Long US stockS

E*Trade's Mortgage Snafu: Will It Prompt a Sale?

Amen!!


On Apr 30 12:26 AM Hirendu Vaishnav wrote:

> There is a bit of fear-mongering in this article which is ignorant
> at the least and fradulent at the worst.
>
> Let us break down the $2.243B in delinquent loans:
> HELOC delinquencies $724M -- Current Provisions $818.6M
> 1-4Family delinquencies $1469M -- Current Provisions $308.8M
>
> HELOC delinquecies are down this quarter. Yet they are provisioned
> more than total delinquencies even assuming 100% loss on all delinquencies.
>
>
> 1-4 Familly loans; which are mostly 1st liens, usually have a much
> reduced loss rate depending on the LTV and recovery rates. Yet E*Trade
> is provisioned assuming at 21% loss on that. Delinquency rates on
> 1-4 Family is likely to come down in future, though charge-off will
> be at current level for one more quarter.
>
> So in my opinion, using $2.243B deliquencies without mentioning over-provisions
> and improving future delinquencies is dishonest.
>
> If anything, E*Trade seems to have finally put all loan problems
> behind and it seems it is suffering now from too much provisions
> intended to push the stock price lower so that private placement
> of equity offerings can be done at sweetheart of stock prices. <br/>
>
> In other words, a great company that will be taken over by unscrupulous
> means, aided and abetted by people like this author.