Kudlow and his brethren should be eating a big serving of crow - but of course in our millisecond attention nation, no one is held accountable for the cr@p they spew.
"Vice Chairman Bruce Toll, sold millions of dollars of stock during the class period."
Insider sales have been at very high levels in quite a few industries for the past year. Yet those same companies buy back stock with profits. It is a pattern worth thinking about.
If your investments make money, you are a genius. If they don't, it's someone else's fault and you can sue them.
No, when the president of a company knowingly makes false statements about the company's financial health, while selling millions of dollars of his own shares using company money on buy-backs to keep the stock prices high, then you can sue them.
Kudlow has an interesting take on markets. He seems to think it's unpatriotic for people to take the position that an asset is overpriced. As if everything has a predisposition to perpetually appreciate.
No, when the president of a company knowingly makes false statements about the company's financial health, while selling millions of dollars of his own shares using company money on buy-backs to keep the stock prices high, then you can sue them
Legislation requires that insider's transactions be posted. Twas. Maybe for the brain challenged (hey it could happen!) we need to see these postings every time guys like Toll make an appearance. The striped convict suit optional, but where the convict number was, the shares sold in the last month or two, in flashing florescent orange. This is so doable.
So the lawyers are going to be busy, but did the suit against Fannie work for the Pittsburgh Teachers? (Who actually paid who?) Is Fannie back to responsible corporate governance (what?)?
Toll Brothers' Execs -- A Fine Example Of Corporate Crooks of America
Toll Brothers' Scam, aka stock, has been my number one short position for the past 6 months (I was early, as always) among the Housing and Finance related companies and I have commented on it several times during this period (see one commentary below, for example, and you will see that I had already concluded then that he was lying).
My skills at identifying Corporate Crooks is well-honed by now and it took me watching two interviews each by Mr. Robert Toll, one of the two Toll brothers and the CEO, and Joel Rassman, the CFO, to conclude that they are genuine Crooks and they were purposely misleading the public to pump-and-dump their holdings of the companys Scam.
The Scam, which has been going down sharply for the past 3½ months, went down another 14% today when these execs lies about the future demand for their homes could no longer be held back from the public. The two Crooks again appeared on the TV today and what a difference in their demeanor and the lack of former confidence about the business in 2006 that they exuded only two months ago.
Vast majority of America's public corporations are run by Crooks who are in the BUSINESS of selling their company's Scam. Dont feed the Crooks by being a Scam Lover. If you got the guts and, most importantly, the skills, be a Scam Hater! It would be good for your character.
So the lawyers are going to be busy, but did the suit against Fannie work for the Pittsburgh Teachers? (Who actually paid who?) Is Fannie back to responsible corporate governance (what?)?
Point taken. You expect a company president to take a positive spin about his own company, but if he said anything substantive that proved to be false, he should be held to account.
Like most of us around here, I do think the business world is overrun by optimism bias. AKA: a buy recommendation from a CEO appearing on CNBC should be taken with a grain of salt...
Right, for now we need to quickly tattoo all fraudsters on the forehead so that it will be easy to chase them when time will come. Tell your congressman.
Ah, yes, the old "who will tatoo the tatoo artists?" problem.
I suggest that we organize a world-wide Be Rude Like Ivy Day for investors. All holders of brokerage accounts will have to chain themselves to their televisions and sing "We Shall Overcome the Kool-Aid" until either the fraud stops or they get arrested.
Ummm one thing... if Kudlow was ever to eat crow, it wouldn't be today. Check out the Dow - that's all you'll hear from Larry... And he'll be crowing alright, just not eating.
I hate to be negative (or do I mean positive?) but now-a-days, whenever a stock falls 20% or so, these law suits start falling from the sky. Basically, these firms file crap loads of suits, hoping a few will pay off.
I'm not defending Toll, just noting that the vast majority of these suits go nowhere.
Thanks Bob...lots of 'over-reach' but even tons more just feedin the lawyers.
Aren't these the guys that draft the legislation...that gets them work later?
I think I'm missin some of my anti-depressants today.
I had some Auto body work done this week- same place I have gone before. Spoke to the owner. He told me 'Business stinks' and the economy has slowed perceptively compared to 2 years ago.
Says costs for materials are soaring.
Also said two local Auto dealerships-one in Vernon and Manchester CT are 'in trouble'. One sells Ford- the other Lincoln Mercury/Mazda (he said the Mazda's sell the Ford products 'no' .
With the DOW at an all time high- I wonder if there is some disconnect here between expectations and reality.
Americans must suffer the consequences of a depotic govt. These are my comments from yesterday (to a private list):
Here are the prescient words of the greatest thinker on the subject of democracy, Tocqueville, and its road to despotism (written 130 years ago):
I seek to trace the novel features under which despotism may appear in the world. The first thing that strikes the observation is an innumerable multitude of men all equal and alike, incessantly endeavoring to procure the petty and paltry pleasures with which they glut their lives. Each of them, living apart, is as a stranger to the fate of all the rest his children and his private friends constitute to him the whole of mankind; as for the rest of his fellow-citizens, he is close to them, but he sees them not - he touches them, but he feels them not; he exists but in himself and for himself alone; and if his kindred still remain to him, he may be said at any rate to have lost his country. Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications, and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent, if, like that authority, its object was to prepare men for manhood; but it seeks on the contrary to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness: it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances what remains, but to spare them all the care of thinking and all the trouble of living? Thus it every day renders the exercise of the free agency of man less useful and less frequent; it circumscribes the will within a narrower range, and gradually robs a man of all the uses of himself. The principle of equality has prepared men for these things: it has predisposed men to endure them, and oftentimes to look on them as benefits.
Yes, the benefits of a despotic govt.! Only a despotic govt. takes over the functions formerly left to parents and families, even under the worst dictators. American adults have been infantalized for a reason.
With the DOW at an all time high- I wonder if there is some disconnect here between expectations and reality.
Skytrekker
Wonder no mo, that all time is nominal, that all time high is also an all time high for the top 1% share of the market, that value is actually shrinking due to LBOs taking public companies private...that disconnection merely one facet of the growing disparity.
Not if they start dumping that $400B war chest into equities like has been suggested
Now, isn't that war chest already in equities? That story a while back didn't make a whole lot of sense to me.
