dapperdan19's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/180544/comments http://seekingalpha.com/article/82545-plotting-the-april-case-shiller-housing-numbers?source=feed#comment-192338 192338
One issue we're going to have moving forward is that DU 7.0 has really tightened some of the underwriting standards for conforming loans. Fannie Mae has gotten really really tight. I look at the mix of loans that I'm doing now versus last year and it's a total transformation from all Fannie/Freddie product to right now I've got a mix of 100% government loans (FHA, VA, USDA). Every single loan I'm doing right now is government.

Believe it or not, I'm doing FHA loans for people with excellent credit. 764 midscore type of paper going to FHA because Fannie/Freddie, with the LTV cutback in declining markets, is effectively only going to 85% LTV/CLTV in markets deemed "declining markets".

For those lamenting/moralizing about credit worthiness, all I can say is that the credit quality going through and getting approved for the past 9 months is the best credit quality I've ever seen in my lifetime. Anyone doing loans right now will tell you the same thing. It's much tougher to get an approval, but the benefit is that overall credit quality is extremely high right now.]]> Wed, 25 Jun 2008 01:16:25 -0400
One issue we're going to have moving forward is that DU 7.0 has really tightened some of the underwriting standards for conforming loans. Fannie Mae has gotten really really tight. I look at the mix of loans that I'm doing now versus last year and it's a total transformation from all Fannie/Freddie product to right now I've got a mix of 100% government loans (FHA, VA, USDA). Every single loan I'm doing right now is government.

Believe it or not, I'm doing FHA loans for people with excellent credit. 764 midscore type of paper going to FHA because Fannie/Freddie, with the LTV cutback in declining markets, is effectively only going to 85% LTV/CLTV in markets deemed "declining markets".

For those lamenting/moralizing about credit worthiness, all I can say is that the credit quality going through and getting approved for the past 9 months is the best credit quality I've ever seen in my lifetime. Anyone doing loans right now will tell you the same thing. It's much tougher to get an approval, but the benefit is that overall credit quality is extremely high right now.]]> http://seekingalpha.com/article/82173-the-non-crash-of-2008?source=feed#comment-189763 189763 Sat, 21 Jun 2008 13:14:26 -0400 http://seekingalpha.com/article/80438-preparing-for-the-fall?source=feed#comment-180694 180694 Fri, 06 Jun 2008 22:02:50 -0400 http://seekingalpha.com/article/79462-do-banks-indicate-the-stock-market-s-direction?source=feed#comment-177147 177147
The other problem I see for banks is that there are so few loan categories still remaining, that all the banks are chasing after the same borrowers. The upside is that the loans being done right now are very high quality loans. The downside is that the business has become extremely commoditized. When you combine the commoditization of the industry and lower loan volumes (especially if rates are rising, refinances are extremely sensitive right now to the slightest uptick in rates. Next weeks mortgage applications report should be interesting) I just can't see the margins coming back for the lending industry for at least another 18 months.
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The other problem I see for banks is that there are so few loan categories still remaining, that all the banks are chasing after the same borrowers. The upside is that the loans being done right now are very high quality loans. The downside is that the business has become extremely commoditized. When you combine the commoditization of the industry and lower loan volumes (especially if rates are rising, refinances are extremely sensitive right now to the slightest uptick in rates. Next weeks mortgage applications report should be interesting) I just can't see the margins coming back for the lending industry for at least another 18 months.
]]> http://seekingalpha.com/article/76567-the-worst-is-over-for-financials-really?source=feed#comment-165598 165598
One example, the way the Fannie Mae Automated Underwriting engines are set up, there is very little doubt that the maximum tightening in that Underwriting engine will occur during Q3 of this year, through September. So, if you're looking for the mortgage markets to ease up before then in the conforming market, I think you're dreaming.

On the positive side, we are seeing spreads tighten between the 10 year treasury and 30 year FNMA. Also, we're seeing Jumbos being priced much more attractively. The credit markets are improving, incrementally.

Also, as far as bank stocks are concerned, they've all become commoditized. Compare the rate sheets today versus, say, 15 to 18 months ago. 15-18 months ago, a typical mortgage lender (I'm looking at an old MortgageIT rate sheet) was 9 pages. Today, it is 4 pages, and page 1 is a directory of the entire company. There is no value-added remaining in bank stocks. When every bank pushes to become a Hudson, there are no margins left. The value of Hudson was that it was Hudson when most of the other banks were trying to be a WAMU, Countrywide,Indymac.
]]> Sat, 10 May 2008 19:32:06 -0400
One example, the way the Fannie Mae Automated Underwriting engines are set up, there is very little doubt that the maximum tightening in that Underwriting engine will occur during Q3 of this year, through September. So, if you're looking for the mortgage markets to ease up before then in the conforming market, I think you're dreaming.

On the positive side, we are seeing spreads tighten between the 10 year treasury and 30 year FNMA. Also, we're seeing Jumbos being priced much more attractively. The credit markets are improving, incrementally.

