Weekly Initial Unemployment Claims: 457,000
2009-12-03Calculated Risk Blog
“In the week ending Nov. 28, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 5,000 from the previous week’s revised figure of 462,000 [revised from 466,000]. The 4-week moving average was 481,250, a decrease of 14,250 from the previous week’s revised average of 495,500.
…
The advance number for seasonally adjusted insured unemployment during the week ending Nov. 21 was 5,465,000, an increase of 28,000 from the preceding week’s revised level of 5,437,000. The 4-week moving average was 5,541,500, a decrease of 75,750 from the preceding week’s revised average of 5,617,250.”
The Fed Doesn’t Want Banks to Increase Lending
2009-11-27-09 ZeroHedge.com
“Overall, many participants viewed the risks to their inflation outlooks over the next few quarters as being roughly balanced. Some saw the risks as tilted to the downside in the near term, reflecting the quite elevated level of economic slack and the possibility that inflation expectations could begin to decline in response to the low level of actual inflation. But others felt that risks were tilted to the upside over a longer horizon, because of the possibility that inflation expectations could rise as a result of the public’s concerns about extraordinary monetary policy stimulus and large federal budget deficits. Moreover, these participants noted that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation. To keep inflation expectations anchored, all participants agreed that it was important for policy to be responsive to changes in the economic outlook and for the Federal Reserve to continue to clearly communicate its ability and intent to begin withdrawing monetary policy accommodation at the appropriate time and pace.”
Dubai Shows Limits of Government Rescues, Roubini’s Das Says
2009-11-30 Bloomberg.com
Nov. 27 (Bloomberg) — The worldwide decline in equities spurred by Dubai’s efforts to reschedule its debt is a sign that government spending alone won’t be enough to protect financial markets, according to Arnab Das of Roubini Global Economics.
Stock volatility will probably jump as countries and companies default on loans, said Das, the head of market research and strategy at RGE, the advisory firm founded by economist Nouriel Roubini.
Shares slumped from Shanghai to Brazil and European shares fell the most in seven months yesterday after Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayment on much of its debt. Governments have spent, lent or guaranteed $11.6 trillion and central banks held interest rates near zero percent to end the first global recession since World War II.
“We’re bound to see a rise in risk aversion,” Das, who is based in London, said in an interview. “The Dubai situation signifies that although the major central banks around the world have stabilized the financial system, they can’t make all the excesses simply disappear. We still have to work out those balance sheet stresses. The recovery is proceeding, but significant challenges still lie ahead.”
Dubai Defaults – Deflation In Action – Watched Pot Theory Revisited
1009-11-29 Mish’s Global Economic Blog
Global stock markets endured heavy selling on Thursday as investors were spooked by the spectre of a default by Dubai and after a febrile foreign exchange market saw the yen surge to a 14-year high against the dollar.
The turmoil caused a flight to less risky assets. Gold, which had challenged $1,200 in Asian trading, fell back from its highs and money flowed into havens such as German government bonds.
US markets are closed for the Thanksgiving holiday, but electronic trading of the benchmark S&P 500 equity futures contract showed a potential drop on Wall Street of 2.2 per cent.
As the European trading day progressed it became clear it was Dubai World’s difficulties that had hit a particular nerve, reminding investors of the lingering damage wrought by the financial crisis.
Wells Fargo Chief Economist: “There is no clear, easy way out for housing”
2009-11-28 Mish’s Global Economic Blog
“If there is no clear, easy way out for housing, then there is no clear, easy way out for Wells Fargo. Wells is sitting in a huge pile of Pay Option Arms in bubble states like California, where prices still have a long way to correct.”
FDIC’s List of ‘Problem’ Banks Grows 33% in Q309
2009-11-24 Housingwire.com
“Banks and savings institutions insured by the Federal Deposit Insurance Corp. (FDIC) posted aggregate net income of $2.8bn in Q309 despite net quarterly losses reported by more than 26% of all insured institutions, according to the FDIC’s quarterly report on insured institutions.”
Housing Bottom? “Not Even Close,” Barry Ritholtz Says
2009-11-24- Yahoo.com
Barry Ritholtz, CEO of Fusion IQ… notes the existing home sales number was juiced by sales of cheap condos and various government programs. Meanwhile, the Case-Shiller results were below expectations.
Case-Shiller Still Predicts Massive 45% Fall From Today’s Values
2009-11-24 MLImplode.com
The 10 major cities in the Standard & Poor’s/Case-Shiller home price index have risen 5% from their April low, but the index is still predicting a massive 45% fall from today’s values.
The index is still showing a current loss of 30% from the high in June 2006. Based upon a trend generated from the actual prices of 1987 to 1997, and generated forward in a linear projection, the index will fall a total of 62% before it reaches the trend norm.
The New Flipping: Short Sales
2009-11-16 — heraldtribune.com
“The FBI recently added short sale flipping, dubbed “flopping” by some mortgage fraud experts, to its list of recognized real estate fraud.”
Investors strategize for Fed’s exit from MBS market
2009-11-16 — reuters.com
“Investors who reaped robust gains in U.S. mortgage-backed securities by piggy-backing on the Federal Reserve’s $1.25 trillion buying program are bracing for the end to the central bank’s support — and positioning themselves for a new round of profits as prices cheapen.”
New CMBS Tax Rules Miss Underwater Factor, BofA Says
2009-09-22 Housingwire.com
The market for commercial mortgage-backed securities (CMBS) experienced a rally last week following the issuance of new guidelines regarding acceptable loan modifications within real estate mortgage investment conduits (REMICs).
The total reach of the new rules may not go so deep, however, as to help some underwater borrowers, according to one research firm.
