Fannie and Freddie's Unbelievable Proposals [View article]
The reason why this is under serious consideration is because it is a way of moving underwater loans that will result in serious losses off the balance sheets of the banks and onto the balance sheets of the tax payer. They will never be able to securitize and well these so as they fall one by one for years the taxpayer will pick up the tab. With values down 40-70% in the bubble states where this is aimed, this will be a big tab.
Option ARMs: The Banking Backdrop of 2009 [View article]
Hey Reg - First American's numbers are jacked. They 'track' $200 billion but there are more out there. Additionally, they have only been tracking POA's for about 2 years. But before that the methods of collecting the data did not include the markers needed to identify a POA from a 5/1 ARM for example. After two years of research on this, I have concluded that there were $750 billion originated since 2003 and $550 billion still in existence. Put it this way - we know WB has $122 billion on balance sheet. There is no way they hold 60% of all POA's in existence.
Promising Regional Banks For Patient Investors - Barron's [View article]
Banks are a mess with asset valuations represented on quarterly reports nowhere near their true valuations. I would agree with your analysis if the banks were reporting the true value of their assets. The problem with basing an analysis upon NEW lending is they still have to clean upon the trillions in bad loans before they will realize any upside from new. This runs across all assets classes. Remember, we are in an asset re-valuation period and the leverage comes out of the system. New loans pale in comparison to highly leveraged bad deals currently falling apart.
Puh-lease. If you must gamble in this treacherous market, then by all means small caps are the way to go. They have less to fall when they go to zero. But really, what is the purpose of this story? Watching inflows as you mentioned has been a disaster in the past year. Remember, we are in a credit crisis, small cap and small caps for a reason and when the funding really dries up over the next few years, short-to-zero plays using a dart board with small caps pinned up with be a much better trade than the one described here.
Private Equity to the Rescue of Banks? [View article]
They can't come 'riding to the rescue' until there is some transparency to their books with respect to the valuation of their assets. For example, WaMu has $55 billion in Pay Option ARMs, $60 billion in Home Equity Lines and $16 billion in Subprime. Performing, these loans types might fetch 10 cents to 50 cents on the dollar on a great day! Non-performing or as REO, you may get 30 to 50 cents of the new value of the underlying collateral. That would means WaMu is looking at a write down of $10s of millions yet to come. With the housing market continuing to fall and defaults now surging in Alt-A, Jumbo Prime and second mortgages, there is not enough clarity. Most of these banks that hold such large amount of mortgage paper are deep underwater if you were to sell assets to pay off liabilities and 'settle up'. I highly doubt if any private equity will be as foolish as BofA was with CFC or as foolish as TPG was with WaMu for years to come. Just my opinion.
This information is by and large inaccurate and much worse in reality.
This is because Zillow uses original purchase price to compute the negative equity despite larger percentages having refi'd after the fact or added a second mortgage. The problem is much larger than depicted here.
Housing Crisis Likely to Wipe Out Two Decades of Family-Earned Wealth [View article]
Great analysis. I love the chart. It really shows that despite housing prices dropping the most in history over an period of time, that due to a total lack of financing, the spread between home prices and affordability is as wide as ever.
Why I am Selling Thornburg Mortgage [View article]
Should have stayed short. Still should. I have been short since July and plan on riding it a bit further. I covered American Home at 48 cents. That is about 125% downside left!
Ambac, MBIA Finally Get the Rating They Deserve [View article]
You are right...it is all crooked. As housing prices continue to fall over the next couple of years, all ABP will be taken down with it. These guys do not have the money to pay even a remotely small portion of their potential liabilities. MBIA and ABK are the IMB and CFC of the insurance world. Worthless. AGO is next. How they skated through all of this is amazing.
Good story but housing prices will fall further that you suspect, especially in jumbo bubble states like CA. Since we have lost all the exotic programs and are back to pre 1990's mortgage lending, you have to apply historic prices multiples and the best is the 100-year 3-4 time household income. In CA, were are still sitting at 7-10 times household income in most zip codes.
1- NAR Existing Home Sales Report...30%+ were bank owned REO which sold. Not a strong report at all. 2- New Home Sales reported at the time of contract signing and with rates up sharply over the past month or so, and jumbo money over 8%, you will have a much higher fall out rate. 3- Fannie/Freddie jumbos will not help people to refi out of bad loans. It ill only help someone with a large downpayment who makes alot of money buy a home. That person did not need help in the first place. Plus, AGency jumbo loans will be priced much higher than standard conforming. 4- OFHEO news will not do much. They won't spend it all at once and they will look to buy distressed AAA closed loan assets to dilute the bad stuff happening with their portfolios. 5- Mortgage rates should not decrease...we have an inflation problem. Every move the Fed has made since last year when they began has spiked weakened the dollar and spiked mortgage rates. Why would that change. In a perfect world, as rate cuts stimulate economy, Bond yields/mortgage rate rise.
Go back to the drawing board on your thesis. You are dead wrong.
July Nonfarm Payrolls: +163K vs. consensus +100K, prior +64K (revised from 80K). Unemployment rate 8.3% vs. consensus 8.2%, 8.2% previous. [View news story]
THE MARKET IS NOT PREPARED FOR HAVING THE FED PUT TAKEN OUT OF THE MARKET IN ONE FELL SWOOP.
THIS COULD BE BIG TROUBLE FOR STOCKS THIS MONTH.
Fannie and Freddie's Unbelievable Proposals [View article]
Option ARMs: The Banking Backdrop of 2009 [View article]
Promising Regional Banks For Patient Investors - Barron's [View article]
U.S. Smallcap in Demand [View article]
U.S. Smallcap in Demand [View article]
when the funding really dries up over the next few MONTHS.
U.S. Smallcap in Demand [View article]
Private Equity to the Rescue of Banks? [View article]
Today's Negative-Equity Update [View article]
This is because Zillow uses original purchase price to compute the negative equity despite larger percentages having refi'd after the fact or added a second mortgage. The problem is much larger than depicted here.
Housing Crisis Likely to Wipe Out Two Decades of Family-Earned Wealth [View article]
Assured Guaranty: Vulnerable to Continued Bond Market Troubles [View article]
Why I am Selling Thornburg Mortgage [View article]
Ambac, MBIA Finally Get the Rating They Deserve [View article]
Ten Comments on Housing [View article]
Homebuilding on an Uptrend? [View article]
2- New Home Sales reported at the time of contract signing and with rates up sharply over the past month or so, and jumbo money over 8%, you will have a much higher fall out rate.
3- Fannie/Freddie jumbos will not help people to refi out of bad loans. It ill only help someone with a large downpayment who makes alot of money buy a home. That person did not need help in the first place. Plus, AGency jumbo loans will be priced much higher than standard conforming.
4- OFHEO news will not do much. They won't spend it all at once and they will look to buy distressed AAA closed loan assets to dilute the bad stuff happening with their portfolios.
5- Mortgage rates should not decrease...we have an inflation problem. Every move the Fed has made since last year when they began has spiked weakened the dollar and spiked mortgage rates. Why would that change. In a perfect world, as rate cuts stimulate economy, Bond yields/mortgage rate rise.
Go back to the drawing board on your thesis. You are dead wrong.