JKirk

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    • Tue Jun 24th 12:11 PM | Rating: 0 0
      Commented on:
      Rating Agencies Target Guarantors to Deflect Subprime Blame
      Really, what ABK/MBI suffer from is that they don't control their business model. It relies on a AAA rating from the rating agencies and they didn't have a contractual goal post for maintaining that rating. They thought they just had to have reserves that fulfilled the Moodys/S&P models, but have found out those models... however long they've been in effect previously, can be changed 3 times in a six-month period due to fear. I don't know if ABK/MBI will remain going concerns, but in run-off they seem to be worth multiples of their current stock price... and there are of course lots of talented/experienced people there available to start new financial guarantor companies.
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    • Thu Apr 24th 17:20 PM | Rating: 0 0
      Commented on:
      Subprime Mortgage Losses: Not as Bad as Advertised
      Thought I'd point out that this analysis by Mr Brown was referenced on the Ambac CC during the Q&A. They agree that it's getting hard to hit the absolute $ amounts needed to reach the higher loss estimates being published.

      I also want to echo previous comments about the speed of refinance- it's very fast when it's to the advantage of the borrower - like when rates improve (which they have versus 2006 and 2007), your credit improves (due to a better payment track-record), and when lenders and servicers are working hard to get quality lenders out of ugly looking loans so that they don't end up taking on real estate. The speed of prepayments is actually a major factor that drove the creation of MBS- they created different tranches so as to move prepayments to tranches with a shorter target maturity and only interest payments to tranches for investors that wanted longer maturity bonds.

      Also, from my perspective (first time homeowner as of August 2005) it's still a much better deal to pay my mortgage than to walk away (and maybe lose a little equity) and then have to pay rent. My last mortgage interest payment (@6%) was less than the cost of rent for a 2 bedroom apartment and I like living in my home a lot more than renting an apartment. Even if you are upside down on your home, if you can pay the mortgage you'll probably like your current lifestyle more than you'd like living in a smaller home, in an apartment, or moving in with family.
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    • Wed Apr 23rd 09:43 AM | Rating: 0 0
      Commented on:
      Subprime Mortgage Losses: Not as Bad as Advertised
      IanB makes a decent point about refi'd subprime loans. However, I expect that any lender that's refi'd one of these loans in the current environment of extra-tight underwriting standards has done their DD. Also, there's a good chance they're still holding the loan on their books as securitizations have slowed way down. Perhaps, those that have refinanced fall into that category of borrowers that Congressmen (especially Democrats) have identified- those who were capable of getting non-subprime loans but were sold (or chose themselves to get) a subprime loan in 2006.
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    • Wed Apr 23rd 08:35 AM | Rating: 0 0
      Commented on:
      Wells Fargo Downgraded: Oppenheimer's Whitney Goes Too Far
      The talk of people "walking away" from their 1st mortgages is getting a little overblown, in my opinion. People seem to forget that walking away from that mortgage means walking out of your home... and deciding to rent. I bought my home in August 2005 - I timed the top quite well - but I'm still better off paying my mortgage than walking out on it and paying rent (in excess of my mortgage interest) to live in a smaller, less comfortable dwelling. I'll keep my home, thanks. People walking away are either speculators, people that bought too much house or didn't understand how financing their home worked, or those unfortunate enough to have suffered loss of employment or a costly personal (health) crisis. The rest of us can't walk away from our 1st and 2nd mortgages without some serious consequences- and to me that means that, negative equity or not, we're going to keep paying our mortgage to keep living in our home.
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    • Fri Apr 18th 10:03 AM | Rating: 0 0
      Commented on:
      'SuperREIT' CapitalSource Swoops Up Fremont's Branches
      CSE's competitive advantage is its focus on credit underwriting in niche businesses and with borrowers that others aren't qualified or interested in underwriting. The credits it underwrites are mostly commercial loans, M&A/bridge loans, and then some sale-leaseback transactions in the healthcare business. CSE gets premium pricing (and premium covenants, usually) for providing liquidity to people that need money fast or have complex financing situations.

      It's the healthcare business that drove them to REIT status- as they can now achieve higher NPV on their healthcare loans because they have the same cost structure as the healthcare REITS they were competing against. Similarly, they've pursued deposit based funding as a diversification strategy for their own source of funds- pretty Nostradamus-like in the sense that they've been talking about this for about 2 years and we're just now seeing what happens when securitization-depende... lenders can't sell their ABS to the market.