I find it hard to believe they actually have piles of dollars siting around in some account. If they move $400B into something, they have to move it out of something else...
Cal, Interesting link, but it seems to miss the key underlying issue - affordability in most bubbly expensive markets. That doesn't get fixed by and new fancy risk measurement tools. Only thing that corrects that problem is RAPID wage inflation or price declines. Inflation won't help since most of the mortgages are ARMs so they will rocket with inflation, until a CAP. Unless we are talking hyper-inflation...
Freddie Mac, Washington Mutual Offer 22 Billion in Subprime Help
Freddie Mac today committed to buy as much as $20 billion in subprime mortgages, while Washington Mutual Inc. offered to refinance $2 billion in loans as the U.S. mortgage finance industry made its biggest gesture yet to help borrowers with poor credit histories avoid losing their homes.
How will a loan "work-out", where rates are lowered, be arranged for the securitized loans? Many or even most, were. Will the bondholders agree to a lower coupon and the servicer make deals?
I can't imagine how this could work - tanta, any ideas????
In a statement, the homebuilder said it expects net loss from continuing operations of between 34 cents and 38 cents a share for the quarter. It had previously expected results to range from break-even to a loss of 10 cents a share. The results will include between $130 million and $140 million in land-impairment charges. Net new orders fell 21% to 8,499 for the quarter. The company blamed a "challenging" housing market for the shortfall.
barely,
I'm just an amatuer, but I think the refinance will pay off the balance on the current mortgage, therefore eliminating it and all obligations under it. I don't think the resales of the original mortgage impact the mortgagee's ability to pay off the balance and terminate the loan.
WOW are these guys who brought this suite in the dark ages or something. The Securities act of 1934 NO LONGER is law. It was replaced in 1995 by the Private Securities Litigation Reform Act. I wonder who their attorney was? Is he in for a rude awakening or what.
lama, Lawmakers are urging lenders to do work-outs, the topic I am referring to, work-outs on existing mortgages to avert mass foreclosures. I can't see any MBS going back to the borrower to do a work-out. and these loans are mostly bundled in securities.
You're suggesting a prepay. I wonder where the fees and penalties will come from. I don't see the MBS forgiving those either.
How about $100's of millions in stock sales while pumping and pumping the stock and being so oblivious to the housing market bubble.
He went on TV in Latter part of 2005 and said something about crushing the shorts...very questionable activity. Then about a week later unloaded over $100 Million in stock.
Affordability is the entire issue here. Dopes were allowed to buy a house with a pulse and no chance of paying it back which artificially inflated home prices. Home prices in bubble marklets need to drop 30-50% to get it back to affordable levels.
Noone in govt or this unethical REIC will admit it.
The median price of homes went up 143& from 2000-2005 and median incomes went up 21.5% over the same period.
How can this stupidty be allowed to continue?
We are working hard to return mortgage to historical levels of profitability through our strategy of building our prime, retail origination business,'' Baker continued.Accordingly, we have made the decision to no longer underwrite, process and fund nonprime loans. Our nonprime business, which represents less than two percent of our mortgage loan production, has resulted in a reasonable level of repurchase activity for which we have adequate reserves to cover estimated remaining losses. However, reduced investor appetite for this product has diminished gain-on-sale margins drastically; therefore, we believe market risk no longer justifies the modest potential rewards and believe it is better to service retail customer needs through broker relationships. In contrast, our Alt-A business, which represented 20 percent of our first-lien production in first quarter 2007, has prime-type credit characteristics despite the non-standard loan structures, with an average FICO of over 715 and continues to price appropriately. The majority of our Alt-A production is securitized and to-date, no residual or credit support structures have been retained and we have not seen any material repurchase activity from these loans.''
Can anyone explain to me how WB, DSL and the like be earnings something like 7.4% on their total mortgage loan portfolio ?
Seems everyone prime could have refi'd at well under 6% - zero points. So that would imply that all the Alt-A and subprime loans are at much,much higher rates than 7%. Does this makes sense ? I still can't believe someone as large as WB is making over 7% on the hundreds of billions of residential RE loans.
Fees and penalties for prepayments....good point. I didn't think of that. At the neighborhood thrift, you could negotiate with a human. That option doesn't seem so available in the aftermarket.
Actually, I suspect a great deal of the arm-twisting going on behind closed doors right now has to do with "modify" versus "refinance." Some MBS may just have to eat some modifications, I suspect, although obviously the push from Wall Street will be to force these to refi (which adds costs to a consumer who probably doesn't really need them). As far as prepayment penalties? Oh, believe me, lenders will be waiving those in these hardship cases. Dick Syron, for one, doesn't sound like he's in the mood to direct Freddie to buy a refi of some toxic subprime ARM and include a prepayment penalty in the loan amount. Pop your popcorn, folks, this'll get entertaining in a fairly sick way, as everybody lines up to see who eats what expense.
"WOW are these guys who brought this suite in the dark ages or something. The Securities act of 1934 NO LONGER is law. It was replaced in 1995 by the Private Securities Litigation Reform Act. I wonder who their attorney was? Is he in for a rude awakening or what."
Renter,
That's Bill Lerach's firm you're talking about. They are now the biggest Securities Class Action plaintiff firm in the world. They know what they're doing.
Bob_in_MA is right however. These firms bring lots of suits. This one may go nowhere, or it could end up settling for hundreds of millions. It won't be resolved either way for years.
I'm surprised the lawyers didn't throw in this quote from Bob Toll in 2005:
"We'll reach the point Europe reached 20 years ago, where families pay 45% of their income on housing and married couples have to live with their parents for years before they can afford houses," he says. "Prices will keep going up in double digits for years."
This is off topic, but I think I know where many of the recently laid off construction workers are presently working.
I just returned from Lake Charles, Louisiana which is on the Gulf Coast near the Texas border. Plastic sheets are still covering holes in some roofs in Lake Charles and surrounding areas and there is still other hurricane related work to be done. Ill bet reconstruction is still going gangbusters from East Texas to the Alabama line.
Also, I saw only a couple of for sale signs in the 4 days I was there.
