Cash America International Inc. (CSH)
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- Cash America: Up 16% on Higher Guidance [view article]
- A Change-of-Pace Growth Strategy [view article]
- Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
- Hedge Fund Manager's Notebook: Pawn Shops and Railroads In, Oil and Commodities Out [view article]
- Still No Panic? [view article]
- Recycling for Higher Returns: Potential Conservation Investments [view article]
loading ...Recent CSH Articles
- Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries
- Hedge Fund Manager's Notebook: Pawn Shops and Railroads In, Oil and Commodities Out
- A Change-of-Pace Growth Strategy
- Still No Panic?
- Cash America: Up 16% on Higher Guidance
- Recycling for Higher Returns: Potential Conservation Investments
- Rob Black's Financial Stock Report
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Analyst Upgrades & Downgrades for Wednesday, July 19, 2006
on Jul 19, 2006| by
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Cash America: Up 16% on Higher Guidance [view article]
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A Change-of-Pace Growth Strategy [view article]
Wow. That was a lot of information. I really like Micros, they are doing everything right and yet the market is not rewarding them.I am thinking that money is probably best put to work in SKF right now as the financials experience reality.
Keep up the good work.
Clark Jenkins
FishGoneBad.com Reply
Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
Thanks, Jimmy, for your penetrating and poignant article. Something is systemically wrong to allow such widespread flim-flam. ReplyLathrop
Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
Hello Mike, I'm glad to see you are still following my posts.The situation that I was describing in the above article deals with loans that are owned by Mortgage Backed Securities. That is, Trustee bank as Trustees for the Pass-Through Securities for Series blah blah blah.
If the loan was held by the original underwriter, there is a big incentive for the bank to work out a loan modification. Why? Because they can take a cut of the principal and still count on future payments to fund more loans which they can underwrite. A nonperforming loan can be written off the books, or counted against loss reserves, or whatnot. The important thing to remember is that a portfolio bank has the leverage to modify these loans.
Now lets look at a loan which is held by a Mortgage Backed Security pool. Some of these loans have limited recourse, which means, if a loan defaults they can send it back to the original underwriter who will replace it with performing loan. What if the original underwriter is out of business? What if the loan was from New Century or IndyMac and the bankruptcy trustee or the Federal receiver refuses to take it back? Remember, once the original underwriter goes under, the fiduciary responsibility changes. Now you have the Trustee for these Mortgage Pools caught in a bad place - if they try to modify the loan, the junior or senior tranches may call "foul" and bring a shareholder derivative suit against the Trustee Bank for not protecting their interests. A bank's interest is to stay solvent and protect itself as an ongoing business. A mortgage backed security only exists to generate yield. It doesn't underwrite loans. It can't replace loans if the original underwriter is gone. Will the original AAA insurer honor its commitment? Whats the process to unwind these securities? Who is going to "unwind" them? Is it going to be like a bankruptcy?
The point is, these mortgage backed securities have less leverage to modify loans than a portfolio loan. Five points to anyone who can name the recent commentator on CNBC who called MBS "the heroin of the financial world" . This is your housing market on drugs. Reply
Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
I have yet to read any story about someone putting a gun to a citizen's head and forcing him to take a exotic, mindless real estate loan. I am still waiting. ReplyLax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
why should not the dumb-dumber americans get to bail out the rich.they reelect almost the same folks to congress although they give them a 9% approval.the "weapons of mass destruction " guy,they relected."good job brownie" did a hell of a job for this country & nobody cared till the s hit the fan. Replychael
Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
Good article, but I would like to get your comments on an exchange we had a while back re whether banks were actually taking the haircut and writing down the principal balance preemptively. This article suggests that, no, banks are not willing to write down the balance and work with the borrower, preferring foreclosure. Yet, before, you indicated that banks were taking the writedown or selling the defaulted loans to GSE's.That prior exchange follows.
I first commented:
The article and comments re modified terms disregard the impact loan recasts and teaser rates are going to have on losses in the Alt-A portfolios. The "payment shock" and related defaults associated with these factors will operate independently of interest rates. Further, because many of the borrowers could not afford the payments on their principal balances if subject to fully amortized payments at market interest rates, loan modification is simply not an option without a principal haircut (which banks don't appear willing to take on a preemptive basis).
You commented:
Uh, speaking as someone on the frontlines? The banks are taking the haircut and writing down the principal, either through short sales or loan mods. It was a good theory though.
I responded:
Uh, Jimmy Lathrop, you think First Fed is going to voluntarily take the 40%-plus haircut required to get the principal balance on this loan (from the WSJ) low enough for Mr. Truong to afford his payment?
"Dien Truong, a 35-year-old, water deliveryman, pulled out $156,000 in cash when FirstFed refinanced the $628,000 mortgage on his Richmond, Calif., home in 2005. Mr. Truong used the money as a down payment on another home and turned the FirstFed home into a rental property. But the $2,500 a month he collects in rent is no longer enough to cover his mortgage payments, which have climbed to roughly $5,100 from $1,618.
FirstFed offered to refinance him into a new loan with payments of roughly $4,250 for the first five years, but Mr. Truong says he can afford only to pay the $2,500 in rental income. Because he has been making the minimum payment, his loan balance has climbed to more than $690,000, which is more than the home is worth.
"I've been a good customer," says Mr. Truong, who hasn't made a loan payment since March. "This time my credit will be screwed up for good." His loan application shows that Mr. Truong and his wife earn $165,000 a year, more than double their actual income, says Katrina Vizinau, a housing counselor with Community Housing Development Corp. of North Richmond. Like Mr. Truong, she says, many borrowers say they didn't read the application until later."
You responded:
MichaelSchmichael - the answer is yes, because they are doing it now, or they are selling the loans to a GSE who will take the loss and let the American taxpayer bail them out until someone dissolves the GSE charters, which will not happen in the near future.
Thoughts? Reply
Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
I'm asking a really dumb question here but...What happens to a retailer in a mall that goes bankrupt?
Can anyone explain this process to this little one? Reply
Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
good article.how many of our informed(?) citizens would read the whole article? how many of our educational products could even understand it if they read it?this is some mess.it may be too late to clean it up.sad ReplyLax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
Misery industries are thriving now. I've had to use pawnshops to get money to buy gas, and I've got two jobs!!Pawnshops, payday loan houses, car title loan shops, and the like have steady business. Banks, credit unions, and finance companies are pulling back from consumer lending because of their own liquidity issues and tightening credit criteria, forcing regular workers to seek out alternative ways to make ends meet.
Don't forget BK attornies, process servers and collection agencies. Those businesses are in growth mode now as well. Reply
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Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries [view article]
What I'd like to see - and maybe you know where the answer can be found - is the percentage of mortgages taken out by cohabiting couples and the percentage of those in arrears by marital status.My guess is that cohabiting couples are disproportionately represented among those in arrears and may very possibly be the main trigger of the crisis.
Reply