Freddie, Fannie Failure Could Be World `Catastrophe,’ Yu Says
2008-08-26 — bloomberg.com
“If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,” Yu said in e-mailed answers to questions yesterday. “If it is not the end of the world, it is the end of the current international financial system.”
FHA Bailout could cost U.S. Taxpayers over $100 million
2008-08-26 — forbes.com
When the nation’s politicians take the stage in Denver and St. Paul, Minn., you’ll hear a lot of talk about saving the decrepit housing market, and lately that means one thing: The Federal Housing Administration.
Watch your wallet.
“Nobody is talking about it, but in three years the FHA bailout is going to cost taxpayers at least $100 billion dollars,” said Guy Cecala, a mortgage industry insider and publisher of Inside Mortgage Finance. “Everybody on Capital Hill recognizes that there will be significant costs, but they’re trying to keep the housing spigot open even if it will bring in some bad water down the road.”
Economist says: “Expect two more waves of foreclosures…”
Mortgagenewsdaily.com
“While the U.S is currently in the midst of the largest bout of home foreclosures in at least 30 years, at least one economist says two more ‘waves’ are likely on the way.
Patrick Newport, a housing economist at Global Insight, said the next round of foreclosures could come over the next several months as a result of continued job losses in the U.S.
In addition to the nearly 660,000 U.S. jobs lost since December, Global Insight is currently forecasting another 600,000 jobs lost over the rest of 2008 and into the first quarter of 2009.”
“Shadow Inventory” is often overlooked in housing data numbers…
From Signonsandiego.com Aug 19,2008
“Sood, in a recent report, lays out a case for why the surge in foreclosures isn’t being fully reflected in the resale inventory levels, as measured by the real-estate databases known as multiple listing services, or MLS. In nine of the 33 markets Sood examined, distressed inventory is significantly higher than what is found in the MLS listings.
This is most pronounced in what have been deemed “bubble” real estate markets, which saw the biggest gains during the home buying boom and are experiencing the largest declines since the pullback began more than two years ago. For instance, in Sacramento, the foreclosed inventory was 31,219 units, or more than twice the 14,913 units on the MLS listings. San Francisco had foreclosures running at 190 percent of MLS listings, while foreclosures in Phoenix ran at 130 percent of the MLS listings.
Sood attributes that gap largely to bank-owned foreclosed homes that aren’t always captured in the MLS listings. He calls that the “shadow inventory,” and says the behind-the-scenes glut of properties wreaks havoc on housing-related statistics. “
Large U.S. Banks May Fail Amid Recession, Rogoff Says
From Bloomberg.com Aug 18, 2008
The worst is yet to come in the U.S.,” Rogoff, a Harvard University professor of economics, said in an interview in Singapore today. “The financial sector needs to shrink; I don’t think simply having a couple of medium-sized banks and a couple of small banks going under is going to do the job.
Top Alt-A Mortgage Lenders in First Quarter 2008
From TruthAboutLending.com Aug 19, 2008
Now that Alt-A lending is grabbing some headlines, I thought it’d be timely to take a look at the top Alt-A mortgage lenders over the last reported quarter, as compiled by National Mortgage News.
As you can see, GMAC’s Residential Capital, which includes companies like Homecomings Financial, led the way with a paltry $2 billion in loan fundings during the first quarter of 2008.
While they were the leader, their production was off more than fifty percent from the same period a year earlier.
Countrywide Financial managed a close second with $1.8 billion, though it was nowhere near the $9.2 billion they funded in the first quarter of 2007.
HSBC came in a distant third with just $602 million funded, followed by Branch Banking & Trust with $581 million and Flagstar Bank with $460 million.
Am Trust Bank, which funded just $247 million during the quarter, had been the top Alt-A lender during the fourth quarter of 2007 with $8.2 billion in production.
Indymac, who had been one of the leading Alt-A lenders over the last several years, didn’t even make the list as they shifted nearly all production to GSE/FHA/VA.
For comparison sake, EMC Mortgage produced a whopping $58 billion in Alt-A loans during the final quarter of 2006, before things took a turn for the worse.
