default rate up and could create a potentially devastating political issue for Republicans gearing up for the 2008 elections.

Federal Reserve Chairman Ben Bernanke, who has been criticized for being too slow to take sterner measures to stamp out the smoldering credit crisis, is scheduled to speak on Friday morning about housing and monetary policy shortly before Bush's statement.

[Show-me]

Tax cuts for those trying to keep up with the Jones's by spending every cent they have even before they earn it.

[Oldcoin]

And now....the "Decider" is weighing in.

Lord help us all.

the "Decider's " solution?
Why, cut their taxes, of course!.
.

I know this sounds like fluff, but people are loosing there homes and then getting slapped with a tax bill on the relief of Debt they owed on the house. I think the only way out is to go into bankruptcy (insolvency) which excludes the relief of debt from income. (at least I think that’s the way it works).

[Birchtree]

From TWSJ - Investors Default On Outsize Share Of Home Loans - 8/31

"Investors played a big role in pumping up home prices during the housing boom. Now they account for an outsize proportion of loan defaults, mortgage bankers and builders say.
A survey by the Mortgage Bankers Association found that mortgages on properties that aren't occupied by the owner - mostly investment homes - account for between 21% and 32% of defaults on prime-quality home loans in Arizona, California, Florida and Nevada, states where overdue payments are mounting fast. The four states were among the favorites of speculators during the housing boom. When the market was hot, many speculators bought homes hoping to flip them for a quick profit. But now that home prices have turned lower, that strategy is backfiring. As a result, some investors have simply walked away from their mortgages. Investor defaults are likely to add to the spate of foreclosed homes hitting the market over the next year or two, even as much tighter lending standards cut many potential buyers out of the market. Goldman Sachs Group is predicting that home prices will fall an average of about 7% both this year and next." IMHO now is the time to be a buyer and I'm looking for something in the Blue Ridge Mountains of North Carolina.

[James48843]

Wait until next year, when a whole new crop of ARMs hit s the reset time.

It will get much, much more bloody, before it gets better in the sub-prime markets.

[Birchtree]

In the vacation markets homes that are not occupied are open for rentals trying to bring in some revenue. There is always a blessing if one looks long enough - opportunities are prevalent for those attentative.

[James48843]

Bernanke Says Fed Will Do What's Needed

Friday August 31, 11:54 am ET
By Jeannine Aversa, AP Economics Writer

Bernanke Says Fed Will Act As Needed to Limit Economic Fallout From Credit Crisis

JACKSON, Wyo. (AP) -- Federal Reserve Chairman Ben Bernanke pledged Friday that the central bank will "act as needed" to keep the credit crisis that has unhinged Wall Street from hurting the national economy.

In anxiously awaited remarks, Bernanke didn't specify what the Fed's next move will be but made clear policymakers are keeping close tabs on the problem, which has roiled investors in the United States and around the globe.

Even as Bernanke vowed Fed action, he sought to temper investors' expectations.

"It is not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions," Bernanke said. "But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy."

President Bush, meanwhile, said the economy was strong enough to deal with turbulence on Wall Street.
Bush, speaking in the Rose Garden, said he was briefed on the financial markets by Treasury Secretary Henry Paulson.

"The markets are in a period of transition as participants reassess and reprice risk," the president said in a rare comment about Wall Street. "This process has been unfolding for some time and it's going to take more time to fully play out. As it does, America's overall economy will remain strong enough to weather any turbulence."
Many believe the odds are growing that the Fed will cut its most important interest rate, now at 5.25 percent, by at least one-quarter percentage point on or before Sept. 18, its next regularly scheduled meeting. The Fed hasn't lowered this rate in four years.

The Fed "will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets," Bernanke told an economics conference here.

On Wall Street, stocks rose after the Fed chief's remarks. The Dow Jones industrials were up around 90 points in late-morning trading.

To guide the Fed in terms of what its next move will be, Bernanke said policymakers will pay especially close attention to the "timeliest indicators" as well as information gleaned from businesses and banks around the country. Economic data that was taken before the credit markets really seized up in August will be much less useful to policymakers to assess the country's economic health, he explained.

It was his first speech -- and his most extensive comments -- since the credit crunch took a turn for the worst in August. The carnage in credit markets and the turmoil on Wall Street pose the biggest test of Bernanke's skills since taking the Fed helm 19 months ago.

President Bush was announcing steps Friday to aide homeowners who are having trouble making the payments on risky mortgages.

The Fed's most important interest rate, called the federal funds rate, has been at 5.25 percent for more than a year. Any reduction to this rate would mean lower interest rates for millions of people and businesses. That's why it is the Fed's main tool for influencing economic activity.

After listening to Bernanke's speech, John Makin, principal at Caxton Associates Inc., believed the Fed was moving "a tiny bit closer" to a rate cut.

In his remarks to a high-profile conference here on housing sponsored by the Federal Reserve Bank of Kansas City, Bernanke discussed some of the steps the Fed has taken so far to deal with the credit crunch.

While problems were triggered largely by heightened concerns about higher-risk "subprime" mortgages made to people with blemished credit histories or low incomes, Bernanke said "global financial losses have far exceeded even the most pessimistic projections of credit losses on those loans."

To stabilize wobbly markets, the Fed on Aug. 17 sliced its lending rate to banks by a half percentage point to 5.75 percent. It also has pumped billions of dollars into the financial system to help banks and other institutions get through the credit hump and carry out their business.

The Fed's main concern, however, is the extent to which these problems might short-circuit economic growth.

"The further tightening of credit conditions, if sustained, would increase the risk that the current weakness in housing could be deeper or more prolonged than previously expected, with possible adverse effect on consumer spending and the economy more generally," Bernanke said.

The fear is that if credit continues to become harder for people and businesses to get, spending and investment will be crimped. That could hurt overall economic growth. In a worst-case scenario, the country could slide into a recession. Credit is the economy's life blood. It allows people to finance big-ticket purchases such as homes and cars and can help businesses bankroll expansions and other things that can boost hiring.

After a five-year boom, the housing market went bust last year; problems are expected to persist well into next year as builders try to whittle down a glut of unsold homes.

During the housing slump, a combination of higher interest rates and weaker home values clobbered homeowners, especially those with blemished credit histories or low incomes holding higher-risk "subprime" loans.

With squeezed homeowners finding it impossible to make their mortgage payments or pay them in a timely fashion, foreclosures and delinquencies are soaring and are expected to get worse. Lenders have been forced out of business, and hedge funds and other big investors in subprime mortgage securities also have taken a big financial hit.

Very low initial "teaser" rates jumping to much higher rates as they reset are socking some homeowners. Analysts estimate 2 million adjustable-rate mortgages will reset this year and next. Steep prepayment penalties have made it difficult for some to get out of their mortgages. Some overstretched homeowners can't afford to refinance or even sell their homes.

Most of the carnage has been in the subprime market, but problems have spread to other more creditworthy borrowers. That has sent investors into periods of panic in recent weeks, causing stocks on Wall Street to careen wildly.

Source:
http://biz.yahoo.com/ap/070831/bernanke.html?.v=15

[BeaverState]

When I bought my house the lender told me I could borrow whatever I wanted without income verification. It didn't take a genius to figure out this was a bad lending practice. I think any institution that engaged in this type of practice should be allowed to go under.

[robo]

2 Indicted for Flipping Scheme in California


Thursday, August 30, 2007
2 Indicted for Money Laundering, Theft & Corrupt Activity


Former Ohio Title Agent Indicted for Mortgage-Related Crimes


Wednesday, August 29, 2007
Alaskan Branch Manager Sentenced for Falsifying Information

Monday, August 27, 2007
Appraiser Pleads Guilty in $50 Million Real Estate Investor Fraud


Friday, August 31, 2007
Texan Pleads Guilty to Defrauding Mortgage Lenders
Firooz Deljavan, 56, former owner and operator of Austin Realtors Network, Inc., faces five years in federal prison after pleading guilty to participating in a fraud and money laundering scheme that defrauded federally insured financial institutions and mortgage lenders of more than $15 million.

Appearing before U.S. Magistrate Judge Andrew Austin, Deljavan pleaded guilty to one count of conspiracy to commit mail, wire and bank fraud and one count of conspiracy to commit money laundering.

From March 27, 2001 to January 23, 2004, Deljavan and others instituted a real estate flip-for-profit scheme …

http://www.mortgagefraudblog.com/

[Oldcoin]

Wait until next year, when a whole new crop of ARMs hit s the reset time.

It will get much, much more bloody, before it gets better in the sub-prime markets.