Also, as far as bank stocks are concerned, they've all become commoditized. Compare the rate sheets today versus, say, 15 to 18 months ago. 15-18 months ago, a typical mortgage lender (I'm looking at an old MortgageIT rate sheet) was 9 pages. Today, it is 4 pages, and page 1 is a directory of the entire company. There is no value-added remaining in bank stocks. When every bank pushes to become a Hudson, there are no margins left. The value of Hudson was that it was Hudson when most of the other banks were trying to be a WAMU, Countrywide,Indymac.
]]> http://seekingalpha.com/article/75542-housing-data-crybabies-and-deceivers?source=feed#comment-161483 161483
Step 1 - Underwriting standards need to stop getting tighter. That has not happened yet. Fannie Mae's underwriting engine has a built-in feedback loop (an econometric model for underwriting scoring). At this point, there is really no getting around the fact that this model is scheduled to continue to tighten through the 3rd quarter of this year. Also, adding fuel to this part of the argument, is the fact that first time homebuyer programs through Fannie Mae and Freddie Mac (My Community and Home Possible) are no longer going to allow 100% LTV financing. The two factors above will continue to be a negative overhang on the real estate market. Hopefully, by the 4th quarter of this year, financing standards will stop tightening, and will simply remain tight - at least they will have stabilized.

Step 2: Roughly coincident with the stabilizing of the conforming markets, mentioned above, we will see the falling off of the bulk of the ARM Resets, just looking at the charts of ARM Resets, this should occur in December of 2008.

Step 3: Unfortunately, steps 1 and 2 merely set the financial preconditions for recovery. There is a time lag between establishing those preconditions and when recovery actually takes place. During this time lag is when, in my opinion, two events will take place. 1) the new homeowners (from say 2005, 2006, 2007) who have been doing there best to hang in there and ride out the storm, barely making their payments, working two and three jobs to make ends-meets, at this point those that just can't take anymore will throw in the towel. This is the classic capitulation stage. It will occur, and will probably occur during the first six months of 2009.

Step 4: Recovery. With the financial decks finally cleared, we'll see a bottom in the real estate market formed in the 2nd half of 2009. Given the seasonal nature of real estate, my guess would be the bottom will be formed between September 2009 and March 2010.]]> Sun, 04 May 2008 11:20:32 -0400
Step 1 - Underwriting standards need to stop getting tighter. That has not happened yet. Fannie Mae's underwriting engine has a built-in feedback loop (an econometric model for underwriting scoring). At this point, there is really no getting around the fact that this model is scheduled to continue to tighten through the 3rd quarter of this year. Also, adding fuel to this part of the argument, is the fact that first time homebuyer programs through Fannie Mae and Freddie Mac (My Community and Home Possible) are no longer going to allow 100% LTV financing. The two factors above will continue to be a negative overhang on the real estate market. Hopefully, by the 4th quarter of this year, financing standards will stop tightening, and will simply remain tight - at least they will have stabilized.

Step 2: Roughly coincident with the stabilizing of the conforming markets, mentioned above, we will see the falling off of the bulk of the ARM Resets, just looking at the charts of ARM Resets, this should occur in December of 2008.

Step 3: Unfortunately, steps 1 and 2 merely set the financial preconditions for recovery. There is a time lag between establishing those preconditions and when recovery actually takes place. During this time lag is when, in my opinion, two events will take place. 1) the new homeowners (from say 2005, 2006, 2007) who have been doing there best to hang in there and ride out the storm, barely making their payments, working two and three jobs to make ends-meets, at this point those that just can't take anymore will throw in the towel. This is the classic capitulation stage. It will occur, and will probably occur during the first six months of 2009.

Step 4: Recovery. With the financial decks finally cleared, we'll see a bottom in the real estate market formed in the 2nd half of 2009. Given the seasonal nature of real estate, my guess would be the bottom will be formed between September 2009 and March 2010.]]> http://seekingalpha.com/article/75542-housing-data-crybabies-and-deceivers?source=feed#comment-161474 161474 Re statistics of the housing market, just an idea regarding the creation of a statistic that may compliment the Case-Shiller index. How about a diffusion index using the MSAs comparing the percentage of MSAs deemed to be in "declining markets" and subject to the 5% LTV haircut by Fannie Mae and Freddie Mac versus the total of MSAs. This seems to be an objective measure of the severity of the total number of declining markets. If the NAR people are pooh-poohing the Case-Shiller data, maybe this would be a broader look at the problem.]]> Sun, 04 May 2008 10:59:15 -0400 Re statistics of the housing market, just an idea regarding the creation of a statistic that may compliment the Case-Shiller index. How about a diffusion index using the MSAs comparing the percentage of MSAs deemed to be in "declining markets" and subject to the 5% LTV haircut by Fannie Mae and Freddie Mac versus the total of MSAs. This seems to be an objective measure of the severity of the total number of declining markets. If the NAR people are pooh-poohing the Case-Shiller data, maybe this would be a broader look at the problem.]]>