$30 billion home loan time bomb set for 2010
2009-09-21 sfgate.com
“Next year, many option ARM payments will begin to readjust, slamming borrowers with dramatically higher monthly mortgage bills. Analysts say that could unleash the next big wave of foreclosures – and home-loan data show that the risky loans were heavily used in the Bay Area.”
Is Pent-Up Inflation From Fed Printing Waiting On Deck?
2009-09-21 — blogspot.com
Housing prices sink as underwater number rises
2009-08-11 — blownmortgage.com
“Two reports out say if you’re thinking of buying, wait. The prices are going to continue to drop. The reason they offer are the same: Continuing increases in the number of homes worth less than their current mortgages.”
Deflationary Debt Destruction Must Run Its Course
2009-08-11 — minyanville.com
“My vacation back to the US surprised and confounded many of my old friends: they know I moved back to park my wealth in dollars. Incredulously they asked how I could possibly not believe the US government, along with their crony partner the Federal Reserve, will not devalue the dollar to “settle” our debt with foreign lenders. A normal default (since we all know there is no way to possibly pay this debt back, nor is their enough capital in the world to buy our newly needed “financings”) isn’t palatable, they say, so the only direction for the dollar is down. I agree, but only in the long run. “
Entering the Greatest Depression in History
2009-08-10 — lewrockwell.com
How To Avoid Foreclosure By Declaring Bankruptcty
2009-08-10 — blownmortgage.com
” Over 3 million people are 60 days behind in their mortgage payments with little hope of finding a quick solution. This has caused many borrowers look for somewhat imaginative measures to save their home, one of these has been declaring bankruptcy to avoid a mortgage foreclosure. Does this work? Is it legal?”
Quelle Surprise! The Fed is Reporting Losses on Its Bear Stearns and AIG SPVs
2009-07-20 NakedCapitalism.com
“Readers may recall that during the heat of bailout battle, the Federal Reserve got into the fancy finance business, relying on the sort of deal structuring sometimes used to try to turn toxic odd pork scraps into barely-digestible sausage, the procedure used for pigs so dead that merely putting lipstick on them just won’t do.
The items in question are Maiden Lane, the vehicle used to backstop JP Morgan’s purchase Bear Stearns, and two sons of Maiden Lane created for dodgy AIG exposures. The bank was permitted to move some particularly fragrant collateral from Bear over to the Fed for a loan of $30 billion. The arrangement got reworked on the fly, and in the end, the Fed loan was reduced to roughly $29 billion as JP Morgan agreed to assume $1.15 billion of risk. The assets were placed in a holding company to be managed by BlackRock.”
Congressman Stearns: Mr Paulson How Do You Have Any Credibility?
It’s about time that people start asking the tough questions.
U.S. Rescue May Reach $23.7 Trillion, Barofsky Says
2009-07-20 Bloomberg.com
THIS IS NOT A MISPRINT.
“U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.
The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.
“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.
Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.
“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”
Option-ARMs worse than subprime
2009-07-14 TheMessThatGreenspanMade
“More than one-third of all Option-ARMs (called Pick-A-Pay loans below) are in default and most of these are likely to make it to the foreclosure stage eventually.”
SandP Downgrades 120 Classes of Alt-A RMBS
2009-07-13 Housingwire.com
“After a review of 13 US residential mortgage-backed securities (RMBS) transactions, Standard and Poor’s lowered its ratings on 120 of the securities’ classes last week. The collateral backing the vintage 2005-2007 securities are primarily Alt-A, first-lien residential mortgages.”
Short Sellers BEWARE
2009-07-10 Calculatedrisk.blog
“Often, the troubled home owner assumes the loss will be eaten by the lender. But Bank of America and Chase have quietly added language in their short-sale agreements that require the borrower to sign a promissory note for the shortfall.”
PMI Expects Lower Housing Prices in 2011
2009-07-o7 Housingwire.com
“Home prices will be lower in two years compared to Q109 for much of the country’s metropolitan statistical areas, (MSAs) according to an economic trends report released by PMI Mortgage Insurance Co.”
Another wave of foreclosures is poised to strike
2009-07-04 LATimes.com
“Reporting from Washington — Just as the nation’s housing market has begun showing signs of stabilizing, another wave of foreclosures is poised to strike, possibly as early as this summer, inflicting new punishment on families, communities and the still-troubled national economy.
Amid rising unemployment and falling home prices, mortgage defaults have surged to record levels this year. Until recently, many banks have put off launching foreclosure action on the troubled properties, in part because they had signed up for the Obama administration’s home-stability plan, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments….”
Banks Falling 23% Since May Foreshadow S&P 500 Slump
2009-07-01 Bloomberg.com
“Declines of more than 20 percent in regional banks and homebuilders and the failure of transportation companies to erase their annual loss may be signs the rally in the Standard & Poor’s 500 Index is about to fizzle.”
Delinquencies Double on Least-Risky Loans, U.S. Says
2007-07-01 Bloomburg.com
“Delinquency rates on the least risky mortgages more than doubled in the first quarter from a year earlier as U.S. efforts to help homeowners failed to keep pace with job losses that pushed more borrowers toward foreclosure.”
175 California Hotels In Default; Sheraton Keahou Bay Resort in Hawaii Defaults; More Defaults Coming
2009-06-28 Mishs Global Economic Blog
In California, 175 hotels are in default — the first stage in the foreclosure process — according to a report from Atlas Hospitality Group, an Irvine-based brokerage firm. Another 31 have been foreclosed, nearly one third of them in the Inland region.