They say the second thing to go is your memory, can’t remember what the first thing is, or who the heck “They” are but,

I seem to recall that a bunch of arms are due to reset soon. I don’t know how long the fallout from this will take, a month? Maybe two? But it would be interesting to try and guess when the @#%$ will hit the fan or if it’s going to hit.

Does anyone know when the next big reset is going to occur? For some reason I thought it was this month.

[Oldcoin]

http://www.smugmug.com/photos/136440158-O.png

[Oldcoin]

Alright, so it looks like we have a bunch resetting into the end of the year and a pretty significant number of subprime ARMs during September, October & December.

[Birchtree]

Spring of 2008.

[Oldcoin]

Spring of 2008.

Yeah...... I wonder if things will erode further?

[robo]

September 01, 2007

The Writing is on the Wall
by Peter Schiff


This week, Larry Kudlow and others strongly chastised Bernanke for his failure to read the writing on the wall and urged the Fed Chairman to quickly slash the Fed Funds rate. Methinks the pundits doth protest too much. For years, Kudlow, who practically coined the term "Goldilocks economy," has dismissed with scorn suggestions that the American economy was anything less than ragingly healthy. If our economy is really so strong, why does he call so loudly for the artificial stimulus of a significant rate cut?

In truth, the writing has always been clearly on the wall all along. A credit bubble has been steadily inflating for at least the last six years, which in its final frenzy produced some of the most absurd mortgage funding products the world has ever seen. To anyone not dependent on the hysteria, a no-doc, no money down, negative amortization, interest only, adjustable rate jumbo mortgage was a just as clear a sign of pending catastrophe as $200 for a share of Pets.com, or 5,000 Dutch guilders for a single tulip bulb.

The one thing all bubbles have in common is that they eventually pop, and ours just did. Unlike the popping of the last bubble in 2000-2001, this one will fall directly to our economy's bottom line. And this time the Fed can not step up to the plate with unlimited liquidity injections.

A record percentage of our GDP is comprised of consumer spending. The source of this spending was the housing bubble. Would our savings rate really be negative were it not for housing related "wealth?" Could consumers really have spent as much as they did without the benefits of temporarily low teaser rates and the ability to extract equity from their homes? How many service sector jobs are directly related to that extra spending? When the low mortgage payments and home equity disappear, so too will the spending and jobs they engendered.

Those who feel that the economy will keep growing must believe that discretionary consumer spending is unrelated to wealth or expenses. In other words, they believe that individuals will spend as much with no home equity and $3,000 per month mortgage payments as they did with $200,000 in home equity $1,500 monthly payments. Factor in other rising expenses; such as food, energy, insurance, and taxes and discretionary spending will not just slow, it will completely collapse.

With the ugly truth laid bare, many now prod Bernanke and Bush for solutions. Unfortunately there are none. Based on absurd assumptions about real estate, we simply borrowed more money than we can ever hope to pay back. There is no magic elixir we can swallow to cure what ails us. The free market is the only force that can fix this mess. Unfortunately, the fix won't be pretty. Prudent lending standards will return, guaranteeing that real estate prices collapse. This is an important connection that very few have made. There is no way the average American can afford to buy the average house at today's prices with a mortgage he can afford. Assuming that the lax standards of 2005-2006 do not return, the only way this can happen is if real estate prices collapse, which is exactly what is happening.

The financial institutions that are calling most loudly for a bailout claim the Government must act to protect homeowners. However, the most severe losses will not be born by homeowners but by those who loaned them the money. Therefore any bailouts will ultimately go to lenders not borrowers. Homeowners who offered no down payment and who have no equity in their homes will in reality lose nothing in foreclosure, except perhaps a debt burden on an overpriced house. In addition, even those homeowners who made down payments likely extracted larger sums in subsequent refinancings or home equity loans. With plenty of available foreclosed homes on the market to rent it is unlikely that these former homeowners will become homeless.

As a result, the only losses for most homeowners will be psychological, as their dreams of real estate riches vanish. For some paper millionaires, the sudden realization that they are flat broke will be somewhat disheartening. Also for those who thought retirement was simply a function of living in a home and allowing it to appreciate, the sudden realization that they will now have to finance their retirement the old fashioned way, by saving up, will be quite an eye opener. However, even if misguided government bailouts enable more borrowers to keep their homes the equity they thought they had will still be gone.

In the final analysis, though it was Wall Street that served the punch, it was the Greenspan Fed that spiked it in the first place. Just as Fed policy enabled Wall Street to flood the world with worthless dot.com stocks it enabled an encore performance with subprime mortgage-backed securities. My guess is the Fed's bubble blowing days are over. Once the inebriates sober up this time, the hangover will be so severe that no one will drink a drop of Wall Street's punch again, meaning any more inflation the Fed creates will go strait into consumer prices.

For a more in depth analysis of the tenuous position of the American economy, the housing and mortgage markets, and U.S. dollar denominated investments, read my new book "Crash Proof: How to Profit from the Coming Economic Collapse." Click here to order a copy today.


http://www.safehaven.com/article-8312.htm

[Fivetears]

145 subpime lenders down to date:
145 - Castle Point Mortgage
144 - Group One Lending
143 - Allstate Home Loans / Allstate Funding
142 - Home Loan Specialists (HLS)
141 - Transnational Finance Wholesale
http://ml-implode.com

92 Failed this year.
17 in 2006.
http://www.mortgagedaily.com/MortgageGraveyard.asp?spcode=graveyard

[Oldcoin]

Homes entering foreclosure at record

The housing slump, Midwestern economic woes and resetting ARMs send late payments higher.

By Les Christie, CNNMoney.com staff writer
September 6 2007: 1:26 PM EDT

NEW YORK (CNNMoney.com) -- The delinquency rate for mortgage borrowers spiked higher in the second quarter and the number of homes entering the foreclosure process hit a record high, according to a report released Thursday.

Deliquencies hit 5.12 percent of all outstanding mortgages, up from 4.39 percent a year ago, the Mortgage Bankers Association (MBA) said in a quarterly survey.

Serious delinquencies, those 90 days or more late, jumped to 1.11 percent of all loans, from 0.98 percent in the first quarter.

The loans actually entering foreclosure proceedings stood at 0.65 percent, a rise from 0.58 percent in the first three months - and the highest rate in the MBA's 55-year history. (Latest home prices - 149 markets)

More Americans are falling behind in their mortgage payments as stagnant home prices, auto-industry weakness and climbing interest rates have taken a toll on housing affordability.

The survey revealed steady increases in all categories of delinquencies among mortgage borrowers, but problems in subprime adjustable rate loans drove much of the increase.

"There is a clear divergence in performance between fixed rate and adjustable rate mortgages due to the impact of rate resets," said Doug Duncan, the MBA's chief economist.

Duncan called the delinquency trends "a story of seven states." There are the three midwestern states - Michigan, Ohio and Indiana - where defaults and foreclosures are linked to serious underlying economic and job issues. Michigan alone has lost 300,000 jobs since 2000.

Then there are the once red-hot housing markets of the Sunbelt. According to Duncan, homes entering the foreclosure process in Arizona, California, Florida and Nevada drove the national increase - the national foreclosure rate would have otherwise declined.

"The data shows dramatic effects of speculative investing in those four states," said Duncan. High levels of non-occupied houses there coupled with a high percentage of ARMs made markets particularly susceptible to delinquencies.

Many investors simply do not have the same level of interest in retaining their properties than do owner-occupiers who have, historically, always strived to keep their properties.

Coping with foreclosure

Delinquencies are expected to continue a steady climb for the next year or so. The number of adjustable rate mortgages (ARMs) that reset to higher rates will peak this fall and many of those borrowers will likely fall behind on payments.

Many borrowers in default work out their problems without undergoing foreclosure. Some rework their loans in cooperation with their lenders, often cleaning up arrears by making extra payments later. Others get free of unaffordable ARMs by refinancing into fixed rates.

Many sell their homes before they lose them, especially if they still retain some equity in the properties. Even if there is no home equity, they may get their bank to agree to a short sale in which the bank will forgive the debt not covered by the sale of their houses.

A minority of homeowners will actually go through the entire foreclosure process and their numbers are not forecast to peak until 2008, as homeowners scrambling to find a solution to their unaffordable loans abandon the fight.

The ultimate foreclosure total may be influenced by several of the initiatives being discussed in Washington. President Bush floated some proposals last week that sought to help responsible borrowers stay in their homes.

Bush's proposals, if followed through on, could make it easier for some families to refinance from ARMs into fixed rates.

