Mr Mortgage's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/109351/comments http://seekingalpha.com/article/110368-fannie-and-freddie-s-unbelievable-proposals?source=feed#comment-353816 353816 Mon, 12 Jan 2009 16:59:18 -0500 http://seekingalpha.com/article/113063-option-arms-the-banking-backdrop-of-2009?source=feed#comment-348125 348125
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]]> http://seekingalpha.com/article/103516-promising-regional-banks-for-patient-investors-barron-s?source=feed#comment-296552 296552 Sun, 02 Nov 2008 16:14:47 -0500 http://seekingalpha.com/article/94019-u-s-smallcap-in-demand?source=feed#comment-245945 245945 Fri, 05 Sep 2008 01:27:39 -0400 http://seekingalpha.com/article/94019-u-s-smallcap-in-demand?source=feed#comment-245941 245941
when the funding really dries up over the next few MONTHS. ]]> Fri, 05 Sep 2008 01:12:37 -0400
when the funding really dries up over the next few MONTHS. ]]> http://seekingalpha.com/article/94019-u-s-smallcap-in-demand?source=feed#comment-245940 245940 Fri, 05 Sep 2008 01:11:25 -0400 http://seekingalpha.com/article/93112-private-equity-to-the-rescue-of-banks?source=feed#comment-241315 241315 Thu, 28 Aug 2008 23:20:27 -0400 http://seekingalpha.com/article/91505-today-s-negative-equity-update?source=feed#comment-234974 234974
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. ]]> Wed, 20 Aug 2008 13:53:49 -0400
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. ]]> http://seekingalpha.com/article/88767-housing-crisis-likely-to-wipe-out-two-decades-of-family-earned-wealth?source=feed#comment-222059 222059 Mon, 04 Aug 2008 08:18:18 -0400 http://seekingalpha.com/article/70245-assured-guaranty-vulnerable-to-continued-bond-market-troubles?source=feed#comment-164400 164400 Thu, 08 May 2008 17:09:26 -0400 http://seekingalpha.com/article/71920-why-i-am-selling-thornburg-mortgage?source=feed#comment-148766 148766 Fri, 11 Apr 2008 03:00:40 -0400 http://seekingalpha.com/article/71624-ambac-mbia-finally-get-the-rating-they-deserve?source=feed#comment-147310 147310 Tue, 08 Apr 2008 20:30:48 -0400 http://seekingalpha.com/article/71291-ten-comments-on-housing?source=feed#comment-146021 146021 Sun, 06 Apr 2008 14:30:07 -0400 http://seekingalpha.com/article/70968-homebuilding-on-an-uptrend?source=feed#comment-135761 135761 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. ]]> Thu, 03 Apr 2008 02:14:59 -0400 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. ]]> http://seekingalpha.com/article/70968-homebuilding-on-an-uptrend?source=feed#comment-135760 135760
Now, with only 30-yr fixed, 15-yr fixed and selective 5/1 product, the same $1 million home requires 20 cash down and a household income of $150 - $175k. Inventories are up 500+%.

Essentially, we have 95% fewer buyers to buy 5x the number of homes for sale. And that does not include REO inventory. Remember, only 3-5% of homes sell to a 3rd party in foreclosure. The banks buy the rest back and add them to REO. ]]> Thu, 03 Apr 2008 02:04:42 -0400
Now, with only 30-yr fixed, 15-yr fixed and selective 5/1 product, the same $1 million home requires 20 cash down and a household income of $150 - $175k. Inventories are up 500+%.