See NVR Inc. (NVR) for homebuilder famous for buybacks and insider sales? Any comments from the board on this homebuilder, trading at over 3X book, and 3X its peers, mind you?
If you want to sue somebody for making false and misleading statements, start with our so-called "media" in this country. THEY are the ones that have been pimping this housing market as a miracle for the last 4 years and are still constantly calling the bottom.
Yesterday lending giants Fannie Mae and Freddie Mac announced the development of new loans to help borrowers at risk of default. Edward Leamer, director of the UCLA Anderson Forecast, said the move comes a little too late.
We should have had some kind of system in place a year or two ago to prevent people from getting in over their heads, Leamer said. Buyers assume (that) if they can qualify for the loan, they can afford the product.
Failing loans remain a small segment of the overall mortgage market in Southern California, Leamer noted. Not enough homes are going to be foreclosed on for the economy to go into the tank, but it will be tough for individuals caught in this trap.
At Union Bank of California, senior economist Keitaro Matsuda agreed that foreclosures pose no threat to the economy. As long as economic and job growth continue, I don't think it is going to be a serious issue, he said.
A few interesting items from the BKUNA release. First there was this comment on the state of the secondary market:
"Early in the quarter we were able to lock in the pricing for those loans to be sold into the secondary market and achieved a gain on sale of approximately 100 basis points. While our option ARM loans continue to be well received due to our credit quality and low prepayment rates, the prices in the secondary market for these types of loans deteriorated during the latter part of the quarter. Adjusting for current prices, our gain on sale would have been in the range of 40 to 50 basis points. While we cannot predict future price levels, historically, loan originators have adjusted their cost to originate loans to increase the gain on sale, and we have seen those adjustments beginning to occur."
Negative amortization in the quarter totalled $46MM or slightly more than 125% of pretax income. Neg am as a percent of Option Arm loans increased from 1.9% of the portfolio to 2.5%.
Tanta, here's one for you. They claim a weighted average LTV "after mortgage insurance" of 73%. I'll confess to never having seen LTV quoted in a "after MI" fashion. Does that mean the real LTV is something like 93% and the boys in Milwaukee own the first 20% loss position?
The linked Kudlow article contains the statement, "... Why not apply the same tax laws that have benefited home owners to stock market investors and home buyers? If this were to come about, even more wealth would be created in America, ...".
I have always been utterly mystified as to how people can think that bidding up the prices of assets without regard to the income streams (real or imputable) they generate somehow produces "wealth".
True wealth resides in possession of assets that generate real or imputable income, and is proportional to that income.
For the first twenty-odd years of my association with Japan, all I heard there regarding real estate was that no matter how much you paid, someone else would always be ready to pay more. Some Japanese liked to say that Japan's financial system was based not on a "gold standard" but on a "land standard" (土地本位制 tochi hon'isei). But by the late '90s, the watchword had become "never buy land that doesn't flow cash!" (金を生まない不動産を買うな - kane wo umanai fudousan wo kau na!), and prices kept sinking until they reached levels actually justified by the incomes land could actually provide.
Asia tanking and yen looking stronger tonight. That could set off a few sell triggers. Tomorrow may be an intersting day indeed, with Pulte, FHN and SOV all reporting woes. God know I couldn't take too many more days like today or the past few days of goldilocks for that matter
Syron is the CEO of Freddie Mac. He is not the Mortgage Finance Czar of the U.S. with the unilateral ability to make outfits like Wall Street and the REITs and the bottom-feeders behave themselves. His job is to set a limit on Freddie's risk.
My question is: there appear to be two, dichotomous worlds of risk out there.
One, the world that gets the ink in these comments: chiselers on relief with moustaches and ponchos making fraudulent statements on loan applications.
Two, the world as seen through the filter of securitized mortgages: DSL gaining on bad news, an inverted yield curve (clearly part of the solution to Greenspan's conundrum was the predominance of securitized mortgages at the long end of the yield curve), etc.
I am really, really interested in the risk-management techniques in the second world. They're all quantitative, which makes them hard to describe, but worth description.
As an orthopedic surgeon once said, "The solution to pollution is dilution." But there's more to it.
The third exists in Mr. Syron's corporate lair, the GSE's.
In that world, there is no risk. Oh, sure, the stockholders might, just might, get their hair mussed, but with all that government backing...well, there is no risk.
And I understand that one.
It is ironic, that Tanta's brilliantly (emphasis brilliantly) written piece on the GSE's construction of pass-through bond describes a situation in which all their activities exist in a world without risk.
Weakening sales tax collections may foreshadow a potential downturn in U.S. state budgets, which have been riding high in recent years on a strong economy and generally robust tax receipts, a report said on Thursday.
Their research showed an amazing development. Between 1995 and the final quarter of 2005, equity withdrawal grew to 8 percent of the economy from 1 percent -- a whopping 800 percent increase. And as of the fourth quarter of 2005, when total MEW had reached its peak, it stood at $1 trillion annualized.
Also revealing was the way the Fed broke down the withdrawal data into three categories: housing turnover (the equity released when a homeowner sells a house and often plows the capital back into a new home) home-equity extraction, and cash-out refinancing.
This breakdown was helpful because it is the latter two categories that are most likely to drive spending. Goldman Sachs termed these two elements ``active MEW.''
On that score as well, the Fed data showed an amazing expansion. In 1995, active MEW had been $37 billion. By the fourth quarter of 2005, it soared to $532 billion annualized, a 17-fold expansion.
Brian, I just got around to looking at that BKUNA PR this morning. I must really love you guys.
There's so much irrelevant generalized smoke in here, I kept expecting to see reference to the CEO once winning his high school's Elk's Club Outstanding Essay Contest in 1973.
Nobody I know ever reports "after MI" LTVs. For starters, there's an actual name for that, if you wish to discuss the subject, and it's called "exposure." I do not understand why someone without an intent to mislead would fail to use the term "exposure" rather than "LTV after the adjustment for coverage."
You can't back into the actual LTV without knowing what the MI coverage amount is, which is the problem here.
The average FICO score of the entire residential portfolio at March 31, 2007, was 710, and including the adjustment for coverage of mortgage insurance, the average LTV at inception was 70%. The average FICO score of the option-ARM portfolio at March 31, 2007, was 709, and the average LTV after the adjustment for coverage of mortgage insurance was 73%.