In addition, regulators recently informed mortgage servicers, which act as liaisons between investors and borrowers, that rewriting the terms of mortgages does not violate accepted accounting practices if it's done for the benefit of the investors. That should remove one of the legal stumbling blocks faced by servicing firms that want to help borrowers by modifying or refinancing their mortgages.

Other proposals - such as increasing cap limits on HUD loans - that offer some relief to troubled homeowners may also reduce the total of loans that actually go into foreclosure.

If, however, the housing-market slump deepens, delinquencies and foreclosures could worsen. And turmoil in the credit markets could tighten the liquidity squeeze that has made it much tougher for many potential home buyers - as well as owners looking to refinance - to obtain loans.

That has caused demand for homes to plunge in many areas and the national inventory of homes on the market has doubled over the past three years. There is now about a nine-month supply of listings at the current rate of sales.

http://money.cnn.com/2007/09/06/real_estate/mortgage_delinquencies_climbing/index.htm?cnn=yes

[Pilgrim]

Greenspan: We've seen this turmoil before

Report: Economic bubbles can't be defused through interest rate adjustments, he suggests in speech.


http://money.cnn.com/2007/09/07/news/newsmakers/bc.apfn.greenspan.remarks.ap/index.htm?postversion=2007090706

Despite all the hoopla about a rate cut, this is one more voice - a big one - saying that it won't work.

[weatherweenie]

http://biz.yahoo.com/ap/070913/greenspan_mortgages.html?.v=8

Greenspan Acknowledges He Didn't Initially Grasp Risks of 'Subprime' Mortgages

Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.

[350zCommTech]

Greenspan Acknowledges He Didn't Initially Grasp Risks of 'Subprime' Mortgages.

That's an understatement. Actually, I think he's full of ****.

[robo]

Tales of the crash of 2007

The meltdown in housing prices may not cause a recession, but it's costing some people their homes - and some their marriages, Ben Stein writes in Fortune.

By Ben Stein, Fortune
September 11 2007: 10:20 AM EDT


(Fortune Magazine) -- It doesn't look to me as if there will be a recession - at least not a major recession - from the subprime problems or the credit crunch or any of that panic on Wall Street. But there are effects rippling all over the place right here and now, and some of them are not what you might expect (though some are).

Item: My dear friend B is a broker for super-luxury homes in Scottsdale. He used to be perpetually out of breath from hustling around that lush area showing immense houses and depositing huge checks.


"Now," he says, "I go into the office on Saturdays and Sundays, and I'm literally the only person there. There are dozens of empty cubicles, but their phones never ring. Never. Not once all weekend. It's as if I were down in the desert 100 miles from here. That's how quiet it is."

"Why do you bother going in at all?" I ask.

"If I don't," he says, "there's a 100% chance nothing will happen. At least here by the phone, there's a chance."

Oh, the people you'll blame!
Item: I, your humble servant, am negotiating to buy a condo in Sandpoint in magnificent, super-beautiful northern Idaho. The day I made my first offer, I read a piece in the New York Times that seemed to say that jumbo loans were either unavailable or available only at rates in the range of 13%.

That same day my mortgage broker offered me a 30-year jumbo at 6 7/8%. She said she had money to lend and could do the thing in two weeks. The next day two more lenders called and offered me the same deal. Don't believe everything you read in the papers.

Item: On CNBC there is story after story about the mortgage cutoff and credit crunch. In between are ads for mortgages.

Item: One of my best friends, a blue-eyed, red-haired stunner and a math whiz, is married to a builder and mortgage broker near Naples, Fla. She flew into town, and I had lunch with her today. "How is your husband taking all this stuff?" I asked her.

"He doesn't sleep. At most he sleeps from 5 A.M. to 7 A.M. We built two spec homes near Naples. We spent $2.7 million on each of them. We had them listed for $4 million each. We haven't had one prospect in a year. We lowered the price by a million each. Still no prospects. We're losing $60,000 a month on the two of them. My husband has no business. None. The phone never rings."

"Horrible," I said.

How to marry a billionaire
"I'm leaving him," she said. "He's grouchy all the time. I want a guy who's rich and cheerful all day and all night. Why should I have to suffer because his business is bad?"

"He's your husband," I said. "You have to stick by him."

"Why? I want to laugh and have fun, and he's in a bad mood for months on end. I didn't make this mortgage mess, and I don't see why I should have to suffer for it."

"It won't last," I said. "It never does."

She suddenly looked much more upbeat. "How long until the market turns around?" she asked expectantly.

"Maybe six years," I said.

She looked staggered. "That's it," she sighed. "I want you to start looking for a rich husband for me who's going to stay rich no matter what. Tell him I'll be a really great wife." (She has a killer sense of humor so I am praying she's kidding.)

Twenty-four hours later, as I was driving to Malibu from Beverly Hills, I was called by a woman friend of 37 years who is a psychologist and marriage and family counselor in a suburb of Philadelphia. I told her the story about my friend who's planning to look for a richer husband. She gasped.

"That could be a disaster," she said firmly.

"Because she's breaking up her family over money?"

"No, because what if she leaves him and the mortgage market and the spec home market suddenly turn around and he gets rich again and then she can't find anyone as rich to marry next?"

"Good thinking," I said.

"You have to be realistic," she answered.

Ben Stein is a writer, lawyer, economist, and actor.

http://money.cnn.com/magazines/fortune/fortune_archive/2007/09/17/100250263/index.htm?postversion=2007091110

[Bullitt]

That is incredible how CNBC will have analysts warning the public not to get near Countrywide Financial with a 10 foot pole and then at the commercial break, you can see DiTech, Lending Tree and Countrywide advertisements. Actually, I can't think of any companies that advertise on CNBC more aggressively than mortgage lenders.

[James48843]

Now up to 156 "Imploded lenders"