The Truth About Inflation
By, Aaron Krowne, the founder and fearless owner of ML-Implode, now tracking the US mortgage meltdown since New Year’s Day 2007 by publishing its trade-marked Implode-o-Meter of busted lenders.
“What does it mean when they say Inflation???”
NOBODY LIKES INFLATION, writes Aaron Krowne of ML-Implode, but inflation is a “fact of life” – a natural disaster, like a hurricane or earthquake.
Right?
Wrong. That is the impression policy makers and politicians have worked very hard for almost a century to create. But it is a bold-faced lie, meant to deflect your attention (and anger) away from the real culprit – them.
The fact of the matter is that prices in general can only go up if more money is created. When more money is created, that means each Dollar buys fewer goods and services. Your common sense is exactly right on this matter!
Merrill’s CDO’s: ‘They Knew What They Were Doing’
This story is amazing. In 2007, during the time in which subprime lenders were collapsing and defaults soaring, Merrill was packaging up and selling $30 billion in rotten CDO’s and selling them as fast as they could.
Everyone already knows about the Merrill 5.47 cents on the dollar CDO deal that just went down. In case you missed it her e is the link.
Now, of course, many are coming out saying ‘but but but that was for the worst of the worst CDO’s’ and ‘but but but, 2005 vintages were not as strong as recent vintages’.
That is not the truth. The truth is that Merrill’s marks are very similar to National Australia Banks write-down earlier this week and other banks with similar holdings will likely have to write down their holdings similarly. Meredith Whitney said the same today in her interview on CNBC. It was great….
Hedge funds are buying up delinquent mortgages
Forbes, July 30, 2008
Guess who holds your mortgage now? It’s your friendly neighborhood hedge fund.
Dozens of hedge funds, private equity groups and other investors have plunged into the beaten-down mortgage market in recent months, buying tens of thousands of distressed loans and foreclosed properties around the country. They hope to profit from the woes of banks and other investors holding mortgages that have plummeted in value as home values sink and defaults soar.
Lawmakers Now Pressing for Banks to Hide Losses Longer
This is infuriating. When will the deception and fraud stop!
It is actions like these by the Solon’s that has turned a ‘crisis of confidence’ into something that has brought the global financial markets to their knees.
The FASB is being pressured by the lawmakers to delay its time line on the revamped FAS 140 and FIN 46R. This of course will help out the financial institutions by creating less transparency and delaying the inevitable probably due to a new tax payer bailout being drawn up that will channel more dollars to parties other than those who need it, the US citizens.
Bush Signs Sweeping Housing Bill into Law
“President Bush signed a massive housing and mortgage relief bill into law early Wednesday morning, the White House said, making official changes ranging from a $300 billion expansion of the underwriting authority of the Federal Housing Administration to a new regulator for twin mortgage finance giants Fannie Mae and Freddie Mac”
You Know The Banking System Is Unsound When….
Mish’s Global Economic Blog
Top 25 Reasons our US banking system is unsound
#25:
25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.
What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
WaMu: Liquidity Options Running Low
“(The title of this story may be misleading because they have they do have ‘options’ if you are speaking in terms of $10s of billions in Pay Option ARMs. See spreadsheets below.)” WaMu stock price keeps falling. From $40 per share less than a year ago to $20 four months ago to $3.03 a couple of weeks back before the SEC and Treasury ganged up to prop up the markets yet again.
Keep in mind earlier this week WAMU’s Treasurer Robert Williams in an interview with the New York Post said “The banks raising of more than $7bn from TPG has made borrowing from the Federal Reserve’s short-term borrowing window unnecessary.” Did he change his mind literally the next day as WaMu admitted that part of the extra $10 billion cushion absolutely came from Fed Short-Term borrowing window?
Banks Cant Give Away Foreclosures
Video of the Day: Foreclosure Auction on the Courthouse steps in Martinez, CA. It’s amazing how much some of these houses sold for a few years ago, not that I feel any of the homes in this news piece are worth the stated sales prices.
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