Let us assume an original LTV of 90% on an Option ARM. We'll just assume the lender gets 25% coverage. The MI's maximum claim is going to be based on the original insured loan amount, not the future capitalized balance. So the lender's exposure with original balance and original LTV is 67.5% (75% of 90%).
But since the loan is neg am, the real exposure is higher than that. I don't see the balance cap indicated here, so let's assume they're conservative and it's 110% of original balance. That means a $90,000 loan for a $100,000 property could have a maximum loan amount of $99,000. The MI maximum claim is still $22,500 (25% of $90,000), so the potential lender exposure is 76.5% instead of 67.5%.
If you're doing a neg am and you want to keep your exposure in the mid-sixties, you'd have to require a higher coverage percent than 25% to get there.
Applied to BKUNA, that's all just playing with examples, because they don't tell you what the original uninsured LTV is, what the coverage percent is, and what the balance cap is.
Honestly, I'd run like hell from these people just for that reason.
Now, isn't that war chest already in equities? That story a while back didn't make a whole lot of sense to me. - Max
Not from what I understand - they have just started transferring the reserves around... from PBoC to the regional & state owned banks & also to this new entity. They don't have an experienced staff together yet to make intelligent buys.
My guess is they have made baby steps into the market but that is about it. Look for late 2007 & beyond for their real weight to be felt.
However there is no law it all has to be invested in the US. China exports almost as much to Europe now.
Lotsa euros to invest too.
I find it hard to believe they actually have piles of dollars siting around in some account. If they move $400B into something, they have to move it out of something else... - Max
My guess gov't bonds & agency debt.
Probably try to turnover & replace some of the agency first & see how that goes.
It will take time but a lot of what they hold on the gov't side is pretty short... at least that's what I read... but they buy so damned much one would think they have to be long too - just to manage the volume.
If the $400B goes into equities instead of MBS liquidity won't be 'dead'... just reincarnated.
Cal,
I've held the opinion that property tax increases might be another nail in the coffin for people already financially extended. This problem might reach even into the population that took out traditional mortgages in the last few years.
The feds have been pushing back responsibility to states who push back to municipalities. We haven't felt it yet due to the robust economy.
Smart money would bet on the BOJ, but someday they're going to lose.
I watch the yen like hawk. The euro? Who cares. So what if my wine costs a little more.
The day the BoJ & PboC throw in the towel is the day we all look back at as the day the 'prosperity ended'... like the Crash of '29 and The Great Depression... it will not have been the cause but it will be the milestone we all remember.
I would be interested in reading an intelligent journalistic account of the Japanese economy, 1980-present. Does anyone know of one?
Here at this link is a good overview of the Florida land boom in the 1920's, which I think qualifies as the worst real estate crash in the last 107 years, and ahrbinger of the 1929 stock crash. (Was there a worse USA land value collapse in the 1800's?)
cs said: "...Here at this link is a good overview of the Florida land boom in the 1920's, which I think qualifies as the worst real estate crash in the last 107 years, and harbinger of the 1929 stock crash. (Was there a worse USA land value collapse in the 1800's?)..."
Hard data that old is pretty sketchy, but I wouldn't be surprised. What we know as the "Great Depression" (1929-33) wasn't even called "Great" at the time, because the ones from the mid- to late-1800s were of comparable magnitude.
cs,
I think there were deep real estate (then called "Land") collapses in parts of the former Confederate states after The Civil War. Boy, that's reaching for comparatives, isn't it?
BKUNA is my #1 short position. I'm writing something longer, but you lucky guys get the first draft.
Unless otherwise stated, all quotes are from the 8K sec filing, and all comparison are between Q1 2007 and Q4 2006.
81% were stated income/no-doc/low doc loans
85% of new loans were negative-amortization option ARMS
The total portfolio of neg-am loans have had their outstanding loan balances increase 2.5%. This is an increase from the previous quarter from 1.9%, and from the previous year of 0.7%.
Claims of low default rates are just beyond belief. Florida has the highest third highest foreclosure rate in the nation, behind only Colorado and Nevada, yet the bank claims that Of the 31,700 residential loan files in our portfolio, 216 are in foreclosure.
Thats 1 in 146 loans.
That number just has no credibility.
Just in February 2007, one in 382 Florida homes fell into foreclosure. Thats not the total number in foreclosure, just the number of new foreclosures just in one month. And the 1 in 382 number includes houses that have no mortgage at all, and those bought a long time ago sitting on tons of equity. If the rate stays the same (more likely it will rise, plus Feb is a short month) it implies that 3.1% of Florida homes will fall into foreclosure in 2007. If you exclude homes that have more than 50% equity or are fully owned, this 1 in 30 rate will is more likely 1 in 20. Yet BKUNA claims 1 in 146!
Total deposits increased 26% to $6.8 billion at March 31, 2007
Non-interest-bearing deposits were $368 million at March 31, 2007, down 7%
So the free money they get from customer checking accounts is down, while the number of CD's they sell at 5+% is way up.
Non performing loans that the company will actually admit to rose from .33% in the previous quarter to .53% in Q1 2007. Thats about a 65% increase in bad loans in just one quarter.
I like this gem:
"Residential loan net charge-offs were $77,384."
How credible is that to a company with total loans outstanding of about $11 billion doing the riskiest types of loans in the riskiest residential RE market in the USA?
Something in the report I dont understand is in the listing of "non-performing assets" is "Non-accrual loans." This increased QtoQ from 44.7M to 70.4M. What are these?
I noticed REOs on the balance sheet increased in just one quarter about 8-fold from 400K to 3.1M. Yet the allowance for loan losses only increased $2.6 million. That quarter.
The company did not release a cash flow chart in its report, but cash decreased from 267M to 202M QtoQ. Loans held for sale decreased from 117M to 29M. Presumably all of these sold loans boosted cash, yet cash on hand plunged.
The company had net income of 24.4M, but the amount of interest added to neg-am loans was 46.3 million.