"Imploded" Lenders:
156. Long Beach (WaMu Warehouse/Correspondent)
155. Expanded Mortgage Credit Wholesale
154. The Mortgage Store Financial
153. C & G Financial
152. CFIC Home Mortgage
151. BrokerSource (BSM Financial - Wholesale)
150. All Fund Mortgage
149. LownHome Financial
148. Sea Breeze Financial Services
147. Castle Point Mortgage
146. Premium Funding Corp
145. Group One Lending
144. Allstate Home Loans / Allstate Funding
143. Home Loan Specialists (HLS)
142. Transnational Finance Wholesale
141. CIT Home Lending
140. Capital Six Funding
139. Mortgage Investors Group (MIG) - Wholesale
138. Amstar Mortgage Corp
137. Quality Home Loans
136. BNC Mortgage (Lehman)
135. Accredited Home Lenders, Home Funds Direct
134. First National Bank of Arizona (FNBA) Wholesale, Correspondent
133. Chevy Chase Bank Correspondent
132. GreenPoint Mortgage - Capital One Wholesale
131. NovaStar (Wholesale), Homeview Lending
130. Quick Loan Funding
129. National City Home Equity
128. Calusa Investments
127. Mercantile Mortgage
126. First Magnus
125. First Indiana Wholesale
124. GEM Loans / Pacific American Mortgage (PAMCO)
123. Spectrum Financial Group - Wholesale
122. Kirkwood Financial Corporation
121. Lexington Lending
120. Express Capital Lending
119. Deutsche Bank Correspondent Lending Group (CLG)
118. MLSG
117. Trump Mortgage
116. HomeBanc Mortgage Corporation
115. Mylor Financial
114. Aegis
113. Alternative Financing Corp (AFC) Wholesale
112. Winstar Mortgage
111. American Home Mortgage / American Brokers Conduit
110. Optima Funding
109. Equity Funding Group
108. Sunset Mortgage
107. Fieldstone Mortgage Company
106. Nations Home Lending
105. Wells Fargo Alternative Lending Wholesale
104. Entrust Mortgage
103. Alera Financial (Wholesale)
102. Flick Mortgage/Mortgage Simple
101. Alliance Bancorp
100. Choice Capital Funding
99. Premier Mortgage Funding
98. Stone Creek Funding
97. FlexPoint Funding (Wholesale & Retail)
96. Starpointe Mortgage
95. Unlimited Loan Resources (ULR)
94. Freestand Financial
93. Steward Financial
92. Wells Fargo (Correspondent)
91. Bridge Capital Corporation
90. Altivus Financial
89. ACT Mortgage
88. Alliance Mortgage Banking Corp (AMBC)
87. Concord Mortgage Wholesale
86. Heartwell Mortgage
85. Oak Street Mortgage
84. The Mortgage Warehouse
83. First Street Financial
82. Right-Away Mortgage
81. Heritage Plaza Mortgage
80. Horizon Bank Wholesale Lending Group
79. Lancaster Mortgage Bank (LMB)
78. Bryco (Wholesale)
77. No Red Tape Mortgage
76. The Lending Group (TLG)
75. Pro 30 Funding
74. NetBank Funding
73. Columbia Home Loans, LLC
72. Mortgage Tree Lending
71. Homeland Capital Group
70. Nation One Mortgage
69. Dana Capital Group
68. Millenium Funding Group
67. MILA
66. Home Equity of America
65. Opteum (Wholesale, Conduit)
64. Innovative Mortgage Capital
63. Home Capital, Inc.
62. Home 123 Mortgage
61. Homefield Financial
60. First Horizon Subprime, Equity Lending
59. Platinum Capital Group (Wholesale)
58. First Source Funding Group (FSFG)
57. Alterna Mortgage
56. Solutions Funding
55. People's Mortgage
54. LowerMyPayment.com
53. Zone Funding
52. First Consolidated (Subprime Wholesale)
51. EquiFirst
50. SouthStar Funding
49. Warehouse USA
48. H&R Block Mortgage
47. Madison Equity Loans
46. HSBC Mortgage Services (correspondent div.)
45. Sunset Direct Lending
44. Kellner Mortgage Investments
43. LoanCity
42. CoreStar Financial Group
41. Ameriquest, ACC Wholesale
40. Investaid Corp.
39. People's Choice Financial Corp.
38. Master Financial
37. Maribella Mortgage
36. FMF Capital LLC
35. New Century Financial Corp.
34. Wachovia Mortgage (Correspondent div.)
33. Ameritrust Mortgage Company (Subprime Wholesale)
32. Trojan Lending (Wholesale)
31. Fremont General Corporation
30. DomesticBank (Wholesale Lending Division)
29. Ivanhoe Mortgage/Central Pacific Mortgage
28. Eagle First Mortgage
27. Coastal Capital
26. Silver State Mortgage
25. ResMAE Mortgage Corporation
24. ECC Capital/Encore Credit
23. Lender's Direct Capital Corporation (wholesale division)
22. Concorde Acceptance
21. DeepGreen Financial
20. Millenium Bankshares (Mortgage Subsidiaries)
19. Summit Mortgage
18. Mandalay Mortgage
17. Rose Mortgage
16. EquiBanc
15. FundingAmerica
14. Popular Financial Holdings
13. Clear Choice Financial/Bay Capital
12. Origen Wholesale Lending
11. SecuredFunding
10. Preferred Advantage
9. MLN
8. Sovereign Bancorp (Wholesale Ops)
7. Harbourton Mortgage Investment Corporation
6. OwnIt Mortgage
5. Sebring Capital Partners
4. Axis Mortgage & Investments
3. Meritage Mortgage
2. Acoustic Home Loans
1. Merit Financial
Ailing/Watch List Lenders:
11. Secured Bankers Mortgage Company (SBMC)
10. Impac Lending Group (Wholesale)
9. Delta Financial Corp
8. Countrywide Financial
7. Meridias Capital
6. Option One
5. Ocwen Loan Servicing
4. Doral Financial Corp.
3. Evergreen Investment/Carnation Bank
2. Coast Financial Holdings, Inc.
1. Residential Capital, LLC*

"Imploded" lenders: The "imploded" status is somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or a "firesale" acquisition. The Companies include all types (prime, subprime, or a mix of both; retail or wholesale; subsidiaries and entire companies). Note: Companies listed here may still be operating in some capacity; check with them before making assumptions.

Ailing lenders haven't shut down, but they're significantly scaling back or are (or recently have been) in manifest financial, legal, or operational distress. Unfortunately, most of the industry now falls under this description, so we are forced to reserve this list for the more glaring cases or those which we happen to have more specific info about.

Note: This site changes rapidly. You should always check other sources regarding information found here, and check with the companies themselves if you plan on doing business with them. And as always, please let us know if you have corrections, clarifications, or additions.


"Non-imploded list":

Sponsored by Waquis. So you think the market is all doom and gloom? Not us. There are actually lenders out there that are operating and focused on smart business fundamentals. Listed below are companies that wish to express that they are still operating in good health and soliciting business:

* Select Lenders Assurity Financial Services (Retail) : Our Grade: A- [FHA Lender - 100% commission payout & 10 bps recruiting income stream!]
* Assurity Financial Services (Wholesale) : Our Grade: A- [No FICO limits on FHA! 65% are manually approved! 18bps to AE's.]
* Key Financial Corporation : Our Grade: B+ [Key Financial Corporation is a true affiliate branch mortgage lender that specializing in FHA loans and superior customer service.]
* Megastar Financial Corporation : Our Grade: A+ [Looking for Net Branch, Branch Mgr or VP that wants to transfer business, LO’s or company to stable environment.]

Want to put your company in this spot? Contact us for pricing ! This section is managed by Waquis Global . Waquis is an off-shore outsourcing company focused on the mortgage lending and banking markets. Our clients are more profitable, efficient, and resilient in a challenging market due to off-shoring in countries like India.

* Charter Lenders Residential Capital Mortgage Income Fund: Our Grade: B/B+ [Residential Capital is a wholesale lender, specializing in a non-FICO-based HELOC for non-prime borrowers. CA only, up to 70% LTV]
* ...

Latest imploded:
Last addition: September 14, 2007.

* Long Beach (WaMu Warehouse/Correspondent)
* Expanded Mortgage Credit Wholesale
* The Mortgage Store Financial
* C & G Financial
* CFIC Home Mortgage

Top Non-Imploded:

* Assurity Financial Services (Retail): A-
* Assurity Financial Services (Wholesale): A-
* Key Financial Corporation: B+
* Megastar Financial Corporation: A+




Source: http://ml-implode.com

[oreo]

Interesting article.

http://www.nytimes.com/2007/09/16/business/worldbusiness/16housewives.html?_r=1&ref=business&oref=slogin

Japanese Wives Sweat as Markets Reel

[Oldcoin]

http://tinyurl.com/38mh5a

UBS to report $3.4 billion subprime hit
First quarterly loss in nine years; exec changes, jobs cuts in the works

By Simon Kennedy, MarketWatch
Last Update: 10:18 AM ET Oct 1, 2007

LONDON (MarketWatch) -- UBS will take a net third-quarter write-down of around 4 billion Swiss francs ($3.4 billion) tied to its subprime mortgage exposure and plans sweeping management changes and job cuts in its investment-banking division, the Swiss banking giant said Monday.


Events from the sub-prime seem to be loosing their impact. My guess is that the market believes that it has already priced in the effect of losses from this exposure or the risk has been spread so that the impact will not decimate the entire banking industry, thus little or no action on the two big stories today.

[robo]

Boom, Bust in Area Beset by Foreclosures

By ADAM GELLER (AP National Writer)

From Associated Press
October 06, 2007 9:19 PM EDT
QUEEN CREEK, Ariz. - Out on Phoenix's suburban fringes, where cement mixers are fast colonizing what's left of the hay and cotton fields, the day is winding to a close. The home hour has arrived.

But sundown gives away a troubling secret: Behind dark windows and many unanswered doors, it's clear nobody is coming home.

The ranch home on Via del Palo where the newspaper in the driveway has been sitting unclaimed since April. The house at the corner of 223rd Court with faded fliers stuck in the door. The two-story on Via del Rancho with the phone book on the step.

They're all empty, left behind by a rising tide of foreclosures.

This neighborhood has a still-unfolding story to tell, and it is not always a comfortable one to hear.

Not long ago, builders were raising home prices here thousands of dollars week after week. Families pitched tents in front of sales offices and waited for Saturday morning lotteries to win the right to buy. Buyers - including more than a few speculators - gambled with loans whose risks were obscured by euphoria.

This is the tale of how America's real estate boom came to a seemingly ordinary subdivision called the Villages at Queen Creek, where the whipsaw of easy credit has led to some extraordinary times.

They were the best of times, for a while. The empty homes, though, raise serious doubts about what comes next.

As the nation confronts skyrocketing foreclosures, and policymakers try to contain a symptomatic credit crunch, what is happening here and in scores of similar neighborhoods is worth considering.

Because while the pressures at work in Queen Creek were extreme, the choices people made - and the consequences of those decisions - are not so different from those faced by thousands of other homeowners and their neighbors.

"Honestly," says Joy Kessler, a mother of three boys standing on the doorstep of the house she and her husband are surrendering to foreclosure, "if you were in this situation, what would you do?"