Of those in default or foreclosure, about 75 percent obtained new loans between 2005 and 2007 for construction financing, re-financing or to buy the hotel, according to the firm. Atlas Hospitality estimates that 2,500 hotels — about 25 percent of the state’s entire hotel population — refinanced or obtained new loans in that time meaning more defaults and foreclosures could be on the horizon.
Agency MBS (Mortgages)? Better Read This!
2009-06-29 Denninger.net
“Mad props once again to Zerohedge who shone the bright light on Freddie’s latest screed. I’m not going to take from their discussion of The Fed buying up paper at what will (almost certainly) lead to ruinous losses – you can find that there. Rather, I am going to look at some of the internals from the document published that they didn’t focus on.”
Wary of dollar, China wants super-sovereign currency
2009-06-26 Forbes.com
China’s central bank renewed its call on Friday for the creation of a super-sovereign reserve currency to reduce the dollar’s global domination, which it said had worsened the financial crisis. In its annual financial stability report, the central bank did not mention the dollar by name but said it was a serious defect that one currency should tower over all others. “An international monetary system dominated by a single sovereign sovereign currency has intensified the concentration of risk and the spread of the crisis,” the People’s Bank of China said.
Delinquencies on US Auto-backed Securities Jump 22%
2009-06-27 ResearchRecap.com
Alt-A and Pay Option ARMs Fueled out of State Buying
2009-06-10 Dr Housing Bubble.com
If you want further proof how horrific these products are, take a look at how many of the Alt-A and pay Option ARM products originated with a second lien. That is, low down or nothing down fantasy buyers. In California, there are currently floating around 186,917 Alt-A mortgages with a second lien on them. You can rest assured that 90 to 99 percent of these loans will implode in the upcoming months. This is where your piggy back loans and 80-10-10 crap came about. I remember when zero down was a crazy way to suck in unknowing investors to thousand dollar seminars but it actually became a mainstream way to buy a home.
Before you even wonder how safe these loans are 41.6 percent of California Alt-A mortgage holders already have one late in the last 12 months! Keep in mind that most of this junk hasn’t even hit recast points and nearly half are already late with one payment:
Mish’s Global Economic Analysis speech at Google
May 6, 2009
Presented by Mike “Mish” Shedlock.
Mike “Mish” Shedlock is author of one of the most read economics blogs on the Internet: Mish’s Global Economic Trend Analysis http://globaleconomicanalysis.blogspot.com.
Mish gave an @Google talk, sharing his perspective on the state of the global economy (housing, the stock market, commodities, etc.) He also provides his interesting story about how he started blogging, and the impact that it has had on his life personally and professionally.
In January, Time.com ranked his site the #1 based on a rounded set of criteria http://www.time.com/time/business/article/0,8599,1873144-3,00.html. From the article:
“Although Mish is not an economist by training, he adroitly gets into the thick of economic data. Mish uses observations made by those in major media, so-called experts and government officials and serves up analysis based on his impression of their relevance and validity. The author is not afraid to attack conventional wisdom.”
So Yesterday was a HUGE day as Real Data on Housing Poured in
3 Fascinating articles. Woooooaah Nelly, it seems as things were not as rosy as we thought for the last month.
Mortgage Delinquencies, Foreclosures, Rates Increase
Bloomberg: http://www.bloomberg.com/apps/news?p…mO8&refer=home
“Mortgage delinquencies and foreclosures rose to records in the first quarter and home-loan rates jumped to the highest since March this week as the government’s effort to fix the housing slump lost momentum.”
Mortgage Marekt Seizes Up
Mish’s Global Economic Blog: http://globaleconomicanalysis.blogsp…-locks-up.html
“With respect to yesterday’s episode in the mortgage market — yes, it is as bad as you can imagine. Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.”
THE CURTAINS ARE ON FIRE!!!
Denninger.net: http://market-ticker.denninger.net/a…e-On-Fire.html
“To put this in a bit more simple form, this means that while the banks are claiming to be increasing loss provisions, loans are going bad faster than their provisioning is increasing – which means they’re reporting “profits” that are false, as provisions for bad loans hit earnings. So we can take some more off those “reported earnings”, as much as another $6-10 billion dollars.”
Five Economic Storms Raging NOW!
2009-05-11
“JP Morgan Chase & Co., Citigroup, Wells Fargo & Co., Goldman Sachs Group, GMAC LLC, SunTrust Banks, Inc., and Fifth Third Bancorp — are at risk of failure and may have to cut back lending dramatically to stay alive.”
The capital well is running dry and some economies will wither
2009-04-27 Telegraph.co.uk
Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.
Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long.
For Housing Crisis, the End Probably Isn’t Near
2009-04-22 NYTimes.com
In 2006 and early 2007, the official housing statistics were still showing that house prices were holding up. But that was largely because so many sellers were refusing to sell. The auctions, made up mostly of foreclosed homes, showed the truth: house values were starting to plummet in many places.
So a few weeks ago, I decided to go to an auction at a hotel ballroom in Washington — and to study the results of several others elsewhere — with an eye to figuring out whether prices may now be close to bottoming out.
That’s clearly a huge economic question. Last week, JPMorgan’s chief financial officer told Eric Dash of The New York Times that JPMorgan, and presumably other banks, would be under pressure “until home prices stabilize and unemployment peaks.”
A Backdoor Nationalization of Banks?
2009-04-21 WallStreetJournal.com
It seems we are off to the races with the gov’t being the primary shareholder of bank interests. Good Lord, what’s next?
Is That Recovery We See?
2009-04-11 Ritzhoild.com
Is That Recovery We See?
By John Mauldin
- Is That Recovery We See?
- Those Wild and Crazy Analysts
- The Shadow Inventory of Homes
- Commercial Real Estate Starts a Long, Slow Slide
- P/E Ratios Go Negative!