As for the loans that Bank United is willing to do, I checked out Broker Outpost. Here is an interesting couple of messages that show BKUNA is will to offer a loan for closing within a week to a 660 FICO (subprime by most measures), 95% LTV, stated income, and make an exception to the rule that the buyer gets the 5% downpayment from his own funds.
gk1024 61 Posts Posted - 11/14/2006 : 10:59:10 AM
Purchase
O/O LA: $403,750 95% LTV SFR Stated SE POA
Let me know. Most cut-offs for this LTV are 680. I want to get this file off my desk! Thanks
I can do this for you stated to 95%, 1 loan, with a 660 score. I can also get it closed for you in a week. I offer the most competitive margins and can pay up to 3.75 on my ysp.
John Palma Account Executive BankUnited 631-327-0349
Property in AZ, does that matter?
Posted - 11/14/2006 : 11:19:25 AM
John,
Can you offer this on NOO purchases with no seasoning of down payment? 90% LTV?
Originally posted by jpalma
I can do this for you stated to 95%, 1 loan, with a 660 score. I can also get it closed for you in a week. I offer the most competitive margins and can pay up to 3.75 on my ysp.
John Palma Account Executive BankUnited 631-327-0349
They usually require 2 months seasoning, but it's an exception that can be made.
John Palma Account Executive BankUnited 631-327-0349
Heres another one where a BKUNA rep offer to do a 90% LTV ARM for a Las Vegas house to a non owner.
The whole "adjusted for MI" is BS. A 75% LTV no MI and a 95% LTV with 20% MI do not mean the bank has the same exposure.
The 95% LT(claimed)V, with FL prices dropping and a 6% realtor commission means the "owners" are best off walking away unless they are really in love with the house. The 75% has much lower risk because of all the equity to foreclose on or for the owner to tap.
BKUNA's losses on foreclosures in Florida I bet probably will exceed 50% of loan value. And the 20% the MI is supposedly going to pick up I bet the MI will fight tooth and nail. Give the pervasive fraud and that 81% of BKUNA's loans are no or low doc, it should not be hard to fight BKUNA's MI claims. Either BKUNA will have to spend money litigating them, or take settlement for less than the MI coverage.
Kudlow and his brethren should be eating a big serving of crow - but of course in our millisecond attention nation, no one is held accountable for the cr@p they spew.
Trichet Warns of `Dangerous Herding' Derivatives Risk (Update4) - Bloomberg.com
ROTFLMAO. I remember Toll making the misleading claim on CNBC.
I would love to see Bob Toll dragged through the mud on this.
"Vice Chairman Bruce Toll, sold millions of dollars of stock during the class period."
Insider sales have been at very high levels in quite a few industries for the past year. Yet those same companies buy back stock with profits. It is a pattern worth thinking about.
If your investments make money, you are a genius. If they don't, it's someone else's fault and you can sue them.
Shorter JoshK: People who get angry when fraud is committed are a bunch of crybaby "loosers".
If your investments make money, you are a genius. If they don't, it's someone else's fault and you can sue them.
No, when the president of a company knowingly makes false statements about the company's financial health, while selling millions of dollars of his own shares using company money on buy-backs to keep the stock prices high, then you can sue them.
Kudlow has an interesting take on markets. He seems to think it's unpatriotic for people to take the position that an asset is overpriced. As if everything has a predisposition to perpetually appreciate.
Does Kudlow have a brother named Josh?
I dunno Max...
No, when the president of a company knowingly makes false statements about the company's financial health, while selling millions of dollars of his own shares using company money on buy-backs to keep the stock prices high, then you can sue them
Legislation requires that insider's transactions be posted. Twas. Maybe for the brain challenged (hey it could happen!) we need to see these postings every time guys like Toll make an appearance. The striped convict suit optional, but where the convict number was, the shares sold in the last month or two, in flashing florescent orange. This is so doable.
So the lawyers are going to be busy, but did the suit against Fannie work for the Pittsburgh Teachers? (Who actually paid who?) Is Fannie back to responsible corporate governance (what?)?
--
******* November 08, 2005 *******
Toll Brothers' Execs -- A Fine Example Of Corporate Crooks of America
Toll Brothers' Scam, aka stock, has been my number one short position for the past 6 months (I was early, as always) among the Housing and Finance related companies and I have commented on it several times during this period (see one commentary below, for example, and you will see that I had already concluded then that he was lying).
My skills at identifying Corporate Crooks is well-honed by now and it took me watching two interviews each by Mr. Robert Toll, one of the two Toll brothers and the CEO, and Joel Rassman, the CFO, to conclude that they are genuine Crooks and they were purposely misleading the public to pump-and-dump their holdings of the companys Scam.
The Scam, which has been going down sharply for the past 3½ months, went down another 14% today when these execs lies about the future demand for their homes could no longer be held back from the public. The two Crooks again appeared on the TV today and what a difference in their demeanor and the lack of former confidence about the business in 2006 that they exuded only two months ago.
Vast majority of America's public corporations are run by Crooks who are in the BUSINESS of selling their company's Scam. Dont feed the Crooks by being a Scam Lover. If you got the guts and, most importantly, the skills, be a Scam Hater! It would be good for your character.
Jas
So the lawyers are going to be busy, but did the suit against Fannie work for the Pittsburgh Teachers? (Who actually paid who?) Is Fannie back to responsible corporate governance (what?)?
Point taken. You expect a company president to take a positive spin about his own company, but if he said anything substantive that proved to be false, he should be held to account.
Like most of us around here, I do think the business world is overrun by optimism bias. AKA: a buy recommendation from a CEO appearing on CNBC should be taken with a grain of salt...
--
" I would love to see Bob Toll dragged through the mud on this."
Who allowed Robert Toll to do what he did?
I would love to see minimum of 100,000 Bankrupters and Fraudsters be crucified in every zip code and at every major intersection of NYC.
Civil war is coming to America and Bankrupters and Fraudsters will flee.
There are consequences to the greatest fraud in history.
Jas
Right, for now we need to quickly tattoo all fraudsters on the forehead so that it will be easy to chase them when time will come. Tell your congressman.
My congressman would be the first with the fraudster tattoo.
Ah, yes, the old "who will tatoo the tatoo artists?" problem.
I suggest that we organize a world-wide Be Rude Like Ivy Day for investors. All holders of brokerage accounts will have to chain themselves to their televisions and sing "We Shall Overcome the Kool-Aid" until either the fraud stops or they get arrested.