---

In June of 2004, Dave Gustafson took time off from his job as a supermarket produce manager, and the family headed to Arizona to visit relatives. The buzz of construction - and word of low home prices - convinced them to have a look around.

Dave and his wife Maryann liked what they saw.

Back in California, they had contented themselves with less than 1,100 square feet. But salesmen here showed them floor plans that would give them 2 1/2 times the space for half the price.

The place they liked the best was a subdivision called the Villages, a crescent-shaped warren of streets cradling a golf course, quickly filling with sand-colored stucco homes. The local schools had a good reputation. It was affordable. There was an extra-big lot on a cul-de-sac, with enough room in back for a pool.

"The sales person was saying that they (homes) were going up $1,000 a week," Dave Gustafson recalls. "So when we came to look, we signed right away."

Builders made it easy. A downpayment of $2,000 to $5,000 was all it took to get started. Buyers could borrow at low teaser rates, requiring payments of nothing more than interest.

As promised, home prices were going up faster than the houses themselves.

By the time the family's new home - a two-story model called The Starling with a cathedral ceiling in the living room - was completed the next spring, the $179,000 base price had climbed to $220,000.

"We were making money while we were waiting," Dave says.

The Gustafsons picked out Corian counters and maple licorice-finished cabinets at the builder's design center, and opted for a pool and a whirlpool bath, adding more than $50,000 to their loan. The interest rate was fixed for only two years, but they didn't worry. With prices rising so fast, they could always refinance. And in five or six years, the Gustafsons figured, they'd sell for $500,000 and downsize.

They hung a plaque over the dining table: "Home is Where Your Story Begins."

They were hardly the only ones feeling optimistic.

Kris Rowberry was ecstatic when the value of his home in nearby Gilbert started to take off. So he bought a second one in the Villages as an investment.

"I was thinking, man, if I could have 10 properties, I could just kind of retire ... and kick back and live off the income," says Rowberry, a nuclear safety inspector.

But the speculative mind-set confounded buyers like retiree David Pickering. When Pickering and his wife left Pennsylvania in August of 2004 for a new home in the Villages, they'd never heard of interest-only loans and the idea of buying a home as an investment hadn't occurred to them.

They were simply buying a place to live, hopefully for a good, long time.

Around them, though, such notions began to look very old-fashioned.

---

The American Dream is a myth overdue for revision.

http://enews.earthlink.net/article/nat?guid=20071006/47070840_3ca6_1552620071006-2022151592

[Oldcoin]

Merrill's own subprime warnings unheeded
Mon Oct 29, 2007 2:22pm EDT

http://www.reuters.com/article/ousiv/idUSN2962398720071029

By Al Yoon

NEW YORK (Reuters) - Merrill Lynch & Co Inc's own investment advice on subprime loans appears to have gone unheeded in its executive office.

Merrill Chief Executive Officer Stan O'Neal maintained an aggressive tack on subprime securities into 2007 even as investors began balking at the bonds and some in the industry labeled pricing as irrational.

Merrill Lynch (MER.N: Quote, Profile, Research) equity analyst Kenneth Bruce in September 2006 warned clients that companies with subprime exposure could face lower earnings, since demand for the debt "could dissipate quickly" as credit worsened. Bruce's call coincided with soaring prices on subprime bonds even as mortgage defaults escalated.

Bruce declined to comment, a Merrill spokeswoman said. He covers mortgage companies for Merrill.

[Oldcoin]

Now up to 176

http://ml-implode.com/

[Fivetears]

New for 2008
1. Soma Financial
2. First American Bank (Wholesale)

Count is 212.
http://ml-implode.com/

[Birchtree]

I'm buying into the sector for my daughter - we got 87 positions so far and I imagine a few will go belly up - it's always a sacrifice to get the best prices and throw off income from their dividends. It's a game I dearly like to play.

[350zCommTech]

Remember CFC's last conference call? Where the Tan-Man promised a 4qtr profit?

LOL!!!!!!:laugh:

3024

[Fivetears]

2 more down for 2008
Bank of America buys Countrywide
First NLC Financial Services
Countrywide Financial Corp.

Count is 214.
http://ml-implode.com/

[Fivetears]

UBS in Shareholder Plea as Subprime Fallout Weighs
UBS has appealed to its shareholders to back a capital injection by the Singapore government and a Middle East investor but warned it still cannot predict how the subprime crisis will play out. UBS's made the appeal in letter to shareholders released on Friday, and it comes after the New York Times reported Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments. The Swiss bank is braced for what looks set to be a stormy shareholder meeting on Feb. 27 when it will seek approval for a capital increase, resulting in the sale of a 9 percent stake to the Singapore government and around 1.5 percent to an unidentified Middle East investor.
http://www.cnbc.com/id/22603854

[Fivetears]

Moody's reviewing Bank of America
NEW YORK - Credit rating agency Moody's Investors Service said Friday it placed Bank of America Corp. on review for a potential downgrade after the bank said it would acquire mortgage lender Countrywide Financial Corp. Moody's will review Bank of America for a possible downgrade based on the bank's ability and willingness to raise capital to support its balance sheet after completing the acquisition. Bank of America currently carries an investment-grade "Aa1" rating from Moody's.
http://www.cnbc.com/id/22609035/for/cnbc/

[McDuck]

I'm buying into the sector for my daughter - we got 87 positions so far

Wow, that's sounds pretty nice. Is she single?

[Birchtree]

Yes she is single. She is a 1LT with the 25th Infantry Division and we just set up three accounts to act as a conduit for her earnings. She will be returning to Iraq at the end of the year making a Captain salary and we are just doing a little long term planning picking up some undervalued assets with the idea of dividend reinvestments on automatic pilot. It's truly a simple plan and her money will never sleep.

[weatherweenie]

Briefing.com
More federal bankruptcy judges are calling into question the business practices of CFC, as BAC prepares to buy the ailing mortgage lender. According to court documents in a bankruptcy case in Houston, Countrywide didn't properly credit a borrower's payments made during bankruptcy but instead applied them to prebankruptcy debt, which isn't allowed. In the same case, involving a debtor named William Allen Parsley, Countrywide represented to the court that Mr. Parsley owed fees that turned out to be unsubstantiated and in error. These included an improper $450 fee and a $65 unsubstantiated fee.

[Fivetears]

3 more down for 2008
Aurora Loan Services
Residential Mortgage Capital
Maverick Residential Mortgage

Count is 217.
http://ml-implode.com/

[Fivetears]

S&P's mortgage view confirms bond insurer woe
MBIA says agency's gloomier loss assumptions won't leave it short of capital. The rating agency increased its forecast for losses on subprime mortgages originated in 2006 to 19% from 14%, as delinquencies continue to rise. Such assumptions are important because S&P uses them to rate securities that are backed in part by those home loans. If projected losses are greater, ratings may have to be downgraded further. That's a potential problem for bond insurers which have guaranteed some of these securities. If more of their exposures are downgraded, rating agencies may decide that bond insurers need to hold more capital to back their guarantees. S&P said on Thursday that total projected losses in the bond insurance business will be 20% higher than previously expected. However, the rating agency stressed that those extra losses didn't cut into bond insurers' capital cushions much. It also didn't take any new rating action on companies in the industry.
http://www.marketwatch.com/news/story/sps-gloomier-mortgage-view-confirms/story.aspx?guid=%7BFE34CE81%2D651D%2D4299%2D9699%2 DFCED27F5A926%7D&dist=sp_inthis

[Fivetears]

MBIA, Ambac Tumble, Default Risk Soars After Losses
MBIA Inc. and Ambac Financial Group Inc., battered by losses from the collapse of the subprime mortgage market, fell the most ever in New York Stock Exchange trading on concern they will lose their AAA credit ratings. New York-based Ambac dropped 52 percent and Armonk, New York-based MBIA fell 31 percent as Moody's Investors Service and Standard & Poor's increased their scrutiny of bond insurers. Credit-default swaps on both guarantors rose to records, signifying investors see a growing chance that the companies won't be able to pay their debt.
http://www.bloomberg.com/apps/news?pid=20601087&sid=afPiWbgEN8qU&refer=home

[Fivetears]

MBIA: Priced for Catastrophe
THE EQUIVALENT OF A MASSIVE METEOR strike hit the bond-insurer industry last week, which rendered even the leading concern, MBIA, a smoking crater. It was all the more surprising since earlier in the week MBIA seemed to have solved any rating-agency capital concerns by putting the finishing touches on a $2 billion capital raise, thereby seemingly halting the decline in the company's stock in the past eight months from 70 down to the middle-teens. Yet in the week's last three sessions the stock resumed its slide, plummeting some 60% at one point before settling Friday at around 8. The $1 billion of capital-surplus notes MBIA had issued earlier in the week to yield 14% had sunk in value to the mid-70s, for a yield- equivalent of more than 20%. Credit protection on MBIA's debt likewise jumped to a first-year cost of $3.1 million per $10 million of debt exposure and an insurance-premium cost of $500,000 a year for the next four years. This implies a more-than-70% chance that MBIA will default on its debt in the next five years. These sorts of numbers overstate the severity of MBIA's admittedly substantial problems.

