Smalltownbanker

Worst Housing Number in Decades: What Is the Wall Street Media Smoking?

The fact is that the numbers 4 years ago were seriously out of whack with reality of genuine demand. We were building to speculatory demand and not real demand for homes. The articles you quote are looking for positive evidence of a bottom or the beginning of recovery whichever way you want to spin it. Increasing housing starts are an indication of an increase in new loans building specifically for a buyer who has not found what they want in a foreclosure or market resale.

As a mortgage banker for a Community Bank I am speaking with people almost everyday who are preparing to build their own new home. This is positive. Yes we still have a lot of pain to go through but I will not and never will succomb to the idiots who have no perspective on the Great Depression, my parents lived through it, since our situation today is no where close to what they went through.

I am as troubled as anyone by the current and just past administration's handling of this mess but think they are too stupid to get much done in a positive vein anyway. As long as they are fumbling around up in Washington this will be a protracted recession of historical proportions but I see no evidence pointing to depression.

Where the Meltdown Began (According to Jamie Dimon)

Dimon is quick to forget that his own firm jumped headlong into subprime lending, offered reduced documentation stated income loans long before Fannie Mae and Freddie Mac, provided a wide range of interest only products and was the nations #1 home equity lender pushing borrowers to increase their lines of credit as late as early 2008. If I am not mistaken his derivative exposure is somewhere in the 180 Billion range.

His recent tirades against wholesale lending to brokers are extremely hollow for those who have done business with them over the last 20 years. In the late 1990's into this decade they were the nation's #1 wholesale mortgage lender. In my opinion Jamie Dimon should remember the old saying about 4 pointing back at you when you point the finger at someone else.

Cramer's Mad Money - Wells Fargo Changes the Game (4/909)

I knew there was some reason I never listen to anything Cramer has to say...

Living in the American Mafia State

What do you think? Should they reward you for paying late?


On Mar 30 05:23 AM castlegard05 wrote:

> I've always thought of Bank issued Credit Cards being the new Mafia
> - the way they can ruin your credit if you don't pay on time reminds
> me of Mafia like operations.

JPMorgan: When I Say Insolvent, I Really Mean Insolvent

Other evidence and speculation:

January 16 - Elimination of wholesale mortgage lending, the backbone of their mortgage origination platform for decades.
January 19th - letters sent to HELOC customers freezing lines of credit prohibiting any future draws stating that BPO's are showing 45-50% reductions in collateral value.

Next - freezing of credit card lines of credit and increasing minimum payment requirements.

Who will be the first major bank to break from the pack and increase their prime rate independent of Fed Rate changes?

Messages from the Large Regional Banks

JPM, once the #1 Home Equity lender in the United States, sent letters nationwide this week freezing existing HELOC's even on some of their best customers. No more draws with letters estimating the current value of their customers homes were down as much as 45-50% from the most recent appraisal. Tightening another big notch in the belt. Credit card limits will be next.

Bank of America Facing Mortgage Servicing Losses

Don't bet on Ross. More than 75% of American Home Mortgages' servicing portfolio in February 2007 was Option ARM product. I think he bought the weakest part of the company.

Fed Pushes Housing into Stronger Hands

Ban building? Which communist Nation are you guys from. If I own 20 acres and want to build a house on it why should you or some government agency have the right to tell me I cannot build. Get real. New housing starts that continue are in areas not impacted by the oversupply.

I am in an area that is overbuilt but new custome homes are still being built. I even have employees who are currently having homes built. Most new home starts are in markets not impacted by the oversupply.

The speculators that I see buying are buying with cash, most of which probably used to be in the stock market. They have taken that cash and feel that they can purchase good homes at great prices, hold them for a few years and make some money. Instead of decrying this practice you should be celebrating it as the makings of a potential bottom to prices. The foreclosure is not driving values down, the inventory is. If the inventory is purchased and becomes rental housing it will help to slow the fall of home prices.

I think your entire premise for this article is flawed.