Ummm one thing... if Kudlow was ever to eat crow, it wouldn't be today. Check out the Dow - that's all you'll hear from Larry... And he'll be crowing alright, just not eating.
I hate to be negative (or do I mean positive?) but now-a-days, whenever a stock falls 20% or so, these law suits start falling from the sky. Basically, these firms file crap loads of suits, hoping a few will pay off.
I'm not defending Toll, just noting that the vast majority of these suits go nowhere.
Thanks Bob...lots of 'over-reach' but even tons more just feedin the lawyers.
Aren't these the guys that draft the legislation...that gets them work later?
I think I'm missin some of my anti-depressants today.
--
Not that it matters, I have made lot of dough by selling truck load of naked calls on TOL as well as accumulating and selling puts.
I am still short naked calls and still have quite a bit of Jan'09 puts in family and friends accounts.
In that sense I luv Bankrupters and Fraudsters. But they are evildoers like none before in the US history.
Jas
BKUNA earnings are just out. It's a bank with heavy neg amortization portfolio.
Can anyone with skills slash and dice the numbers?
Thanks!!!
dryfly,
Today the DJI had 19 stocks down and 11 up. Yet the MSM will claim the bull rally continues.
Larry Kudlow the coke head?
has been my number one short position for the past 6 months (I was early, as always)
Nothing wrong with being early if you've got the capital to hold out.
Perhaps off topic.
I had some Auto body work done this week- same place I have gone before. Spoke to the owner. He told me 'Business stinks' and the economy has slowed perceptively compared to 2 years ago.
Says costs for materials are soaring.
Also said two local Auto dealerships-one in Vernon and Manchester CT are 'in trouble'. One sells Ford- the other Lincoln Mercury/Mazda (he said the Mazda's sell the Ford products 'no' .
With the DOW at an all time high- I wonder if there is some disconnect here between expectations and reality.
--
A bit OT
Americans must suffer the consequences of a depotic govt. These are my comments from yesterday (to a private list):
Here are the prescient words of the greatest thinker on the subject of democracy, Tocqueville, and its road to despotism (written 130 years ago):
I seek to trace the novel features under which despotism may appear in the world. The first thing that strikes the observation is an innumerable multitude of men all equal and alike, incessantly endeavoring to procure the petty and paltry pleasures with which they glut their lives. Each of them, living apart, is as a stranger to the fate of all the rest his children and his private friends constitute to him the whole of mankind; as for the rest of his fellow-citizens, he is close to them, but he sees them not - he touches them, but he feels them not; he exists but in himself and for himself alone; and if his kindred still remain to him, he may be said at any rate to have lost his country. Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications, and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent, if, like that authority, its object was to prepare men for manhood; but it seeks on the contrary to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness: it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances what remains, but to spare them all the care of thinking and all the trouble of living? Thus it every day renders the exercise of the free agency of man less useful and less frequent; it circumscribes the will within a narrower range, and gradually robs a man of all the uses of himself. The principle of equality has prepared men for these things: it has predisposed men to endure them, and oftentimes to look on them as benefits.
Yes, the benefits of a despotic govt.! Only a despotic govt. takes over the functions formerly left to parents and families, even under the worst dictators. American adults have been infantalized for a reason.
Jas Jain
The Prophet of Doom and Gloom
--
What Americans and their misleaders face is:
The Uncalculated Risk!
With the DOW at an all time high- I wonder if there is some disconnect here between expectations and reality.
Skytrekker
Wonder no mo, that all time is nominal, that all time high is also an all time high for the top 1% share of the market, that value is actually shrinking due to LBOs taking public companies private...that disconnection merely one facet of the growing disparity.
What? A stock goes down and lawyers file a class action suit? Really? I'm shocked. SHOCKED!
Will wonders never cease?
Bubble ?:
Many Savers, Few Spenders Leave South China Mall Almost Empty - Bloomberg.com
No way.
Will it be china again which cause the market to go down ?
Will it be china again which cause the market to go down ?
Not if they start dumping that $400B war chest into equities like has been suggested... PEs as big as bond spreads are narrow.
What a wonderful life.
404 Not Found
Check out pages 17-21, REO guy talking about the secondary market and what Wall Street is doing to get confidence back.
Not if they start dumping that $400B war chest into equities like has been suggested
Now, isn't that war chest already in equities? That story a while back didn't make a whole lot of sense to me.
I find it hard to believe they actually have piles of dollars siting around in some account. If they move $400B into something, they have to move it out of something else...
thanks for that link Cal...actually thanks for all your links. Why B stingy?
Cal, Interesting link, but it seems to miss the key underlying issue - affordability in most bubbly expensive markets. That doesn't get fixed by and new fancy risk measurement tools. Only thing that corrects that problem is RAPID wage inflation or price declines. Inflation won't help since most of the mortgages are ARMs so they will rocket with inflation, until a CAP. Unless we are talking hyper-inflation...
What's with the HB stocks this week? Did the inventory glut vanish? I need to short some more.
Freddie Mac, Washington Mutual Offer 22 Billion in Subprime Help
Freddie Mac today committed to buy as much as $20 billion in subprime mortgages, while Washington Mutual Inc. offered to refinance $2 billion in loans as the U.S. mortgage finance industry made its biggest gesture yet to help borrowers with poor credit histories avoid losing their homes.
Freddie Mac, Washington Mutual Offer Subprime Help (Update1) - Bloomberg.com
Now really, how many are going to qualify for a new mortgage?
How will a loan "work-out", where rates are lowered, be arranged for the securitized loans? Many or even most, were. Will the bondholders agree to a lower coupon and the servicer make deals?
I can't imagine how this could work - tanta, any ideas????
Pulte reports a big loss after hours...
In a statement, the homebuilder said it expects net loss from continuing operations of between 34 cents and 38 cents a share for the quarter. It had previously expected results to range from break-even to a loss of 10 cents a share. The results will include between $130 million and $140 million in land-impairment charges. Net new orders fell 21% to 8,499 for the quarter. The company blamed a "challenging" housing market for the shortfall.
Expired
More on pulte
barely,
I'm just an amatuer, but I think the refinance will pay off the balance on the current mortgage, therefore eliminating it and all obligations under it. I don't think the resales of the original mortgage impact the mortgagee's ability to pay off the balance and terminate the loan.