The reasons behind the latest collapse are several. Worries have grown that MBIA's statutory capital -- which, following the completion of its capital raise, will stand at around $8 billion -- won't be enough to make good on the subprime-securities default risks embedded in a $652 billion portfolio insured at par value. And it didn't help that during the week, Standard & Poor's suddenly upped its projection of cumulative losses on 2006-vintage subprime mortgages from around 14% to 19%, which, if valid, might eliminate much of the subordination layer protecting MBIA from claims losses.
http://online.barrons.com/public/article/SB120071150488302379.html?mod=mktw

[Fivetears]

HousingPANIC - McLaughlin group on housing and stock crash
http://www.youtube.com/watch?v=xyiqKfOcl9g
WE ARE SO OWNED!!

[Fivetears]

MGIC Shares Plunge With Rising Payouts
Shares of MGIC Investment Corp. plummeted more than 30 percent Wednesday, striking a 15-year low, after the nation's largest mortgage insurance company said paid losses could reach $2 billion this year. The Milwaukee-based company had said payouts could be as high as $1.5 billion in 2008, but raised that to a range of $1.8 billion to $2 billion late Tuesday citing fresh delinquencies and growing claim sizes.
http://biz.yahoo.com/ap/080123/mgic_losses.html?.v=1

[Fivetears]

Presidential Candidates' Subprime Solutions
As voters in South Carolina and Florida prepare to head to the polls this week, and with a clear-cut favorite yet to emerge from either party, questions about subprime lending and the solutions to our current housing troubles are coming to the forefront of the nation’s primary races. Details are below:
http://www.forbes.com/2008/01/23/candidates-subprime-solutions-forbeslife-cx_mw_0123realestate.html?partner=msn

[Fivetears]

Clayton Holdings INC to cooperate in NY subprime probe
Mortgage loan analysis company Clayton Holdings Inc. will detail how Wall Street firms sometimes shelved their damaging loan reports under an agreement reached with the New York State attorney general. In a statement released Saturday, the company said that it has "entered into a cooperation agreement" with the office of Attorney General Andrew Cuomo and will tell what it knows about how Wall Street sold mortgage investments despite warnings from Clayton that the underlying home loans did not meet quality standards.
http://news.yahoo.com/s/nm/20080127/bs_nm/usa_subprime_diligence_dc_1;_ylt=Ah.KtpMtqxb2yjleL e6gyrwE1vAI

[Oldcoin]

Subprime Lenders Get Big Accounting Break at SEC: Jonathan Weil

Commentary by Jonathan Weil

Jan. 30 (Bloomberg) -- Just when it seemed as if the mortgage mess had hit a new low, now comes this: The Securities and Exchange Commission's staff has granted the subprime-lending industry a huge exemption from the normal rules for off-balance- sheet accounting.
In effect, the move will let home lenders keep their balance sheets looking much smaller and less leveraged, even while the off-the-books loans they made get a makeover.

For months, banking regulators and politicians have been pressing lenders to freeze the interest rates on many adjustable-rate subprime mortgages that are scheduled to reset soon at higher interest rates. The idea is to minimize defaults and foreclosures.

While that's a noble objective, all good deeds must be accounted for, and that's been a sticking point for many banks. Through September, just 3.5 percent of subprime mortgages that reset in the first eight months of 2007 had been modified, according to Moody's Investors Service. Even lenders inclined to help don't want to hurt their financial results. And now they might not have to, thanks to a Jan. 8 letter from the SEC's chief accountant, Conrad Hewitt.

http://www.bloomberg.com/apps/news?pid=20601039&sid=aPSScH5rRBLM&refer=home

I wasn’t planning on making any investments in this area, however I would not consider it after this rule change. ENRON was able to dupe investors with exactly this type of tactic.

[350zCommTech]

I wasn’t planning on making any investments in this area, however I would not consider it after this rule change. ENRON was able to dupe investors with exactly this type of tactic.

I know, how about a law that will allow me to transfer half or more of mortgage and car loans to my newly created off balance sheet (350ZIV). This will allow me to go buy another McMansion and a brand new Mercedes for my 20 year old mistress, thus stimulating the economy, and myself.:D

[FUTURESTRADER]

I know, how about a law that will allow me to transfer half or more of mortgage and car loans to my newly created off balance sheet (350ZIV). This will allow me to go buy another McMansion and a brand new Mercedes for my 20 year old mistress, thus stimulating the economy, and myself.:D

LOL

[Steadygain]

The Securities and Exchange Commission's staff has granted the subprime-lending industry a huge exemption from the normal rules for off-balance- sheet accounting.

In effect, the move will let home lenders keep their balance sheets looking much smaller and less leveraged, even while the off-the-books loans they made get a makeover.

I wasn’t planning on making any investments in this area, however I would not consider it after this rule change. ENRON was able to dupe investors with exactly this type of tactic.

The Professionals swear there is no way possible to even begin to keep track of the inflow/outflow Government Financial Records; This keeps the balance sheet safeguarded from attacks. They equally made it very clear that any Company/Industry like ENRON would immediately come under attack with similar records and the the SEC would be the first to attack.

I call this stuff the "smoke and mirrows" system - where the power players have all kinds of gimmicks designed to deceive the public so they can put on a good face - "or The Illusion" - while if any other institution tried those stunts they would instantly receive huge fines and "BIG TIME BAD PRESS".

[Oldcoin]

Hedge Fund Manager Devaney Returns to Subprime After Yacht Sale

By Pierre Paulden and Jody Shenn

Feb. 2 (Bloomberg) -- Hedge fund manager John Devaney, who had to sell his yacht and jet plane last year after wrong-way bets on mortgage securities, says it's time to buy bonds backed by subprime loans.

http://www.bloomberg.com/apps/news?pid=20601087&sid=anEgTK3aK4gs&refer=home

When will the carnage stop……..his yacht and jet plane. Bet the bank didn’t foreclose on the mansion.

[Oldcoin]

Bristol-Myers, Ciena Losses Show Subprime Infection (Update2)

By Crayton Harrison and Dina Bass

Feb. 1 (Bloomberg) -- Bristol-Myers Squibb Co.'s $275 million writedown on subprime investments shows the mortgage crisis is spreading from Wall Street to the drug, technology and mining industries, where companies are posting losses on assets once rated AAA.

The widening collapse threatens U.S. earnings and stock values. Computer-related companies led by Ciena Corp. already reported writedowns similar to those at New York-based Bristol- Myers. Smaller technology companies including Lawson Software Inc., a maker of human-resources software, may be at risk based on their investments, according to Merrill Lynch & Co.

Losses from investments in subprime mortgages, loans made to people with little or no credit histories, may total as much as $400 billion worldwide, Deutsche Bank AG said in November.

http://www.bloomberg.com/apps/news?pid=20601109&sid=anvgqhQbacc4&refer=home

[Fivetears]

Bond insurer downgrades may add to banks' woes
Bond insurer downgrades could put some bank ratings at risk as ripple effects of the U.S. subprime mortgage crisis spread. The highest potential losses may be in hedges that bond insurers provide for certain pieces of collateralized debt obligations.
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN0516215620080205

[Fivetears]

Many on verge of foreclosure don't get help
An overwhelming majority of borrowers who were seriously delinquent on their home loans in October weren't receiving any help to prevent the possibility of foreclosure. Seven out of 10 seriously delinquent borrowers were not exploring ways to prevent foreclosure, and the lack of interaction between mortgage servicers and homeowners poses a major problem, according to the State Foreclosure Prevention Working Group. Borrowers are considered seriously delinquent if they're 60 days or more late on their mortgage payments. The figures show a wide gap between the number of homeowners needing help and the number receiving it. This suggests that the rise in delinquencies is outpacing efforts to modify loans.
http://www.usatoday.com/money/economy/housing/2008-02-07-foreclosures_N.htm

[Fivetears]

17 Subprime Lenders out of business for 2008
The latest nine are:
8. Lehman/Aurora Loan Services
9. Community Resource Mortgage
10. BF Saul Wholesale Lending
11. Allied Lending Corp. (Wholesale)
12. Popular Warehouse Lending
13. Allpointe Mortgage (Broker Program)
14. E-Loan (Wholesale)
15. Beazer Mortgage Corp.
16. SIRVA Mortgage
http://ml-implode.com/index.html#lists

[Silverbird]

Creators of Credit Crunch Revel in Las Vegas
[Warning - Definate Bias here, New York Times article. But they seem to be the only ones reporting on this conference. CNBC quoted the NYT article verbatim]
"....The occasion was, officially, the 5th annual conference of the American Securitization Forum, a celebration of the financial wizardry that supposedly turns risky mortgages and other loans into gilt-edged securities but, as Mr. Devaney belatedly discovered, does not always make them safe. Mr. Devaney, a 37-year-old money manager, lost big on bond investments last year. This week, in Las Vegas fashion, he said he was doubling down.

