Judy Weil

Annaly Capital To Take Fannie, Freddie's Place?

Dear Schminkie,

No, as you can see from the article my intention is quite the opposite. Since it may be misconstrued, I'm going to change the title. Thanks for the feedback.
Judy

Making Money With Fannie and Freddie: Bank of Ozarks' Conference Call

Dear Guero,

I couldn't decide if I should respond to your comment with "yeah, look what we've come to" or "don't laugh, those guys did pretty darn well!"

Judy

Mortgages and Lending In The Subprime Meltdown [Housing Tracker]

Dear Curbs-In,

Sadly, this phenomenon isn't new. Barry Ritholtz pointed out months ago that Michigan houses were selling for a dollar, as did the NY Times back in May www.nytimes.com/2007/0....

I suspect that there are many who would pay you to buy their house right now, if you could just get the millstone off their necks!

The point is, these kinds of crazy asking prices have been around for awhile. The house mentioned in the Chicago Sun Times article is a foreclosed property, which means the rights to the property don't necessarily come with just $1.75. Back taxes, liens, fines for upkeep, etc. can reach in to the thousands.

Michigan's macro environment is poor, and is likely to get poorer as the credit crunch hits automobile manufacturers even harder. Michigan's high homeownership rate is also clogging the market on its way down. See Mark Perry: seekingalpha.com/artic....
High unemployment, poor job market prospects and mobility; the list is pretty long. I don't know much about Saginaw, but i haven't noticed anyone touting the solution to Michigan's problems recently.

On the other hand, that may be the clearest contrarian signal that the market is in absolute despair, and so it's time to jump on those crazy offers.

I'd like to say there's a bright side to this: Like maybe the market is actually moving up. After all, if back in May the headlines were about $1 houses, maybe prices have risen 75% and are now $1.75, indicating a positive trend??? Or maybe your half joke about putting in a $5 bid is an indication that, even in jest, buyers are looking for bargains and so may be moving back in to the markets.
Somehow, I have the feeling that this isn't the case. But you have to trust your instincts!
All the best,

- Judy

Billion $ Question: What Will Mortgage Backed Securities Be Worth? [Housing Tracker]

Thanks Bill,
I haven't seen a $5T figure yet, but who knows where this will all end??
Sometimes when I read some of this stuff, I can't believe the numbers being thrown around. $1T. It boggles the mind.

What do you think about the bailout plan?

Fannie, Freddie: Who Benefited, Who Lost [Housing Tracker]

Oops, thanks for picking up on that. Removed it.
- Judy

Financials: No Sign Of Let Up From Subprime [Housing Tracker]

Yours is the question of the hour really. Homebuilders, financials, bloggers, buyers and sellers and even ratings agencies debate this issue vigorously and constantly. If people are bidding on condos even though they are not at rock bottom prices as you say, then is it the bottom?

Obviously, I don't know the answer to that question. But here are just two things to think about in trying to.

One is that many billions of dollars more worth of ARM mortgages and other exotica between subprime and prime mortgages are still in the process of resetting. I don't have the numbers in front of me, but I recently read that dozens of billions will be resetting in the next month and a half alone. Maybe with Fannie and Freddie's new look, banks will start lending, mortgages will now become more affordable and people can refinance in to a good, solid mortgage at a decent rate. After all, the Fed Funds Rate stands at 2%! People should be able to get a better deal than the 6-7%+ lenders are offering. But so far they can't and lenders won't lend even the sturdiest buyers for low rates right now. Risks are too high.

Even if we're at the bottom, the market is still, well, at the bottom. Those that cannot afford the 10%-20%-even 40%-50% mortgage payment hikes, and cannot refinance or are not eligible to refinance, will not be able to sell. If they do, it will be without equity or even negative equity. Many will likely walk away. That's a lot of product coming on to the market. I won't even touch on the trend of rising prime mortgage delinquencies, the scenarios become even uglier.

The other issue is why this whole thing started. Affordability. A bubble was created by prices just inflating and inflating and inflating until most people simply could not afford to buy anymore-- particularly in SoCal, as I'm sure you know.

If sales are rising, is it because people can finally afford to buy houses now? Have prices reverted to the affordable mean already?

[There's an actual measurement for that, by the way. Housing and Urban Development has an affordability metric, if I'm not mistaken. i.e. how much of their salaries can spend on housing and still live above the poverty line.]

Obviously, I don't know the answer to that question either. But I personally believe that the answer to it will define the real bottom to this whole thing. If most people still can't afford to buy homes for a reasonable part of their salary, then the downturn will only stop when they can.

Having said all that, I hope you're hopefulness turns out to be well-placed!

ATB,
Judy

Alt-A Default Warnings Grow Louder [Housing Tracker]

Hi Bill,
I thought of you when I was posting this one. I know you've commented on this before. Thanks for keeping up,
Judy

Federal Entities and Troubled Loans [Housing Tracker]

Hi Bill,
It's incredible, a five-year supply. How much longer will they be "worth" a million, i wonder?

Housing Market Tracker - Subprime Slump Hits Tennessee

Dear Fat Arby,

My 'columns' are not meant to contain a thesis, or a conclusion. Seeking Alpha's housing roundups are direct quotes of important data points, taken from articles on different aspects of the U.S. housing market. Topics range from the subprime crisis to the macro-economic effects of the housing slump, to actual sales, price, foreclosure, etc. data from all over the U.S.

The goal is to provide the reader with a balanced survey (I try, anyway) of what is going on in the housing market in order for an investor to be able to formulate his/her own informed opinion of which way things are heading.
If I ever decide to include my own interpretation, I'll be sure to let you know.

All the best,

Judy