WOW are these guys who brought this suite in the dark ages or something. The Securities act of 1934 NO LONGER is law. It was replaced in 1995 by the Private Securities Litigation Reform Act. I wonder who their attorney was? Is he in for a rude awakening or what.
lama, Lawmakers are urging lenders to do work-outs, the topic I am referring to, work-outs on existing mortgages to avert mass foreclosures. I can't see any MBS going back to the borrower to do a work-out. and these loans are mostly bundled in securities.
You're suggesting a prepay. I wonder where the fees and penalties will come from. I don't see the MBS forgiving those either.
Millions of dollars in stock?
How about $100's of millions in stock sales while pumping and pumping the stock and being so oblivious to the housing market bubble.
He went on TV in Latter part of 2005 and said something about crushing the shorts...very questionable activity. Then about a week later unloaded over $100 Million in stock.
Affordability is the entire issue here. Dopes were allowed to buy a house with a pulse and no chance of paying it back which artificially inflated home prices. Home prices in bubble marklets need to drop 30-50% to get it back to affordable levels.
Noone in govt or this unethical REIC will admit it.
The median price of homes went up 143& from 2000-2005 and median incomes went up 21.5% over the same period.
How can this stupidty be allowed to continue?
We are working hard to return mortgage to historical levels of profitability through our strategy of building our prime, retail origination business,'' Baker continued.Accordingly, we have made the decision to no longer underwrite, process and fund nonprime loans. Our nonprime business, which represents less than two percent of our mortgage loan production, has resulted in a reasonable level of repurchase activity for which we have adequate reserves to cover estimated remaining losses. However, reduced investor appetite for this product has diminished gain-on-sale margins drastically; therefore, we believe market risk no longer justifies the modest potential rewards and believe it is better to service retail customer needs through broker relationships. In contrast, our Alt-A business, which represented 20 percent of our first-lien production in first quarter 2007, has prime-type credit characteristics despite the non-standard loan structures, with an average FICO of over 715 and continues to price appropriately. The majority of our Alt-A production is securitized and to-date, no residual or credit support structures have been retained and we have not seen any material repurchase activity from these loans.''
Expired
Can anyone explain to me how WB, DSL and the like be earnings something like 7.4% on their total mortgage loan portfolio ?
Seems everyone prime could have refi'd at well under 6% - zero points. So that would imply that all the Alt-A and subprime loans are at much,much higher rates than 7%. Does this makes sense ? I still can't believe someone as large as WB is making over 7% on the hundreds of billions of residential RE loans.
Fees and penalties for prepayments....good point. I didn't think of that. At the neighborhood thrift, you could negotiate with a human. That option doesn't seem so available in the aftermarket.
For any NY Yankees fans who might be reading this blog:
Luxury Home Prices Fall in New York's Long Island (Update2) - Bloomberg.com
Go Boston Red Sox!
Actually, I suspect a great deal of the arm-twisting going on behind closed doors right now has to do with "modify" versus "refinance." Some MBS may just have to eat some modifications, I suspect, although obviously the push from Wall Street will be to force these to refi (which adds costs to a consumer who probably doesn't really need them). As far as prepayment penalties? Oh, believe me, lenders will be waiving those in these hardship cases. Dick Syron, for one, doesn't sound like he's in the mood to direct Freddie to buy a refi of some toxic subprime ARM and include a prepayment penalty in the loan amount. Pop your popcorn, folks, this'll get entertaining in a fairly sick way, as everybody lines up to see who eats what expense.
"WOW are these guys who brought this suite in the dark ages or something. The Securities act of 1934 NO LONGER is law. It was replaced in 1995 by the Private Securities Litigation Reform Act. I wonder who their attorney was? Is he in for a rude awakening or what."
Renter,
That's Bill Lerach's firm you're talking about. They are now the biggest Securities Class Action plaintiff firm in the world. They know what they're doing.
Bob_in_MA is right however. These firms bring lots of suits. This one may go nowhere, or it could end up settling for hundreds of millions. It won't be resolved either way for years.
I'm surprised the lawyers didn't throw in this quote from Bob Toll in 2005:
"We'll reach the point Europe reached 20 years ago, where families pay 45% of their income on housing and married couples have to live with their parents for years before they can afford houses," he says. "Prices will keep going up in double digits for years."
This is off topic, but I think I know where many of the recently laid off construction workers are presently working.
I just returned from Lake Charles, Louisiana which is on the Gulf Coast near the Texas border. Plastic sheets are still covering holes in some roofs in Lake Charles and surrounding areas and there is still other hurricane related work to be done. Ill bet reconstruction is still going gangbusters from East Texas to the Alabama line.
Also, I saw only a couple of for sale signs in the 4 days I was there.
Pulte reports a big loss after hours...
That might work out well for some housing bears. Especially those who loaded up after that big spike in homebuilder stocks today.
Could be an interesting day tomorrow...
See NVR Inc. (NVR) for homebuilder famous for buybacks and insider sales? Any comments from the board on this homebuilder, trading at over 3X book, and 3X its peers, mind you?
Curious on others thoughts?
Thx in advance
Do your own due diligence
Not a fan of Toll business practices, but this lawsuit is garbage.
They're saying Toll did not have enough inventory - Ha!
Everybody looked like geniuses in '04/'05 in real estate.
Who can we sue next - GM? Intel?
NVR - likely due to the difference between market value of properties held and book value. In RE big difference depending on hold time.
Dick Syron. The fact that he seems smart masks the fact that he's extremely smart.
If you want to sue somebody for making false and misleading statements, start with our so-called "media" in this country. THEY are the ones that have been pimping this housing market as a miracle for the last 4 years and are still constantly calling the bottom.
Yesterday lending giants Fannie Mae and Freddie Mac announced the development of new loans to help borrowers at risk of default. Edward Leamer, director of the UCLA Anderson Forecast, said the move comes a little too late.
We should have had some kind of system in place a year or two ago to prevent people from getting in over their heads, Leamer said. Buyers assume (that) if they can qualify for the loan, they can afford the product.