- The Effect of Earnings Surprises
- Corporate Earnings and Recovery in Recessions
- The Implosion in Social Security
The market, we keep hearing and reading, is telling us that there is recovery around the corner. And pundits point to data that seems to suggest the worst is behind us. The leading economic indicators, while still down significantly, seem to be in the process of bottoming. There is a large amount of stimulus in the pipeline. Mark-to-market has been modified. Housing seems to be finding a bottom, if you look at the rise in sales from January. And so on.”
California Foreclosures About To Soar
2009-04-09 ZeroHedge Blog
The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium — this wave is so big I would not put it past them trying it.
CA foreclosure background – in mid-2008 the foreclosure wave was artificially held back as a result of the CA law SB1137 enacted in Sept 2008. This also kept NOD’s and NTS’s at much lower levels than the actual defaults that were occurring. Other bubble states and several banks/servicers also went on random moratoria and the foreclosure wave was held back for the past six months. But just like so many other intervention and moratoria in the past, the problem just comes out the other side even more violent than if they would have done nothing. Adding insult to injury, the GSE’s announced this week that they were coming off moratorium, which could increase foreclosures by 20-25% alone.
Moyers Interview: Sharing the Blame for the Economic Crisis?
EXCELLENT!
Must Watch!
Bill Moyers Journal
Sharing the Blame for the Economic Crisis?…
William K. Black, former senior bank regulator
3 parts
wow.
House of Cards, Hour Long Special on CNBC
Excellent explanation of what happened between 2001 and today. I caught a glimpse of CNBC’s documentary on the financial crisis called “House of Cards” just now and I highly recommend anyone who’s interested on how we got ourselves into such trouble to watch it.
From what I’ve seen, it at least explains:
- How it was a credit crisis to a stock market crisis to a economic crisis.
- What a CDO is and Alan Greenspan’s take on it.
- What some people have done to warn it and how others knew things were going to be bad.
The show, House of Cards, is going to be on CNBC and premiers tonight (2/12/2009) at 8:00pm ET and 12:00am ET.
Or you can view this entire special online here:
http://www.hulu.com/watch/59026/cnbc-originals-house-of-cards
The Short and Simple Story of the Credit Crisis.
2009-02-19 — crisisofcredit.com
Obama’s Plan Aimed at Helping Troubled Homeowners
2009-02-18 – WSJ.com
Homeowner Affordability and Stability Plan
Executive Summary
The deep contraction in the economy and in the housing market has created devastating consequences for homeowners and communities throughout the country.
· Millions of responsible families who make their monthly payments and fulfill their obligations have seen their property values fall, and are now unable to refinance at lower mortgage rates.
· Millions of workers have lost their jobs or had their hours cut back, are now struggling to stay current on their mortgage payments – with nearly 6 million households facing possible foreclosure.
· Neighborhoods are struggling, as each foreclosed home reduces nearby property values by as much as 9 percent.
1. Refinancing for Up to 4 to 5 Million Responsible Homeowners to Make Their Mortgages More Affortdable
2. A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
3. Supporting Low Mortgage Rages by Strengthening Confidence in Fannie Mae and Freddie Mac.
The Homeowner Affordability and Stability Plan is part of the President’s broad, comprehensive strategy to get the economy back on track. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs. The key components of the Homeowner Affordability and Stability Plan are:
Total Bailout Tab, To Date…
2009-02-17 – Ritzhold.com
“Beyond the $700 billion bailout known as TARP, which has been used to prop up banks and car companies, the government has created an array of other programs to provide support to the struggling financial system. Through Feb. 10, the government has made commitments of nearly $8.8 trillion and spent $2 trillion. Here is an overview, organized by the role the government has assumed in each case.”
Stimulus Bill Signed
2008-17-08 - NYTimes.com
“President Obama has not ruled out a second stimulus package, his press secretary, Robert Gibbs, said on Tuesday, just before Mr. Obama signed his $787 billion recovery package into law with a statement that it would “set our economy on a firmer foundation.”
Mortgage default notices up 121% over year ago
US fiscal policy: the Keynesian fallacy on steroids
The government’s attempt to spend (read borrow) our way out of this situation may lead to a total collapse of the dollar.
The Fed meeting minutes released today sure paint a picture of a Federal Reserve with very little regard for how to unwind these measures or what the long term consequences could be. I think a collapse in dollar assets is a very real concern after years of being considered nearly lunatic fringe talk.
Willem Buiter wrote a great piece on this.
Analysis of Destroying the Dollar
Peter Schiff vs the Federal Reserve – LIVE!
Among other unpleasant observations, Peter calls the U.S. a banana republic and mocks the Fed with ‘the idea’ of exporting prosperity via printing endless money (debt) to the rest of the world!
This should be a real thrill for those of us that want to see the money masters face that we know the truth about our multi-fractional reserve ponzi scheme banking system.
Jumbo Prime: ‘Walk Away’ Loans – More Downgrades Coming
2008-12-10 — ml-implode.com
“This story was originally released a couple of weeks ago but somehow did not make it to the blog. It goes hand in hand with the Moody’s downgrade of many Bank of America Jumbo Prime deals citing a 13% delinquency rate. This represents a total meltdown in the sector happening right now that nobody is reporting.”
Fed Ponders Issuing Debt to Finance Its Mushrooming Balance Sheet
This is a difficult one to wrap my head around. But the idea that they are trying to create a different class of debt is very troubling. The resulting confusion can’t be good for investors who were fooled by GSE AAA ratings based on “implicit” guarantees.