The Danger in Financial Stocks in 2009

As a small town banker on the mortgage side I don't know a great deal about derivatives. I do know what their purpose is. My concerns are more direct. The credit card money market is getting tight. I spoke with the owner of a local tire store today who told me that my 800 credit scores would not get me credit to buy tires today through GE Money Bank where he goes to finance the purchases of customers who can't pay cash.

How long will it be before the credit lines start getting cut off that are already in existence for example on my credit cards, HELOC, etc?

Was the flow of credit improved by EESA/TARP or was the collapse just prolonged at an extraordinary cost?

Will any of the mortgage modifications done to date keep the buyers in the homes or will they all fail resulting in significantly higher losses than would have been incurred without intervention?

Are we fixing anything or just prolonging the pain?

How Will We Finance the MBS Fix?

I think the lack of knowledge is with the authors. It is amazing that two of you couldn't do better than this. They are purchasing the securities, not the servicing rights to the loans. No one has suggested that the government will begin servicing loans.

Investment Banks, Rumors, the Trough, and Fair Value Accounting

Serious reform is needed in mortgage securitization.

On Dec 10 07:18 AM User 316598 wrote:

> "Mark to Market" has been unnecessarily devestating. Your sarcastic
> tone makes it clear that you support the concept, but it has distorted
> "true" values by creating a devaluing atmosphere of fear. There is
> currently no sane market for the securities. One reason the "market"
> for mortgage securities has collapsed is that any purchaser fears
> that they may have to "mark" the value due to fear rather than intrinsic
> value. There is no good distinction inthe market between a "good"
> performing mortgage related security and a bad one. This drives the
> "market" price lower, which in turn ratifies the fear. The negative
> feedback loop is devestating to financial firms holding these securities.

Unintended Consequences - Fast Money Recap (10/6/08)

I have flipped past it before but never listened for more than a few seconds. I won't even buy a used car from someone who yells on TV.

This morning on Bloomberg I listened to a few minutes of analysis on why BofA needed to raise capital. Not one of them mentioned the $8.4 Billion predatory lending settlement they just entered into to get out of the Countrywide lawsuits. They haven't impressed me much either lately.

Did the FDIC Sabotage WaMu's Management and Erode Investor Confidence?

WAMU was the #1 cause of WAMU's failure. Option ARM's markteted broadly to the entire mortgage market was foolish but WAMU, Wachovia, American Home Mortgage and others pushed these products like they were the Holy Grail of Mortgages. The product was very dangerous in the market segments they pushed it too and was doomed to failure from Day one. I have no sympathy for any of the lenders who sold this product to anyone other than the savvy investment property owner with 5+ years of experience as a landlord.

Buying a Bank? My Vote is for JPMorgan Chase

Primary risk lies in HELOC and Credit Card exposure and we have not yet seen the impact of the losses they will take there.

JPMorgan: Buying the Stock, Not the Sector

Some comments on JP Morgan in the mortgage industry.

First: One of the highest risk areas of mortgage lending right now is Home Equity Lending. JP Morgan Chase has more exposure in this area than any other lender as the leader in this product for many years, especially after the Bank One merger.

Secondly: Chase has always purchased a much higher percentage of their loans through the broker/wholesale/corre... channel than through direct origination and the deterioration of quality in this part of their business has led them to 1. eliminate wholesale sub-prime 2. eliminate wholesale Home Equity Lending 3. eliminate non-conforming Jumbo lending These were defensive measures taken after the damage was done. These actions have dramatically reduced their ability to generate new revenues from mortgages while increasing runoff from their existing portfolio. At the same time they have significantly reduced their sales and support force on the direct lending side because of an ongoing refusal to fix a broken technical origination platform.

JP Morgan Chase has been a major player in US mortgage lending for a long, long time and they are moving away now because even their tight controls were not able to protect them from the virus which started this problem which was "stated income and No Doc" mortgages, not sub-prime. The problem just manifested when the virus was spread to the sub-prime channel as common sense would dictate to anyone with a brain.

While retail mortgage is not a huge factor for JPM, the mortgage servicing and wholesale operations have always been integral and will have a significant impact that has not yet shown up in their public numbers.

I spent over 5 years on the inside of this operration and very little has changed.