Alt A, Foreclosures, Dumping, Cell Phones, Salons & Talking Apes
Fed says some borrowers are clearly experiencing "significant financial and personal challenges" and that subprime sector consolidation "has likely not yet run its course". Do ya think??
Along those lines... Lenders are increasingly refusing to lend to homebuyers who can't make a down payment of more than 5%, especially if they won't document their income.
Until recently such borrowers qualified for so-called Alt A mortgages, which rank between prime and subprime in terms of risk. Last year the category accounted for about 20% of the $3 trillion of U.S.
Consumers borrowed 100% of their home's value on about 18% of Alt A loans made last year, according to Bear Stearns, the largest mortgage-bond underwriter.
Another 16% had loan-to-value ratios above 90% as well as limited documentation.
The Nattering One hears... jingle keys, jingle keys, jingle all the way....(when the borrower mails the keys back to the lender and walks after pulling out all the equity...)
Late payments of at least 60 days and defaults on Alt A mortgages have risen about as fast as on subprime ones, to about 2.4%, according to bond analysts at UBS AG.
Lehman Brothers analysts said in a research note:
If home prices remain FLAT this year and next, mortgage defaults could total $225 billion, creating a real risk of pulling down the broader housing market and weighing on borrowers with good credit,
"Our expectations of defaults at about 1.5 million to 2 million units are fairly significant in a soft housing market"...
And thats in a FLAT market, the Nattering One smells a minimum DROP in prices of 10% this year and over 3 Million foreclosures...
This means LESS BUYERS folks and with building inventories, LOWER PRICES.... speaking of which KB Homes profit cut 84%... (see today's other post for the gory details)...
Meanwhile, the largest U.S. mortgage lender, Countrywide Financial (CFC), warned that sub prime turmoil may hurt near term profit, sending its stock down 2.7 %... but it gets better...
Countrywide's "worst single origination year was 2000, for which the cumulative foreclosure rate was 9.89%," Sandor Samuels, the company's executive managing director, said,
"We believe that declining home prices and other factors ... may produce foreclosures numbers on 2006 originations approaching or exceeding those on loans originated in 2000,"
The company believes that there was overcapacity in the mortgage market in 2004... do ya think?
The Nattering One muses, would that have led to ARTIFICIALLY HIGH HOME PRICES through an artifically high number of buyers and speculation made easy???
But it gets even better... really it does as we save the best for last... Talk about high confidence in NO SPILLOVER into PRIME LENDERS or the general economy...
Perhaps the FED should take Angelo Mozilo, chairman and chief executive of Countrywide Financial at his word or at his ACTIONS...
as Angie dumped another 46K shares at $35.63, for proceeds of $1.64 M. That brings his total dumpage since Feb. 1 to 928,000 shares for $36.9 M.
Word from Seeking Alpha is that this latest disgorgement was a sort-of margin call: his tanning salon demanded payment.
Speaking of ostentatious and conspicuous consumer spending of housing and stock market equity at Starbuck's, salons and on cell phones...
Motorola not buying Palm... because "overall sales, profitability and operating cash flow to be substantially below prior guidance."...
due to "lower than anticipated sales and operating earnings at the company's Mobile Devices business"... guess I won't be getting that RAZR with my manicure after all.
Cut to the Nattering One on his knees, pounding his fists into the sand, as the surf rolls in, screaming as Taylor did: "You Maniacs! You blew it up! Ah, damn you! God damn you all to hell!" The End, fade to black...
Along those lines... Lenders are increasingly refusing to lend to homebuyers who can't make a down payment of more than 5%, especially if they won't document their income.
Until recently such borrowers qualified for so-called Alt A mortgages, which rank between prime and subprime in terms of risk. Last year the category accounted for about 20% of the $3 trillion of U.S.
Consumers borrowed 100% of their home's value on about 18% of Alt A loans made last year, according to Bear Stearns, the largest mortgage-bond underwriter.
Another 16% had loan-to-value ratios above 90% as well as limited documentation.
The Nattering One hears... jingle keys, jingle keys, jingle all the way....(when the borrower mails the keys back to the lender and walks after pulling out all the equity...)
Late payments of at least 60 days and defaults on Alt A mortgages have risen about as fast as on subprime ones, to about 2.4%, according to bond analysts at UBS AG.
Lehman Brothers analysts said in a research note:
If home prices remain FLAT this year and next, mortgage defaults could total $225 billion, creating a real risk of pulling down the broader housing market and weighing on borrowers with good credit,
"Our expectations of defaults at about 1.5 million to 2 million units are fairly significant in a soft housing market"...
And thats in a FLAT market, the Nattering One smells a minimum DROP in prices of 10% this year and over 3 Million foreclosures...
This means LESS BUYERS folks and with building inventories, LOWER PRICES.... speaking of which KB Homes profit cut 84%... (see today's other post for the gory details)...
Meanwhile, the largest U.S. mortgage lender, Countrywide Financial (CFC), warned that sub prime turmoil may hurt near term profit, sending its stock down 2.7 %... but it gets better...
Countrywide's "worst single origination year was 2000, for which the cumulative foreclosure rate was 9.89%," Sandor Samuels, the company's executive managing director, said,
"We believe that declining home prices and other factors ... may produce foreclosures numbers on 2006 originations approaching or exceeding those on loans originated in 2000,"
The company believes that there was overcapacity in the mortgage market in 2004... do ya think?
The Nattering One muses, would that have led to ARTIFICIALLY HIGH HOME PRICES through an artifically high number of buyers and speculation made easy???
But it gets even better... really it does as we save the best for last... Talk about high confidence in NO SPILLOVER into PRIME LENDERS or the general economy...
Perhaps the FED should take Angelo Mozilo, chairman and chief executive of Countrywide Financial at his word or at his ACTIONS...
as Angie dumped another 46K shares at $35.63, for proceeds of $1.64 M. That brings his total dumpage since Feb. 1 to 928,000 shares for $36.9 M.
Word from Seeking Alpha is that this latest disgorgement was a sort-of margin call: his tanning salon demanded payment.
Speaking of ostentatious and conspicuous consumer spending of housing and stock market equity at Starbuck's, salons and on cell phones...
Motorola not buying Palm... because "overall sales, profitability and operating cash flow to be substantially below prior guidance."...
due to "lower than anticipated sales and operating earnings at the company's Mobile Devices business"... guess I won't be getting that RAZR with my manicure after all.
Cut to the Nattering One on his knees, pounding his fists into the sand, as the surf rolls in, screaming as Taylor did: "You Maniacs! You blew it up! Ah, damn you! God damn you all to hell!" The End, fade to black...
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