__________________________________
Move Presents Challenges: ‘Very Close Cousins to Existing Treasury Bills’
By JON HILSENRATH and DAMIAN PALETTA – Wall Street Journal
The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets.
Government debt issuance is largely the province of the Treasury Department, and the Fed already can print as much money as it wants. But as the credit crisis drags on and the economy suffers from recession, Fed officials are looking broadly for new financial tools.
Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, according to people familiar with the matter.
It isn’t known whether these preliminary discussions will result in a formal proposal or Fed action. One hurdle: The Federal Reserve Act doesn’t explicitly permit the Fed to issue notes beyond currency.
Potentially, The Worst Housing Crash in American History?
2008-12-08 — doctorhousingbubble.com
“It is important to note that home building during the Great Depression dropped by 80% between the years 1929 and 1932. It is also the case that many families owned farms which clearly isn’t a factor in today’s market. But we can use current measures and try to determine how deep our current decline is in relation to the past. Keep in mind that when you read 1929 – 1932 you may get a psychological feeling that this was a short timeframe. Remember that in late 1929 we saw the peak of the stock market and the bottom wasn’t reached until the middle of 1932 and it lingered near the lows for a very long time. If we follow a similar timeline with our market peak in October of 2007, then we can expect a bottom in the summer of 2010.
Commercial real estate heading South
2008-12-08 — ml-implode.com
The default rate on commercial mortgage debt has remained near historic lows, even while residential-related debt suffered a severe downturn.
But that is now beginning to change, sending new shock waves into much-battered banks, private-equity funds and other financial institutions that participate in the $1 trillion commercial real-estate debt market.
Majority of Modified Loans Fail After 6 Months, Regulator Says
Bloomburg – 2008-12-08
“Most U.S. mortgages modified by lenders to help keep struggling borrowers in their homes fell back into delinquency within six months, the chief regulator of national banks said. “
Almost 53 percent of borrowers whose loans were modified in the first quarter of this year re-defaulted by being more than 30 days overdue, John Dugan, head of the Treasury Department’s Office of the Comptroller of the Currency, said today at a housing conference in Washington.
Hanks Bad Gamble – CRITICS: Rescue Plan Bungles Make Profits Less Likely
2008-12-02 – NYpost.com
“All we’ve created is dead banks, not true value in their stock,” said Paul Miller, a banking analyst with FBR Capital Markets.
Of course the government just buying common equity stakes wouldn’t be so great either, unless they were going to get serious about taking an active stake in management, and forcing increased consumer lending.
But then, what exactly would we be left with? Not a private free market, that’s for sure. Almost makes one pine for New Deal-era direct consumer lending programs and work programs.
There seem to be no good solutions — no matter what Hank does, there are very serious (if not fatal) flaws with the plan. And by continously shifting plans, even more confusion is added, which is toxic to the market. Hank and Ben seem to want to do a little bit of everything, without really committing anything, which seems to be a horrible recipe for success.
Or maybe its just that every intervention is a bad intervention. Is this all really better than just letting the system fall apart so something new can take its place? As far as the list of things we were trying to prevent, the stock market has already collapsed (though it could go further), mortgage lendering is still too constrained for most people (given prices), and consumer lending is still being choked off. What exactly are we gaining from all this intervention and “official” uncertainty?
Understanding De-Leveraging, Merideth Whitney on Credit Cards
2008-12-02 - Optionamrageddon.com
If you want to understand de-leveraging, you could do worse than Meredith Whitney’s op-ed in yesterday’s Financial Times. She noted that $3 trillion of credit had been “expunged” from the economy so far this year. She also said credit card lines could be substantially reduced:
“I estimate that the mortgage market will shrink for the first time in US history and that the credit card market will be 18 months behind it. While just over 70 per cent of US households have access to credit cards, 90 per cent of these people use credit cards as a cash-flow management vehicle, or revolve payments at least once a year. While the credit card market is small relative to the mortgage market, it has grown to play a key role in consumer liquidity. Declining liquidity here will have disastrous effects on consumer spending and the economy. My primary concern is preserving liquidity to consumers, who command more than two-thirds of gross domestic product,” said, Whitney.
It’s official: US has been in a recession all year
2008-12-01 — yahoo.com
Mortgage Rates Drop! It Does Not Mean What it Used to
2008-11-26 — ml-implode.com
Remember folks, we have seen this happen a few times this year. Rates went right back up after the initial knee jerk lower. This actually happened yesterday as after the initial betterment in the morning, all banks re-priced for the worse multiple times yesterday paring back the rate improvement sharply. I am still not convinced that the low rates will last – Mr Mortgage talks about in the link below.
Fed Commits $800 Billion More to Unfreeze Lending
By Scott Lanman and Dawn Kopecki
Nov. 25 (Bloomberg) — The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.
The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a program of $200 billion to support consumer and small-business loans, the Fed said in statements today in Washington.
With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers are aiming to prevent a financial collapse and stamp out the threat of deflation.
“They’re trying to put funds into the system, trying to unfreeze these markets,” said William Poole, the former St. Louis Fed president, in an interview with Bloomberg Television. “Clearly, the Fed and the Treasury are beginning to take a large amount of credit risk.”
The Fed will purchase up to $100 billion in direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Fannie, Freddie and Ginnie Mae, the statement said. Treasury Secretary Henry Paulson said at a press conference that $200 billion is just the “starting point” for the asset-backed securities program.
“The economy is turning down pretty dramatically,” he said. “It’s very important that lending continue to be available.”
Peter Schiff, he was right the whole time 2006 – present
I sure wish some of the foolish talking heads on our televisions could be held accountable for misinformation. But hey, it is the news, since when have we pushed for accuracy. Peter Shiff has tried and tried to speak to the masses about the upcoming crisis and the true net effects it could have on the entire economy. But instead of listening, it was easier to laugh and ridicule. Watch the video for yourself.