      Anyone that calls CSE a mortgage REIT doesn't understand the CSE business very well. They hold super-prime agency and high FICO Wells Fargo non-agency MBS in order to satisfy the 75% of assets REIT requirement. As their healthcare REIT grows, the need for the MBS will decrease. I think other commercial loans collaterallized by RE count too- so as those grow the need for the MBS also decreases. CSE bought ultraprime MBS, term-financed the non-agency MBS and also used hedges to reduce interest rate risk on these assets. They've done everything they could to make these assets totally unexciting- they're just there to maintain the REIT status.

      If/when they secure the deposit based funding their liquidity position should be amongst the strongest in the industry. The next drop of the hat will be when inevitably they're impressively low NPAs and charge-offs mean-revert to "normal" levels. That's the next thing for CSE to focus on (they've been quite capable of protecting capital in the past) and the next barrage of criticism to follow.
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    • Tue Feb 19th 13:00 PM | Rating: 0 0
      Commented on:
      The Great Monoline Debate Goes to Washington
      A well written and logical argument regarding the monolines. There have been few, far-between on SA. I have heldd the opinion that the claim-paying resources are adequate, but am still fearful that Ackman et al can attack the MBIA/ABK structure, that is kill the holding companies via regulators or agency actions. While the policyholders remain safe, the debt and equity holders are left with nothing.
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    • Mon Feb 18th 12:37 PM | Rating: 0 0
      Commented on:
      A Common Sense Look at MBIA
      **Why didn't Mr Buffett attempt to acquire the entire firm?
      He pretty much just did- the part he wants, at a ridiculous price. I'm also reminded by the phrase, "Why buy what you can kill?"

      **Why haven't any international or domestic firms acquired the firm?

      I flipped through January and February SEC filings and on a round number basis you can get to about 2/3rds of MBIA is owned by about 8 entities- so, they've bought a bunch. It may get hard to cover a short position, actually.

      **Why are they unable to raise a proper amount of capital to ensure liquidity and financial security? With the way the USD has been acting we should be seeing international firms pouring money into MBIA if there's no significant danger.

      MBIA is up to about $US 2.65B in capital it raised. Every time a rating agency increases the AAA threshold, they exceed it... then the rating agencies change their mind. And they don't question the ability for the insurers to cover claims, except in a very, very, very depressed scenario... to which they even then add a premium.

      **2. If Ackman's firm's analysis is even somewhat correct and MBIA is in trouble then...

      Ackman's focus seems to be that he can short the ABK and MBIA holding companies via stock/options/CDS and create enough panic to get regulators to suspend the premiums being collected from the underlying insurance companies to the holding company parent. This would result in the insurance companies continuing to exist in a run-off situation while the holding companies go bankrupt. If this occurs and the insurance policies expire over the next 40 years with no insurance payment defaults, history may look back at Ackman as one of the greatest conmen ever.
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    • Mon Feb 18th 11:30 AM | Rating: 0 0
      Commented on:
      MBIA & Ambac: Wow!
      Cherry picked questions for the call? Give me a break. After a 2 hour management presentation they read and answered questions submitted beforehand, and during the call via email, for another 2 hours. That included Ackman's questions... I checked them off, one by one. While Ackman may be successful at killing the holding companies, who's arguing that the insurance companies are going to defualt? Nobody. And in my opinion, the only reason you'd want to keep hammering these companies after they're down over 80% is that you're also short the chain of financial institutions that fall next in the domino effect. If those dominoes do fall, I hope all the short-sellers profits can re-invigorate our economy of the of the recession lock-jam it'll be suffering.
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    • Mon Jan 21st 13:14 PM | Rating: 0 0
      Commented on:
      The Bush Fiscal Stimulus Plan: Looks Good to Me
      The whole point is for people to spend the $800 on a TV, not save it; that's the economic stimulus. Though it wouldn't hurt headline news if people put it towards lowering their CC debt. From a psychological standpoint it's important that Joe Public feels like the government is doing something to prevent a recession- because if Joe doesn't feel that way then he'll stop spending/consuming... and we will be in a recession, and the downward spiral continues....
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