Essentially, we have 95% fewer buyers to buy 5x the number of homes for sale. And that does not include REO inventory. Remember, only 3-5% of homes sell to a 3rd party in foreclosure. The banks buy the rest back and add them to REO. ]]> http://seekingalpha.com/article/70937-stock-valuations-on-the-rise?source=feed#comment-135753 135753 Thu, 03 Apr 2008 01:41:08 -0400 http://seekingalpha.com/article/70962-the-ben-is-my-friend-trade?source=feed#comment-135657 135657 Wed, 02 Apr 2008 22:10:21 -0400 http://seekingalpha.com/article/70962-the-ben-is-my-friend-trade?source=feed#comment-135654 135654 Wed, 02 Apr 2008 22:08:46 -0400 http://seekingalpha.com/article/70245-assured-guaranty-vulnerable-to-continued-bond-market-troubles?source=feed#comment-133559 133559
4 hours ago
Why California Isn't Buying Warren Buffett's Bond Insurance

Warren Buffett is getting two very different messages from the capitals of two of the nation's most influential states: New York and California.
Late last year, with the encouragement of New York's top insurance regulator Eric Dinallo, Buffett's Berkshire Hathaway launched a new bond insurer. Dinallo asked Berkshire to get into the game because he was worried that the financial troubles facing established bond insurers like Ambac [ABK 5.81 -0.24 (-3.97%) ] and MBIA [MBI 11.99 -0.51 (-4.08%) ] would make it harder for cities and towns to find willing buyers for their municipal bonds.

If bond buyers can't trust the insurance company backing the bonds, they'll demand higher yields to compensate for the increased risk they won't get their money back. Higher yields may be good for the buyers, but they increase the cost of borrowing money for perpetually cash-strapped municipalities.

Buffett says he'd been thinking about getting into bond insurance for years, but didn't because he thought the scramble to write new policies had driven down prices so low they didn't cover the risk being taken on by the insurers.

With Ambac and MBIA facing big losses in the wake of the sub-prime collapse, Buffett sees an opportunity to use Berkshire's strong financial position to back muni bonds, at what he sees as an appropriate (higher) price.

California's Treasurer Bill Lockyer sees it differently. He sees decades of history in which almost no muni bonds have fallen victim to a default. (MBIA and Ambac got in trouble not because they guaranteed munis, but because they branched into riskier areas, backing bundles of other loans, including those notorious sub-primes.)

Lockyer argues that the main reason muni bond buyers think insurance is needed at all in most cases is because the big credit ratings agencies don't evaluate state and local government debt the same way as corporate debt, artificially lowering credit ratings for those governments.

He's now proposing that some big California pension funds start their own muni bond insurer to compete with Berkshire, and tells Bloomberg and Reuters he won't do any business with Buffett, accusing Berkshire of supporting the two-tiered credit rating system.

While not exactly endorsing the corporate-government split, Berkshire's top insurance executive Ajit Jain did acknowledge in prepared testimony for a hearing by the House Financial Services Committee that "if the rating agencies level the playing field in terms of how they rate municipal versus corporate obligations, there will be little need for a financial guaranty insurance marketplace as we know it, because much municipal debt on a stand alone basis may not require the enhancement of the insurance to manage the costs of that debt."

That's one of the reasons Jain said he's "very concerned about the long-term viability of this business (bond insurance) in general and for us in particular."

Perhaps the bigger disagreement between Berkshire and California is on how risky muni bonds really are, an assessment that helps determine the 'right' price for bond insurance.

In his testimony, Jain argued against the 'no risk' view of muni bonds"

"There is hardly a sufficient history to conclude that there is a zero chance of loss in this business, although that is the assessment that gets reflected in the pricing. While there have been few municipal defaults in the past fifty years, Jefferson County, Alabama and Vajello, California, both having received publicity lately about possible defaults on their debt obligations, could just be the tip of the iceberg as municipalities are coming under increasingly unfavorable economic conditions, including reduced real-estate and sales-generated tax revenues and underfunded future pension and healthcare costs."

