Observing Credit Market Sea Changes As They Happen [Housing Tracker]

Quote of the Day

“Anybody who is below 1 percent or in the low 1 percent range in this environment should be given an Olympic medal.” - Joseph Schroeder, CEO, San Diego Metropolitan credit union, on the rising—but still low—default rates of consumer (particularly real estate-related) credit at credit unions. Schroeder was comparing the relatively safe credit unions to larger banks that are suffering much higher default rates. (San Diego Union Tribune, Aug. 24) 

Subprime Banking Fallout

What Will Mac ’n’ Mae Cost You and Me? “UBS: In 1954, when the government began to change Fannie Mae (FNM) into a shareholder-owned company, preferred stock was issued to Uncle Sam to help finance the process. Those shares were retired in 1968 when Fannie became a publicly traded corporation. If preferred shares are again issued in exchange for taxpayer cash, common stockholders could lose the most because new preferred shares would take precedence in the payment of dividends and if the companies were liquidated. Investors holding Freddie and Fannie preferred stock could also be vulnerable if the bailout puts the taxpayers’ investment ahead of them for dividend payments. [Already suffering] regional banks and S&L’s hold most of these shares.”  (NY Times, Aug. 23) 

Merrill Poaches Another Trader, Lehman Sees Mortgage Head Bolt. “WSJ: Lehman Brothers Holdings Inc.’s (LEH) Ted Janulis, global head of mortgage capital, will step down next month... Rich McKinney, head of securitized products, also has left the firm; in McKinney’s case, however, the departure is likely less about Lehman and much more about the death of securitization in general. Janulis has been named as a possible successor to current Freddie Mac (FRE) CEO Richard Syron... Lead mortgage trader Jim De Mare has left Citigroup (C) to join Merrill Lynch (MER)… Bloomberg: JP Morgan Chase & Co’s (JPM) head of mortgage trading, Mike Nierenberg, recently quit and jumped ship over to Merrill as well.” (Housing Wire, Aug. 22) 

Small Kansas Bank Is 9th Failure This Year. “Bank regulators closed Columbian Bank and Trust Company on Friday, the ninth U.S. bank to fail this year as the weakening economy and falling home prices take their toll on financial institutions… Citizens Bank and Trust has agreed to assume the failed bank's insured deposits. Columbian Bank and Trust's branches will reopen on Monday as branches of Citizens Bank and Trust… The FDIC said Columbian Bank and Trust of Topeka, Kansas, had $752 million in assets, $622M in deposits, and nine branches. The failure is expected to cost the FDIC deposit insurance fund an estimated $60M.” (Reuters, Aug. 22) 

Mortgage REIT Insider: A Few Deals Still Getting Done. “Nonconforming lender Thornburg Mortgage (TMA) announced [last] week that over 80% of each class of its outstanding preferred stock had been tendered — satisfying a key requirement for a reduction in the interest rate on its senior subordinated secured notes. Thornburg extended the tender offer for the remaining outstanding shares to September 2 in order to give shareholders more time to review its upcoming (yet tardy) Q2 10-Q. Impac Mortgage Holdings (IMH), announced that the NYSE had agreed to give the company a four-month cure period to allow Impac to get its common stock price back above $1.00/share on a consistent basis.” (Housing Wire, Aug. 22) 

Move Over Fannie And Freddie, Ginnie Mae Eyeing First Place. “Ginnie Mae, the only issuer of mortgage backed securities explicitly backed by the U.S. government, has issued more of the fixed-rate bonds so far this month than either Freddie Mac or Fannie Mac… eMBS mortgage bond data provider: It would be the first time in at least 15 years Ginnie Mae has topped both Fannie Mae and Freddie Mac fixed-rate issuance in the $4.5 trillion market… Fannie and Freddie are Congressionally-chartered private companies that guarantee MBS and purchase mortgages as investments… Ginnie, through Aug. 20 issued a record $27.2 billion in fixed-rate MBS, compared with $25.2B from Fannie and $17.3B for Freddie. In adjustable-rate mortgages, Ginnie is still behind Fannie issuance.” (Reuters, Aug. 21)

 

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Get Seeking Alpha's housing market coverage by email -- it's free and takes only seconds to sign up.