Donny Deutsch has the “Right Idea”
2008-11-24 — ml-implode.com
This housing and mortgage crisis is not a result of millions borrowers buying beyond their means or some massive consumer driven multi-year mortgage fraud era where everyone lied to buy a home. This crisis was caused by fraud alright – but not by the consumer.
The greatest real estate bubble of all time was only able to occur because of the bank’s allowing home owners to use extraordinary leverage created through exotic loan programs and easy credit that never existed before and never will again.
Why a Gold Standard?
Once a Gold Standard Warrior, has Alan Greenspan lost his youthful wisdom?
Donald Grove
Washington Correspondent
Casey Research, LLC.
The Casey Report
The $800 billion bailout, and billions more being pumped less obviously into the global economy, will cure nothing. Americans are clamoring for a savior. No one is willing to believe that the party is over. In the past, someone always came to our rescue.
Like a parent dispelling a childhood nightmare, FDR soothed the masses with the assurance that they had nothing to fear but fear itself. To this day, he is revered for turning a depression into the Great Depression. In the aftermath of the dot-com bubble, Fed Chairman Alan Greenspan came to the rescue with a brand-new bubble in real estate.
Even if there was someone out there who could pull off one more illusionary rescue, it would only delay the inevitable and worsen the pain. Pain now or more pain later. The compassionate solution is to let Adam Smith’s invisible hand guide us, as should have been happening all along. Almost no public figures have the backbone to speak honestly about what’s wrong. There is no free lunch. Still, voters believe the promise that “I will give you what you want and make someone else pay for it.” Neither Congress nor either presidential candidate can take us back to the fairytale world of mortgaged opulence we blissfully enjoyed in the recent past.
The End of the Wall Street Boom
FDIC’s Bair pushes aggressive mortgage plan
NEW YORK (CNNMoney.com) — In a surprise move, FDIC Chairwoman Sheila Bair Friday unveiled details of her plan to have the government help delinquent homeowners.
There are two key elements to the proposal.
First, housing payments for delinquent borrowers would be reduced to 31% of gross monthly income.
To get there, mortgage rates could be set as low as 3% for five years, before increasing at an annual rate of 1 percentage point until it hits the prevailing market rate. Loan terms could be extended as long as 40 years.
Second, to encourage servicers and investors to participate, the government would share up to 50% of the losses if a borrower who had been helped ended up in default anyway. The risk of re-default had been one obstacle to getting lenders on board with systematic modification plans.
Fannie Mae to Paulson: Please sir, may I have some more?
This is getting ridiculous.
On top of a record $29bn quarterly loss (and the tacit admission that it will continue to report losses for the forseeable future), and buried on page 218 is this little gem in Fannie Mae’s 10-Q filing with the SEC:
Treasury’s funding commitment may not be sufficient to keep us in a solvent condition
Say what? This is what:
Under the senior preferred stock purchase agreement, Treasury has made a commitment to provide up to $100 billion in funding as needed to help us maintain a positive net worth. To the extent we draw under the funding commitment in the future, the amount of Treasury’s funding commitment will be reduced by that amount. If we continue to experience substantial losses in future periods or to the extent that we experience a liquidity crisis that prevents us from accessing the unsecured debt markets, this commitment may not be sufficient to keep us in solvent condition or from being placed into receivership.
That’s right – Fannie Mae’s taken a page from AIG’s playbook. One massive bailout – and $100bn – may not have been enough to set the mortgage lender to rights.
But the question is – will anything be?
Forecast 2009: Your home
CnnMoney 2008-11-06
Home prices are down 20% nationwide since their peak in July 2006, according to the S&P/Case-Shiller home price index. Economist Nouriel Roubini of New York University, who accurately predicted the housing slide and credit crisis, expects another 20% decline in home prices next year. Patrick Newport of economic forecasting firm Global Insight projects a 15% drop.
NO MORE MORTGAGE PAYMENTS SOON – Get Ready to Default!
The New Bailout- NO MORE MORTGAGE PAYMENTS!
The plan is to FULLY SUBSIDIZE millions of borrower’s mortgage payments for three years. The program is predicated upon the housing market improving within the next 5-years. This is a really bad assumption to make but also could shed some light on the Fed’s inflation expectations. This plan may help borrowers de-leverage temporarily but will not help the broader housing market. It just kicks the default can down the road several years.
“In five years’ time, participants would, in all likelihood, be able to sell their homes or refinance their mortgages at amounts that would allow them to repay the loan.”
This program does nothing about the leading cause of loan default across higher paper grades, which is negative equity. Those severely underwater borrowers that would chose to participate in something like this are the very ones that you want to foreclosure upon in order to clear the market in the first place. The primary reason one would enter a program like this is if you planned on walking anyway. After three years when their mortgage payments kick in again or five when the big balloon is due, do you really think the these underwater home owners will feel better about their situation or more passionate about saving the home in which they have lived for free for years knowing they are another $100k in debt? I think not.
Second Mortgage Notes For less than 1 cent on the Dollar!!?
2008-11-03 — ml-implode.com
“A good friend who specializes in distressed real estate assets such as notes and REO just bought 27 second mortgages with a face value of $2,153,400 million for $2400 – that’s TWO THOUSAND FOUR HUNDRED DOLLARS.”
Nearly One of Five Underwater on Mortgage
thetruthaboutmortgage.com
While the problem can be seen nationwide, a handful of states are taking the brunt of it, including Arizona, California, Florida, Georgia, Michigan, Nevada, and Ohio.