The four-day event at the Venetian drew more than 6,500 financial professionals from across the country. Many came in search of ways to ride out — or better yet, to profit from — the mortgage mess their industry helped to create." ...
http://www.cnbc.com/id/23065301

[Oldcoin]

Microsoft Offers to Buy Yahoo for $44.6 Billion (Update1): “Microsoft Corp., the world's biggest software maker, made an unsolicited offer to buy Yahoo! Inc. for about $44.6 billion, or $31 a share.

The offer is 62 percent more than Yahoo's closing stock price yesterday, according to a Microsoft statement distributed by PR Newswire. Yahoo shareholders can choose cash or stock, Microsoft said.”

That was the big news this morning. Futures shot up, hitting resistance of 1390 on the S&P… where prices got slammed down hard into the close yesterday.

Hidden amongst all the excitement and noise of that deal, CNBC quietly mentioned that eight big banks have formed a consortium to bail out the monoline insurers. They are launching a ‘recovery bid’. (That’s all I know.)

The bank names being tossed around are:

Citigroup
Barclays
Wachovia
UBS
PNP Paribas

Understand this: Every effort, both private and government, will be made to save the monoline insurers. Ultimately, they will be rescued. Somehow. The news will be instantly viewed as massively Bullish and risky assets will rally hard the world over. Wait for the rally to exhaust itself. It may take a while. Weeks. Maybe a month. Be patient. Then get short in a big way.

A bailout will not change the trends currently in place. A consumer lead recession will not be averted. This is just a big counter trend rally.

EDIT: (02/02/08) More details on the proposed bailout. 8 Banks Discuss Aid For Bond Insurers.

Subprime, CDO Bank Losses May Exceed $265 Billion (Update5): “Losses from securities linked to subprime mortgages may exceed $265 billion as regional U.S. banks, credit unions and overseas financial institutions write down the value of their holdings, according to Standard & Poor's.

S&P cut or put on review yesterday the ratings on $534 billion of bonds and collateralized debt obligations, many of which were rated as high as AAA. The action was the broadest by the New York-based firm in response to rising delinquencies among borrowers with poor credit. Moody's Investors Service and Fitch Ratings today said that they're also toughening assessments of the securities as home prices fall and the economy weakens.

While banks and securities firms such as Citigroup Inc. and Merrill Lynch & Co. accounted for most of the $90 billion in writedowns to date, S&P said the next wave may descend on regional U.S. banks, Asian banks and some large European banks. The ratings actions may create a “ripple impact” that further reduces debt prices, S&P said.”

$534 billion of bonds yesterday had their ratings cut. A rescue package for the monolines does not change that.

“Almost half the subprime bonds rated by S&P in 2006 and early 2007 were cut or placed on review, also potentially forcing credit unions and government-sponsored enterprises such as Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks to write down their holdings, S&P said. The securities represent $270.1 billion of subprime mortgage bonds and $263.9 billion of CDOs. About 35 percent of all CDOs comprised of asset-backed securities were put under review, S&P said.”

Subprime Bank Losses Reach $146 Billion as Europe Joins: Table: “The following table shows the $146 billion in asset writedowns and credit losses since the beginning of 2007, including reserves set aside for bad loans, at more than 25 of the world's largest banks and securities firms.

The charges stem from the collapse of the U.S. subprime mortgage market. The figures, from company statements and filings, incorporate some credit losses or writedowns of other mortgage assets that aren't subprime.

All figures are in billions of U.S. dollars, converted at today's exchange rate if reported in another currency. They are net of financial hedges the firms used to mitigate their losses.”

http://benbittrolff.blogspot.com/2008_01_27_archive.html

[Fivetears]

Ackman Floats Proposal to Save Bond Insurers
Activist investor William Ackman met Tuesday with New York State Insurance Commissioner Eric Dinallo to unveil yet another plan to bailout troubled bond insurance companies as banks and regulators continue to squabble over a way to save these floundering businesses from rating agency downgrades. The plan by Ackman, who has been shorting shares of bond insurer MBIA is a surprise since Ackman has released data he says shows that the bond insurers face at least $12 billion in liabilities each because of their decision to underwrite risky structured finance securities such as collateralized debt obligations, or CDOs, held by Wall Street firms and major banks. The bond insurers say that their problem is far smaller than what Ackman has said. Still, the problem is big enough for at least one insurer, Financial Guaranty Insurance Corp., to say it will split its business to protect municipal-bond policy holders from being infected by far riskier CDOs, while the other major troubled insurers, Ambac and MBIA are considering similar moves. Ackman’s plan isn’t so much a bailout as it is an attempt to call the bond insurers bluff about the potential size of their losses.
http://www.cnbc.com/id/23251890

[Fivetears]

Kimball Hill Homes Prepares A Restructuring Plan
Kimball Hill Homes is working toward presenting a plan to restructure its debt and its business to lenders by the end of this month. The Illinois-based builder, which continues to leak money, also stated last week that it is considering several options that include petitioning a U.S. bankruptcy court for protection from its creditors. In a filing with the U.S. Securities and Exchange Commission dated Feb. 14, the Illinois-based builder, which ranked 22nd nationally in closings in 2006, disclosed it had hired Alvarez & Marsal North America, a financial advisory and consulting firm, and was considering hiring a chief restructuring officer as a prelude to filing Chapter 11.

In its latest SEC filing, Kimball Hill Homes reported total liabilities of $630.2 billion for the period ended Dec. 31, 2007, of which $541.8 million are related to inventory not owned. For the three months ended Dec. 31, Kimball Hill saw its home building revenue decline 36.9 percent to $150.4 million, and it suffered a net loss of $46.4 million, compared to a loss of just under $21 million in the same period a year ago. (Its operations in Nevada alone accounted for $18.7 million of its quarterly operating loss.) The company reported negative cash flow of $39.3 million, compared to negative cash flow of $25 million in the same quarter a year ago.
http://www.builderonline.com/industry-news.asp?sectionID=26&articleID=659897

[Fivetears]

Community groups seek Countrywide foreclosure halt
In a letter addressed to Bank of America Corp, which has agreed to acquire Countrywide, the groups said California is in the midst of a mortgage foreclosure crisis, with half a million homeowners on the verge of losing their homes. "Countrywide's bad lending practices are ruining the dreams of thousands of Californians -- Countrywide borrowers and employees alike -- and Bank of America has the opportunity to rebuild them," said the letter, signed by 91 community groups and addressed to Bank of America CEO Kenneth Lewis .
http://www.reuters.com/article/FSCONS/idUSN2034649820080220

[Bullitt]

Hilarious stick figure power point type skit about how this subprime CDO mess came about. 45 slides, make sure you click the arrow at bottom left to go to the next page. I'm still laughin over the final 5 pages or so.

http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1

[weatherweenie]

I’ve been hearing a lot about the sub-prime mortgage market and how it could negatively impact the market. In the past couple of weeks we’ve had some lenders provide negative advice about earnings because of these lending practices. So here is a thread for us to learn about the sub-prime market.

Interesting that Oldcoin started this a year ago, March 5th.

GREAT call!!!