If California does gets its way, and the credit agencies do change their ratings system for government debt, Berkshire's "tip-toe" into the bond insurance business may not last all that long, leaving the state a clearer field to take on the very small, but potentially catastrophic, risk of widespread muni bond defaults.
]]> Sun, 30 Mar 2008 01:51:30 -0400
4 hours ago
Why California Isn't Buying Warren Buffett's Bond Insurance

Warren Buffett is getting two very different messages from the capitals of two of the nation's most influential states: New York and California.
Late last year, with the encouragement of New York's top insurance regulator Eric Dinallo, Buffett's Berkshire Hathaway launched a new bond insurer. Dinallo asked Berkshire to get into the game because he was worried that the financial troubles facing established bond insurers like Ambac [ABK 5.81 -0.24 (-3.97%) ] and MBIA [MBI 11.99 -0.51 (-4.08%) ] would make it harder for cities and towns to find willing buyers for their municipal bonds.

If bond buyers can't trust the insurance company backing the bonds, they'll demand higher yields to compensate for the increased risk they won't get their money back. Higher yields may be good for the buyers, but they increase the cost of borrowing money for perpetually cash-strapped municipalities.

Buffett says he'd been thinking about getting into bond insurance for years, but didn't because he thought the scramble to write new policies had driven down prices so low they didn't cover the risk being taken on by the insurers.

With Ambac and MBIA facing big losses in the wake of the sub-prime collapse, Buffett sees an opportunity to use Berkshire's strong financial position to back muni bonds, at what he sees as an appropriate (higher) price.

California's Treasurer Bill Lockyer sees it differently. He sees decades of history in which almost no muni bonds have fallen victim to a default. (MBIA and Ambac got in trouble not because they guaranteed munis, but because they branched into riskier areas, backing bundles of other loans, including those notorious sub-primes.)

Lockyer argues that the main reason muni bond buyers think insurance is needed at all in most cases is because the big credit ratings agencies don't evaluate state and local government debt the same way as corporate debt, artificially lowering credit ratings for those governments.

He's now proposing that some big California pension funds start their own muni bond insurer to compete with Berkshire, and tells Bloomberg and Reuters he won't do any business with Buffett, accusing Berkshire of supporting the two-tiered credit rating system.

While not exactly endorsing the corporate-government split, Berkshire's top insurance executive Ajit Jain did acknowledge in prepared testimony for a hearing by the House Financial Services Committee that "if the rating agencies level the playing field in terms of how they rate municipal versus corporate obligations, there will be little need for a financial guaranty insurance marketplace as we know it, because much municipal debt on a stand alone basis may not require the enhancement of the insurance to manage the costs of that debt."

That's one of the reasons Jain said he's "very concerned about the long-term viability of this business (bond insurance) in general and for us in particular."

Perhaps the bigger disagreement between Berkshire and California is on how risky muni bonds really are, an assessment that helps determine the 'right' price for bond insurance.

In his testimony, Jain argued against the 'no risk' view of muni bonds"

"There is hardly a sufficient history to conclude that there is a zero chance of loss in this business, although that is the assessment that gets reflected in the pricing. While there have been few municipal defaults in the past fifty years, Jefferson County, Alabama and Vajello, California, both having received publicity lately about possible defaults on their debt obligations, could just be the tip of the iceberg as municipalities are coming under increasingly unfavorable economic conditions, including reduced real-estate and sales-generated tax revenues and underfunded future pension and healthcare costs."