These seven states account for 58 percent of all underwater borrowers, but just 36 percent of outstanding mortgages.
New foreclosure plan on tap
FDIC offers plan to systematically modify loans for homeowners most at risk of foreclosure. Agency chief hopes program will spur other banks to take similar measures.
NEW YORK (CNNMoney.com) — One of the country’s top banking regulators said Thursday that the government is working on a plan to do more to help troubled homeowners.
Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that her agency and the Treasury Department are working closely to find ways to prevent avoidable foreclosures. The plan would use the Treasury Secretary’s new authority under the Emergency Economic Stabilization Act to provide guarantees to mortgage lenders.
“Loan guarantees could be used as an incentive for servicers to modify loans,” Bair said. “Specifically the government could establish standards for loan modifications and provide guarantees for loans meeting those standards.”
IndyMac and the FDIC began working together to modify loans after they went under overnight. Their process, as discussed on August 20, 2008, looked like this. I assume a similar model will be used for current process. Full Article about IndyMac loan modifications.
US house prices face long fall to bottom: analysts
2008-10-20 — yahoo.com
“We don’t know yet the impact of the economic turmoil on the housing market and I suspect it will not be positive.”
Despite a US government rescue of mortgage giants Freddie Mac and Fannie Mae and a 700-billion-dollar program to rescue banks, mortgage rates are still rising and will remain high relative to the levels of previous years, analysts say.
ALT-A: The Risk Abatement Disaster is Coming
2008-10-21 — wordpress.com
”As late as the spring of 2007, major national lenders were still aggressively marketing Alt-A products with with ridiculously vacuous underwriting criteria: A borrower could secure a no income/no asset documentation cash-out refinance loan, with a simultaneous second mortgage up to 95% CLTV, on a non-owner occupied investment property, with only a 620 FICO, two months PITI reserves and a debt to income ratio up to 60%. Now everyone responsible for the mounting losses will throw up their hands in utter surprise that the golden child of the short lived post-subprime era was a bad idea too.”
States Collect Less Tax Revenue, Expect More Layoffs
22 States Face Tax Shortfalls, Frugality To Hit State Budgets
The moribund economy is drying up tax revenues more dramatically than expected, forcing 22 states, including California, to confront growing budget gaps. Some states have already eliminated jobs and services — and more cuts are likely.
The new shortfalls — totaling at least $11.2 billion — come just months after numerous states enacted belt-tightening measures while writing their yearly budgets. Officials also adjusted their revenue projections downward to account for the slowing economy. But in many cases, the actual revenue for the first quarter of the fiscal year, which began July 1, has proven to be even lower.
“States have been confronted with bad economic circumstances in the past, but never so many states, all at once,” said William T. Pound, executive director of the National Conference of State Legislatures.
The revenue pools are shrinking for a number of reasons: Rising layoffs are cutting into payroll taxes. The credit crisis and housing slump are affecting taxes levied on real estate deals. Sales taxes are shrinking as shoppers worried about the economy stay home.
Bank Bailout… not helping main street at all
2008-10-17 — denninger.net
John Mack yesterday in a CNBC interview said that the capital deployed by Treasury into the banks was going to rebuild their capital ratios – not be lent out. In other words, they intend to hoard it.
This means, bluntly, that not one nickel of benefit will be seen by Main Street, despite claims by Paulson, Bush and others that this bailout is necessary for “Main Street, not Wall Street.”
S&P Warns on $351.7 Billion of Alt-A RMBS
By: PAUL JACKSON – housingwire.com
October 15, 2008
Standard & Poor’s Ratings Services said Wednesday that it had placed ratings on 5,536 classes from 456 U.S. RBMS transactions backed by Alt-A mortgage collateral issued in 2006 and 2007 on review for likely downgrades.
Perhaps most telling is that the mortgages involved aren’t short-term resets: S&P said that most of the Alt-A transactions now under review are collateralized by fixed and long-reset hybrids (meaning rates are fixed for five or more years from origination dates). In aggregate, the affected classes represent an original par amount of approximately $351.7 billion; that total is $280.1 billion in current balance.
Driving the likely downgrades is yet another update to loss severity projections by the rating agency, which said it now expects average loss severity on affected mortgage deals to be at 40 percent rather than the previous threshold of 25 percent.
“Continued foreclosures, distressed sales, an increase in carrying costs for properties in inventory, costs associated with foreclosures, and further declines in home sales will depress prices further and push loss severities higher than we had previously assumed,” S&P analysts said in a press statement.
What Stability??? Longterm, we are screwed either way…
Bernanke: Economic outlook weaker (Say it aint so Ben)
Bernanke: Economic outlook weaker
Fed chairman says financial crisis will dampen economy well into 2009 and hints at future rate cuts; says recent actions by Fed, Treasury should help economy recover.
In a speech before the National Association of Business Economics in Washington on Tuesday, Bernanke said the threat of inflation has receded recently, while the economy has continued to weaken. This could be interpreted as a sign that the central bank might be preparing to lower its key fed funds rate soon.
“Overall, the combination of the incoming data and recent financial developments suggests that the outlook for economic growth has worsened and that the downside risks to growth have increased,” he said.
Business loan bailout
Federal Reserve to buy loans crucial to business to unfreeze markets.
NEW YORK (CNNMoney.com) — The Federal Reserve announced a new program to help the battered market for short-term business loans – taking its closest step yet to lending directly to businesses.
The program addresses commercial paper, a form of short-term funding that is crucial to many businesses operations.
Commercial paper is sold by major corporations and most of the nation’s leading financial institutions. They use the proceeds to fund day-to-day business operations. It is bought primarily by money market fund managers and other institutional investors.
