JKirk's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/107030/comments http://seekingalpha.com/article/82455-rating-agencies-target-guarantors-to-deflect-subprime-blame?source=feed#comment-191840 191840 Tue, 24 Jun 2008 12:11:27 -0400 http://seekingalpha.com/article/73500-subprime-mortgage-losses-not-as-bad-as-advertised?source=feed#comment-156131 156131
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.]]> Thu, 24 Apr 2008 17:20:29 -0400
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.]]> http://seekingalpha.com/article/73500-subprime-mortgage-losses-not-as-bad-as-advertised?source=feed#comment-155204 155204 Wed, 23 Apr 2008 09:43:25 -0400 http://seekingalpha.com/article/73275-wells-fargo-downgraded-oppenheimer-s-whitney-goes-too-far?source=feed#comment-155129 155129 Wed, 23 Apr 2008 08:35:25 -0400 http://seekingalpha.com/article/72624-superreit-capitalsource-swoops-up-fremont-s-branches?source=feed#comment-152863 152863
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.]]> Fri, 18 Apr 2008 10:03:26 -0400
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.]]> http://seekingalpha.com/article/65123-the-great-monoline-debate-goes-to-washington?source=feed#comment-117194 117194 Tue, 19 Feb 2008 13:00:37 -0500 http://seekingalpha.com/article/64880-a-common-sense-look-at-mbia?source=feed#comment-116924 116924 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.
]]> Mon, 18 Feb 2008 12:37:51 -0500 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.
]]> http://seekingalpha.com/article/64949-mbia-ambac-wow?source=feed#comment-116916 116916 Mon, 18 Feb 2008 11:30:25 -0500 http://seekingalpha.com/article/60805-the-bush-fiscal-stimulus-plan-looks-good-to-me?source=feed#comment-111921 111921 Mon, 21 Jan 2008 13:14:40 -0500