If California does gets its way, and the credit agencies do change their ratings system for government debt, Berkshire's "tip-toe" into the bond insurance business may not last all that long, leaving the state a clearer field to take on the very small, but potentially catastrophic, risk of widespread muni bond defaults.
]]> http://seekingalpha.com/article/70368-meredith-whitney-threatens-severe-deflation-for-your-portfolio?source=feed#comment-133433 133433
Somehow over the years, the markets have lost that forward looking insight and it's all one big fast money day trade. This is likely due to the excessive use of leverage, a long period of low volatility and most Wall St big money traders being too young to remember times other than the good times.]]> Sat, 29 Mar 2008 13:08:40 -0400
Somehow over the years, the markets have lost that forward looking insight and it's all one big fast money day trade. This is likely due to the excessive use of leverage, a long period of low volatility and most Wall St big money traders being too young to remember times other than the good times.]]> http://seekingalpha.com/article/70368-meredith-whitney-threatens-severe-deflation-for-your-portfolio?source=feed#comment-133432 133432 Sat, 29 Mar 2008 13:02:36 -0400 http://seekingalpha.com/article/70298-lehman-brothers-is-looking-sick-again?source=feed#comment-133386 133386 Sat, 29 Mar 2008 10:46:46 -0400 http://seekingalpha.com/article/70368-meredith-whitney-threatens-severe-deflation-for-your-portfolio?source=feed#comment-133385 133385
And, sell that WAMU position. I have been in the national mortgage arean based in CA for 20 years. WAMU does indeed have more bad debt that their $340 Billion asset base. What you forget, as do so many, is the majority of WAMU's loans are Pay Option ARMs, which are 100% toxic garbage where 80% make the minimum monthly payment and accrue negative amortization. Neg-am and falling home values in States such as CA, where WAMU is highly concentrated is a fatal combination. The upcoming 'Pay Option ARM Implosion' will make the 'Subprime Implosion' look like a good day. On top of the couple hundred million of these, most of the remaining balance sheet waste is Home Equity Loans (2nd mortgage), which are worth about 5 cents on the dollar right now and finally, the 3rd largest category is subprime.

WAMU or National City will be the first big-named bank to fail. Yes, they will get bailed out, but $2 a share will look generous.
]]> Sat, 29 Mar 2008 10:44:43 -0400
And, sell that WAMU position. I have been in the national mortgage arean based in CA for 20 years. WAMU does indeed have more bad debt that their $340 Billion asset base. What you forget, as do so many, is the majority of WAMU's loans are Pay Option ARMs, which are 100% toxic garbage where 80% make the minimum monthly payment and accrue negative amortization. Neg-am and falling home values in States such as CA, where WAMU is highly concentrated is a fatal combination. The upcoming 'Pay Option ARM Implosion' will make the 'Subprime Implosion' look like a good day. On top of the couple hundred million of these, most of the remaining balance sheet waste is Home Equity Loans (2nd mortgage), which are worth about 5 cents on the dollar right now and finally, the 3rd largest category is subprime.

WAMU or National City will be the first big-named bank to fail. Yes, they will get bailed out, but $2 a share will look generous.
]]> http://seekingalpha.com/article/70368-meredith-whitney-threatens-severe-deflation-for-your-portfolio?source=feed#comment-133377 133377
Didn't you hear Paulsen last week??? I will summarize. 'Because you keep submitting very crappy collateral to our new facility, we want to look under your kimono like we do all other banks who borrow Fed money. We do not trust you. Also, to all banks, please cut your dividend and raise cash now. You will need it and not be able to 3 months from now.'

The gig is up pumpers...you lied for years and now you are paying the price.

By the way, the worst pumper of all, CNBC, put Whitney on after hours so as not to crash the markets while they were open. They only allow pumpers on during the day. On days that look really bad or at the end of a quarter, they put Cramer on all day to try to effect the markets. He just sits there and speculates and lies trying to orchestrate a short squeeze. If it were not for short squeezes, he probably would never find a stock that rises, because until someone whispered in his ear in Aug, he swore up and down all this was contained and Downey Savings was worth $100, Countrywide $45, IndyMac $40 and WAMu $45.

You need to quit following the pumper crowd and get the bell around your neck off. You may make some money. Reality is here. You lost. ]]> Sat, 29 Mar 2008 10:16:33 -0400
Didn't you hear Paulsen last week??? I will summarize. 'Because you keep submitting very crappy collateral to our new facility, we want to look under your kimono like we do all other banks who borrow Fed money. We do not trust you. Also, to all banks, please cut your dividend and raise cash now. You will need it and not be able to 3 months from now.'

The gig is up pumpers...you lied for years and now you are paying the price.

By the way, the worst pumper of all, CNBC, put Whitney on after hours so as not to crash the markets while they were open. They only allow pumpers on during the day. On days that look really bad or at the end of a quarter, they put Cramer on all day to try to effect the markets. He just sits there and speculates and lies trying to orchestrate a short squeeze. If it were not for short squeezes, he probably would never find a stock that rises, because until someone whispered in his ear in Aug, he swore up and down all this was contained and Downey Savings was worth $100, Countrywide $45, IndyMac $40 and WAMu $45.