Before the current credit crisis, there was nearly $2 trillion of commercial paper outstanding and was mostly issued for short terms – never more than nine months – and thus had to be renewed frequently.
Financial Times: “Derivatives market faces biggest test”
Derivatives market faces biggest test 2008-10-03 — ft.com
The $54,000bn credit derivatives market faces its biggest test in October as billions of dollars worth of contracts on now-defaulted derivatives on Fannie Mae, Freddie Mac, Lehman Brothers and Washington Mutual are settled. It’s notable that the credit derivatives market has been the source of not a sudden implosion, but something of a slow and steady fizzle. It turns out that the very non-standard, and non-exchange-traded properties of derivatives that has been so worrisome actually keeps things from happening too suddenly. So that is a good thing. However, it does not eliminate the ultimate need of most participants to take losses — and it is bad in the sense that it drags the “crisis” on for longer.
Stocks crushed!! DOW Loses 777 points.
CNNMoney.com Monday, Sept. 29, 2008
Approximately $1.2 trillion in market value is gone after the House rejects the $700 billion bank bailout plan.
Uh Oh, The Credit Market Is Closed
2008-09-26 — blogspot.com
Welcome to the credit market, folks, it is officially closed.
After Lehman, Fannie Mae (FNM), Freddie Mac(FRE), AIG (AIG) and Washington Mutual (WM) debt and preferred holders have been unmercifully tossed under the bus so
Jamie Dimon can be given banks, do you really think many want to get in front of this train wreck.Me thinks not.
- For what it’s worth, I was just offered Wachovia (WB) 5.8% hybrids at $0.10 on the dollar, and I passed. A block of 30-year Wachovia paper just traded at $0.35 on the dollar. This is not preferred stock or hybrid, folks, this is subordinated debt.
- Washington Mutual sub paper? $0.01 on the dollar. This is what a credit rout looks like. And until this ship is righted, watch out. There are others trading similarly, like Morgan Stanley (MS) and, while I have no positions, it’s quite interesting to watch.
- So the few that can raise capital, like JPMorgan (JPM) and Goldman Sachs (GS) will survive, but many failures lie directly in front of us.
- Many regional banks are likely next.
The Bailout – Paulson’s 0% Balance Transfer!
2008-09-24 — ml-implode.com
”But does this really solve our economic problems or make them worse? Ben and Hank are just offering us a low-rate balance transfer and higher credit limit on a new card. And boy are they getting a low introductory rate as yields on new Treasuries have fallen near 0%. Happy days are here again! We can keep borrowing, which means we can keep spending!”
AARP: Older Borrowers Behind on Mortgages Too
2008-09-19 — thetruthaboutmortgage.com
”So the AARP released a “first-of-its-kind” study that reveals older homeowners are not exempt from the ongoing mortgage crisis, significant considering the home is a nest egg for most.”
Will the Government Own Your Home?
2008-09-19 — cnbc.com
”Even the insiders I’m talking to, who know far more than I do, and who will be at the table, are answering my questions with: “Honestly, I’m just not sure.”
Privatizing Profits and Socializing Losses: How the Rich are Staying Rich
We pay taxes – and not on our “profits” mind you – We pay taxes on the money we use to buy food, fuel, clothes for our kids, and everything else we have to fork out to get by every month. They want Us to pay for it. When I think about that I forget to breath for a minute. The don’t just want us to pay for it, they are making us pay for it, and we will pay for generations to come.
Paulson and Bernanke are asking for a Blank Check to bailout people who had profited from the lax oversight and underwriting for years – and Pelosi Purse-strings has pledged to roll over on anything and push a bill through hastily, so they can all go home for a long vacation. Congress probably will not even read it. You know they are not writing it, they will leave that to the lawyers and Corporate Lobbyists – you know, the “Experts.”
Mr Mortgage – ‘The Quickening’
Get ready for the massive dumping of assets on our market, specifically residential properties. Lehman and Merrill are massively dumping inventory. Banks are in the liquidation mode. When this supply hits, it will drive down prices. Home sales ARE increasing, but so is inventory, and the rate of these increases do not offset each other. Expect more inventory and decreasing demand as loans become nearly impossible to obtain. This will only prolong the housing downturn. The foreclosure market is now the real estate market, and the banks are now the market makers.
The Paradigm Shift: “Too Big to Bail Out”
The Paradigm Shift: “Too Big to Bail Out”
Posted on September 15th, 2008 in Daily Mortgage/Housing News – The Real Story, Mr Mortgage’s Personal Opinions/Research
A paradigm shift back to ‘normal’ maybe occurring. Tonight sure looked like .gov is viewing these events as ’too big to bail out’. That is more than a shift, that is a full 180.
‘Maybe its different this time’ was perhaps the past two decades of free money and ultimate leverage. Now, its time for some harsh reality.
It looks like tonight that .gov decided to protect its balance sheet just like the banks have done for the past year. It is every bank for themselves. The Gov’t threw its balance sheet at the GSE’s just two weeks ago and here we sit. Nobody, and I mean nobody is prepared for this. And Nobody, and I mean nobody may be able to stop it.
And the Beginning of the end of Investment Banking
The meltdown
Lehman files for bankruptcy. Merrill is bought by Bank of America. The Fed and major banks expand lending. Anxiety lingers. Will WaMu get bought by JP Morgan? What are the implications of this shrinking market and what will it to do our lending capacity?
Here we go…This was bound to happen when the Feds said “no” to further bailouts.
Pick-a-payment loans turn poisonous
Defaults on option ARM mortgages are expected to double in the next two years, driving foreclosure rates even higher.
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.”
“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.
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.
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”
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