[Fivetears]

FBI starts criminal probe into Countrywide
The FBI has begun a criminal inquiry into the largest U.S. mortgage lender, Countrywide Financial Corp, for suspected securities fraud as part of investigations into the mortgage crisis. Citing unnamed government officials with knowledge of the case, the Times said the investigation into whether Countrywide misrepresented its financial condition and the soundness of its loans in securities filings was at an early stage and it was not clear if any charges would result. A Countrywide spokeswoman, Susan Martin, told the newspaper that "we are not aware of any such investigation." The probe was first reported on Saturday in The Wall Street Journal.
http://news.yahoo.com/s/nm/20080309/bs_nm/countrywide_inquiry_dc_4;_ylt=AtkeIJKQ5NSIU7Y1WxVg HZ0E1vAI

[Heres14U]

Sub-prime mess spreading to Home Equity Lines of Credit, Student Loans, etc. The big problem now is bank liquidity and tightening of lending standards. If banks don't have capital to lend then brace yourself for a long drawn out bear market ordeal. It's going to be tough making money in this environoment without the ability to short in our TSP's. We are playing with one arm tied behind our backs. There will be bear rallies but it will be tough getting out whole.

[Bullitt]

From Bloomberg 3/13, sorry if this is happens to be duplicate post from elsewhere on the board. This prophecy was written before BSC's crash came to the public eye.
-----------------
S&P Says End in Sight for Writedowns on Subprime Debt (Update6)

By Jody Shenn

Standard & Poor's, the ratings company criticized for missing the beginning of the mortgage collapse, now says the end of subprime writedowns is in sight.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6oPHc1OQMxI&refer=home

[robo]

California man losing nine homes in mortgage mess
Sun May 11, 2008 1:21pm EDT Email | Print | Share| Reprints | Single Page| Recommend (13) [-] Text [+]
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¥ € $ - Learn. Practice. Trade.By Dan Whitcomb

LOS ANGELES (Reuters) - A California man who has defaulted on nine homes and expects banks to foreclose on all of them, forcing him into bankruptcy, says he now considers it a mistake to have invested in the real estate market.

Shawn Forgaard, a 37-year-old software company project manager, bought one home for his family to live in and nine more as investments. He stands to lose all the investment houses in the mortgage meltdown but says he has come away wiser from the experience.

"Everyone stumbles. I'm not going to hide or run or live in denial, or with regrets," Forgaard told Reuters in an interview. "On the surface it looks like total devastation but it's just the opposite. I'm confident our lives will be much, much richer as a result."

Forgaard bought a house in Santa Cruz, about 60 miles (100 km) south of San Francisco, in 2000. Four years later, using $800,000 in stock options, he began snapping up investment properties, putting 10 percent to 40 percent down on negative amortization loans -- in which payments do not cover the interest so that a borrower's balance grows over time.

It was those "neg-am" loans, which include triggers causing payments to balloon if the debt reaches a certain percentage of the original balance, that would come back to haunt him.

"I knew I was sitting on time bombs," Forgaard said. "I knew the market was going to go soft and I knew that property values would decline. But I figured that I had enough equity to survive the storm and sell or take the loss and refinance.

"I didn't anticipate a downturn of epic proportions such that home values are 40 percent less than they were," he said.

The mortgage market has melted down in the past two years in a crisis that began in the subprime sector and has left millions of Americans facing the possibility of foreclosure on their homes. Continued...

http://www.reuters.com/article/domesticNews/idUSN0952458820080511

[robo]

Arson to avoid foreclosure?
By Ken Bensinger, Los Angeles Times Staff Writer
April 21, 2008
Some folks celebrate their last home mortgage payment by setting fire to their loan agreement. Lately, some people behind on their mortgages are simply setting fire to their homes.

In what appears to be the latest symptom of the nation's mortgage meltdown and credit crisis, insurers, law enforcement officials and state agencies nationwide report a jump in home and automobile fires in the last year believed to have been set by owners unable to pay their debts. The numbers are small, but they're leading the insurance industry to scrutinize more closely what seem to be accidental blazes.

"We've seen a dramatic increase in this kind of fraud," said Dan Bales, director of fraud investigations at Mercury Insurance. "People upside-down on their house with variable-interest-rate loans, or upside-down on their cars, are pretty quick to burn their property right now."

http://www.latimes.com/business/la-fi-arson21apr21,1,4460977.story

http://blogs.usatoday.com/ondeadline/2008/04/facing-foreclos.html


http://mybackpagesbyjessefelder.blogspot.com/2008/04/foreclosures-burning-down-house.html

Last week, a Sacramento-area couple were arrested on allegations that they burned their Jeep and drove their Nissan pickup into a river, then filed fraudulent insurance claims. According to investigators, the wife admitted she was trying to escape her $600 monthly car payment.

[luv2read]

Mortgage delinquency on the rise

Outlook for delinquencies worsens as lower home prices create cycle of increasing defaults.

By Ben Rooney, CNNMoney.com staff writer
May 12, 2008: 3:48 AM EDT
NEW YORK (CNNMoney.com) -- Mortgage delinquencies will continue to rise over the next six to 12 months as home prices decline and economic conditions remain difficult, according to one forecast released Monday.
The Core Mortgage Risk Monitor (CMRM), an index of foreclosure risk compiled by real estate data analyzer First American CoreLogic, increased 16% compared with the same period last year.
CoreLogic analyzes house price trends, foreclosure rates, economic health factors and fraud propensity to predict the chances that future mortgage delinquencies will occur.
The index, which has increased over the last four quarterly reporting periods, is now 47% higher than it was in the first quarter of 2002 when the last recession was winding down.
Nationwide, the markets with highest levels of delinquency risk also had double-digit declines in home prices and weakening labor markets.
"House price depreciation factors are now outweighing economic stress factors," said Mark Fleming, CoreLogic's chief economist.
Of the top 10 markets with the highest risk of delinquency, eight are in California and two are in Florida. Previously, markets in states like Michigan and Ohio, where the labor market has been weak, dominated the list of most delinquency-prone markets.
But rapidly declining home prices, particularly in places like California and Florida where speculative buying drove prices up during the housing boom, are causing a shift in the nation's mortgage delinquency trends.
CoreLogic forecasts delinquency-risk to be worst in California's Inland Empire region, where home price appreciation has declined more than 21%. Elsewhere in the golden state, the Los Angeles and Sacramento areas are considered high risk for delinquencies.
Meanwhile, urban centers in Texas are expected to have a low risk of delinquency. The Dallas-Fort Worth area tops the list, followed by Tulsa, Okla.
During the same time period last year, Detroit, Mich., led the nation in delinquency risk. In Ohio, Youngstown, Dayton and Toledo were also on the list of high-risk markets. Conversely, Phoenix, Ariz., and West Palm Beach Fla., were among the cities with the lowest risk of delinquencies last year.
"High house price markets are now high risk markets," said Fleming.
Falling home prices have created a vicious cycle: Lower prices lead to more defaults, resulting in excess inventory, which causes demand to fall, bringing home prices even lower, leading to more defaults.
This downward cycle puts pressure on the broader economy, with declining home prices impacting personal wealth and consumer confidence

[Fivetears]

Housing Crisis Brings Veto Threat
The White House issued a surprise veto threat against a Senate bill aimed at preventing hundreds of thousands of foreclosures. The threat signaled more partisan warfare on Capitol Hill as homeowners struggle. The Senate bill would, like a similar bill already passed by the House of Representatives, create a new fund to underwrite up to $300 billion of failing home loans. It would also offer billions of dollars in emergency housing relief. Proponents say the bill could save 400,000 homeowners from foreclosure. But the Bush administration House objected to a provision that would give state and local governments money to buy and fix foreclosed properties. Congressional leaders were trying to hammer out a final bill and send it to President George W. Bush before lawmakers leave town at the end of next week for the July 4 holiday. Some House Republicans also threatened to stall a final version of the housing bill, demanding more information about preferential mortgage terms given to two Democratic senators by Countrywide Financial Corp.
http://news.yahoo.com/s/nm/20080620/ts_nm/housing_crime_dc_2

[Fivetears]

Florida sues Countrywide over mortgages
Florida sued mortgage lender Countrywide Financial Corp for predatory lending practices today, alleging the company at the center of the U.S. mortgage crisis made subprime loans to people who could not repay them. The Florida attorney general filed the lawsuit, which names Countrywide Chief Executive Angelo Mozilo as a defendant, in state court in Broward County, Florida.

Last Wednesday, officials in Illinois and the company's home state of California also sued Countrywide. On the same day, shareholders approved the company's takeover by Bank of America Corp. A spokesman for Bank of America, which is expected to complete its planned acquisition of Countrywide in July, declined to comment on the Florida lawsuit.
http://news.yahoo.com/s/nm/20080630/bs_nm/countrywide_lawsuit_dc_5;_ylt=AnK4h1o4pNHS_3OGxSp4 Z4QE1vAI