You need to quit following the pumper crowd and get the bell around your neck off. You may make some money. Reality is here. You lost. ]]> http://seekingalpha.com/article/70298-lehman-brothers-is-looking-sick-again?source=feed#comment-132813 132813
BELOW ARE THE FACTS ABOUT LEHMAN'S EARNINGS. THESE ARE NOT RUMORS, BUT FACTS.

www.portfolio.com/news...]]> Fri, 28 Mar 2008 01:46:32 -0400
BELOW ARE THE FACTS ABOUT LEHMAN'S EARNINGS. THESE ARE NOT RUMORS, BUT FACTS.

www.portfolio.com/news...]]> http://seekingalpha.com/article/70245-assured-guaranty-vulnerable-to-continued-bond-market-troubles?source=feed#comment-132768 132768
Here is a great story about the insurers...

EXCERPT

NONE of the firms writing this crap have the capital behind them to survive any significant phalanx of claims. They can't because the fiction that underlay this entire business model was that you could buy insurance against default for less than the actual risk premium over risk-free return. In short, the model was predicated on the ability to find a "free lunch."


Now, however, the claims are coming fast and furious and the truth is coming out - the capital simply is not there, and the insurance these people bought is in fact worthless!

www.tickerforum.org/cg...]]> Thu, 27 Mar 2008 22:47:51 -0400
Here is a great story about the insurers...

EXCERPT

NONE of the firms writing this crap have the capital behind them to survive any significant phalanx of claims. They can't because the fiction that underlay this entire business model was that you could buy insurance against default for less than the actual risk premium over risk-free return. In short, the model was predicated on the ability to find a "free lunch."


Now, however, the claims are coming fast and furious and the truth is coming out - the capital simply is not there, and the insurance these people bought is in fact worthless!

www.tickerforum.org/cg...]]> http://seekingalpha.com/article/68476-what-are-brokers-exposures-to-carlyle-capital?source=feed#comment-126178 126178
The operative phrase is ..."Based on available information,". Just wait until the Pay Options, ALT-A, Prime and Home Equity loans start popping. They already are starting here in CA. As a matter of fact, in CA 66% of all new foreclosure activity are Notices of Default, which are the 90-day lates (preforeclosure). This means a wave is coming and the lip is just here.

Also, the impact from the 'negative equity effect' is just starting to be realized.

By the sounds of this report, they are still holding to their guns that this is still a 'subprime thing'. They should know better. ]]> Thu, 13 Mar 2008 17:44:19 -0400
The operative phrase is ..."Based on available information,". Just wait until the Pay Options, ALT-A, Prime and Home Equity loans start popping. They already are starting here in CA. As a matter of fact, in CA 66% of all new foreclosure activity are Notices of Default, which are the 90-day lates (preforeclosure). This means a wave is coming and the lip is just here.

Also, the impact from the 'negative equity effect' is just starting to be realized.

By the sounds of this report, they are still holding to their guns that this is still a 'subprime thing'. They should know better. ]]> http://seekingalpha.com/article/66748-thornburg-mortgage-inc-attack-of-the-verbs?source=feed#comment-122680 122680 Wed, 05 Mar 2008 20:18:58 -0500 http://seekingalpha.com/article/67104-thornburg-s-a-huge-bargain-after-monday-s-crash?source=feed#comment-122679 122679 Wed, 05 Mar 2008 20:16:16 -0500 http://seekingalpha.com/article/67104-thornburg-s-a-huge-bargain-after-monday-s-crash?source=feed#comment-121888 121888
QUIT TRYING TO LEAD SHEEPLE TO THE SLAUGHTER. ]]> Tue, 04 Mar 2008 09:24:39 -0500
QUIT TRYING TO LEAD SHEEPLE TO THE SLAUGHTER. ]]>