Exsangination Spreads To Alt-A
Drums we keep banging...
Repeat the "Happy Daze" pollyanna party mantras, no spillover or bleed into: economy, financial or banking. Alrighty then.
And remember subprime woes will NOT effect Alt-A or Prime lending because those loans are squeaky clean. Sure thing.
Oh yeah baby, this party is just getting started. From Bloomberg with a little sprinkle of Nattering love...
American Home Mortgage Investment, the 20th largest Alt-A lender, whose shares stopped trading yesterday after it disclosed a cash shortage...
Today said it's it may have to liquidate because "very significant margin calls" from its creditors made it unable to fund new loans.
Yesterday $300M in loans went unfunded, today another $450 to 500 Million unfunded.
Bids from investors for American Home's loans began falling earlier this year after defaults on U.S. subprime mortgages rose.
Investors were concerned that the lax underwriting standards and growing fraud might presage rising defaults on Alt-A loans.
IndyMac Bancorp #2 independent U.S. mortgage lender and the largest Alt-A lender in 2006:
Q2 net income -57%; revenue -21% as more borrowers fell behind on payments and it made less from selling loans to investors.
Loans and other assets that have stopped paying interest more than quadrupled to $516 M from a year earlier.
The company was forced to repurchase $219 M of loans from investors because borrowers missed payments, up from $48 M a year earlier.
Defaults on Alt-A mortgages packaged into bonds last year have begun to outpace subprime loans, Citigroup Inc. analysts reported this month.
The three-month constant default rate for 2006 Alt-A hybrid adjustable-rate mortgages is 2.3%, compared with 2.2% for subprime ARMs.
Jeremy Grantham, the money manager who oversees $150 billion as chairman of Grantham, Mayo, Van Otterloo & Co.:
credit-market declines may force as many as half of all hedge funds to close in the next five years.
The loss of investors appetite for risk also may cause at least one global bank and "one or two" of the largest private- equity firms to go out of business.
Hedge funds are "piling on risk of different kinds and presenting it as outperformance. An overload of debt will sink at least a couple very large firms.
These guys are in a big hole. Most of the money going into private equity today will be a total loss." Grantham didn't say which firms may be imperiled.
Repeat the "Happy Daze" pollyanna party mantras, no spillover or bleed into: economy, financial or banking. Alrighty then.
And remember subprime woes will NOT effect Alt-A or Prime lending because those loans are squeaky clean. Sure thing.
Oh yeah baby, this party is just getting started. From Bloomberg with a little sprinkle of Nattering love...
American Home Mortgage Investment, the 20th largest Alt-A lender, whose shares stopped trading yesterday after it disclosed a cash shortage...
Today said it's it may have to liquidate because "very significant margin calls" from its creditors made it unable to fund new loans.
Yesterday $300M in loans went unfunded, today another $450 to 500 Million unfunded.
Bids from investors for American Home's loans began falling earlier this year after defaults on U.S. subprime mortgages rose.
Investors were concerned that the lax underwriting standards and growing fraud might presage rising defaults on Alt-A loans.
IndyMac Bancorp #2 independent U.S. mortgage lender and the largest Alt-A lender in 2006:
Q2 net income -57%; revenue -21% as more borrowers fell behind on payments and it made less from selling loans to investors.
Loans and other assets that have stopped paying interest more than quadrupled to $516 M from a year earlier.
The company was forced to repurchase $219 M of loans from investors because borrowers missed payments, up from $48 M a year earlier.
Defaults on Alt-A mortgages packaged into bonds last year have begun to outpace subprime loans, Citigroup Inc. analysts reported this month.
The three-month constant default rate for 2006 Alt-A hybrid adjustable-rate mortgages is 2.3%, compared with 2.2% for subprime ARMs.
Jeremy Grantham, the money manager who oversees $150 billion as chairman of Grantham, Mayo, Van Otterloo & Co.:
credit-market declines may force as many as half of all hedge funds to close in the next five years.
The loss of investors appetite for risk also may cause at least one global bank and "one or two" of the largest private- equity firms to go out of business.
Hedge funds are "piling on risk of different kinds and presenting it as outperformance. An overload of debt will sink at least a couple very large firms.
These guys are in a big hole. Most of the money going into private equity today will be a total loss." Grantham didn't say which firms may be imperiled.
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