Failing loans remain a small segment of the overall mortgage market in Southern California, Leamer noted. Not enough homes are going to be foreclosed on for the economy to go into the tank, but it will be tough for individuals caught in this trap.
At Union Bank of California, senior economist Keitaro Matsuda agreed that foreclosures pose no threat to the economy. As long as economic and job growth continue, I don't think it is going to be a serious issue, he said.
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A few interesting items from the BKUNA release. First there was this comment on the state of the secondary market:
"Early in the quarter we were able to lock in the pricing for those loans to be sold into the secondary market and achieved a gain on sale of approximately 100 basis points. While our option ARM loans continue to be well received due to our credit quality and low prepayment rates, the prices in the secondary market for these types of loans deteriorated during the latter part of the quarter. Adjusting for current prices, our gain on sale would have been in the range of 40 to 50 basis points. While we cannot predict future price levels, historically, loan originators have adjusted their cost to originate loans to increase the gain on sale, and we have seen those adjustments beginning to occur."
Negative amortization in the quarter totalled $46MM or slightly more than 125% of pretax income. Neg am as a percent of Option Arm loans increased from 1.9% of the portfolio to 2.5%.
Tanta, here's one for you. They claim a weighted average LTV "after mortgage insurance" of 73%. I'll confess to never having seen LTV quoted in a "after MI" fashion. Does that mean the real LTV is something like 93% and the boys in Milwaukee own the first 20% loss position?
The linked Kudlow article contains the statement, "... Why not apply the same tax laws that have benefited home owners to stock market investors and home buyers? If this were to come about, even more wealth would be created in America, ...".
I have always been utterly mystified as to how people can think that bidding up the prices of assets without regard to the income streams (real or imputable) they generate somehow produces "wealth".
True wealth resides in possession of assets that generate real or imputable income, and is proportional to that income.
For the first twenty-odd years of my association with Japan, all I heard there regarding real estate was that no matter how much you paid, someone else would always be ready to pay more. Some Japanese liked to say that Japan's financial system was based not on a "gold standard" but on a "land standard" (土地本位制 tochi hon'isei). But by the late '90s, the watchword had become "never buy land that doesn't flow cash!" (金を生まない不動産を買うな - kane wo umanai fudousan wo kau na!), and prices kept sinking until they reached levels actually justified by the incomes land could actually provide.
Asia tanking and yen looking stronger tonight. That could set off a few sell triggers. Tomorrow may be an intersting day indeed, with Pulte, FHN and SOV all reporting woes. God know I couldn't take too many more days like today or the past few days of goldilocks for that matter
In the previous round of comments, Tanta says,
Syron is the CEO of Freddie Mac. He is not the Mortgage Finance Czar of the U.S. with the unilateral ability to make outfits like Wall Street and the REITs and the bottom-feeders behave themselves. His job is to set a limit on Freddie's risk.
My question is: there appear to be two, dichotomous worlds of risk out there.
One, the world that gets the ink in these comments: chiselers on relief with moustaches and ponchos making fraudulent statements on loan applications.
Two, the world as seen through the filter of securitized mortgages: DSL gaining on bad news, an inverted yield curve (clearly part of the solution to Greenspan's conundrum was the predominance of securitized mortgages at the long end of the yield curve), etc.
I am really, really interested in the risk-management techniques in the second world. They're all quantitative, which makes them hard to describe, but worth description.
As an orthopedic surgeon once said, "The solution to pollution is dilution." But there's more to it.
There are actually three worlds:
The third exists in Mr. Syron's corporate lair, the GSE's.
In that world, there is no risk. Oh, sure, the stockholders might, just might, get their hair mussed, but with all that government backing...well, there is no risk.
And I understand that one.
It is ironic, that Tanta's brilliantly (emphasis brilliantly) written piece on the GSE's construction of pass-through bond describes a situation in which all their activities exist in a world without risk.
The BOJ is working fairly hard these days. Go to Yahoo and do the five day graph of the yen versus the dollar.
The dollar keeps trying to sink, and the BOJ keeps coming in and rescuing it.
| Charts - Yahoo! Finance
Smart money would bet on the BOJ, but someday they're going to lose.
FDIC Conducts LTCM-Style Meeting Over Subprime Mortgages
FDIC Conducts LTCM-Style Meeting Over Subprime Mortgages -- Seeking Alpha
Weakening sales tax collections may foreshadow a potential downturn in U.S. state budgets, which have been riding high in recent years on a strong economy and generally robust tax receipts, a report said on Thursday.
Yahoo! 404 - Page Not Found
Article on MEW:
Their research showed an amazing development. Between 1995 and the final quarter of 2005, equity withdrawal grew to 8 percent of the economy from 1 percent -- a whopping 800 percent increase. And as of the fourth quarter of 2005, when total MEW had reached its peak, it stood at $1 trillion annualized.
Also revealing was the way the Fed broke down the withdrawal data into three categories: housing turnover (the equity released when a homeowner sells a house and often plows the capital back into a new home) home-equity extraction, and cash-out refinancing.
This breakdown was helpful because it is the latter two categories that are most likely to drive spending. Goldman Sachs termed these two elements ``active MEW.''
On that score as well, the Fed data showed an amazing expansion. In 1995, active MEW had been $37 billion. By the fourth quarter of 2005, it soared to $532 billion annualized, a 17-fold expansion.
Housing Bust Meets the Equity Blues: Gene Sperling (Correct) - Bloomberg.com
Brian, I just got around to looking at that BKUNA PR this morning. I must really love you guys.
There's so much irrelevant generalized smoke in here, I kept expecting to see reference to the CEO once winning his high school's Elk's Club Outstanding Essay Contest in 1973.
Nobody I know ever reports "after MI" LTVs. For starters, there's an actual name for that, if you wish to discuss the subject, and it's called "exposure." I do not understand why someone without an intent to mislead would fail to use the term "exposure" rather than "LTV after the adjustment for coverage."
You can't back into the actual LTV without knowing what the MI coverage amount is, which is the problem here.
The average FICO score of the entire residential portfolio at March 31, 2007, was 710, and including the adjustment for coverage of mortgage insurance, the average LTV at inception was 70%. The average FICO score of the option-ARM portfolio at March 31, 2007, was 709, and the average LTV after the adjustment for coverage of mortgage insurance was 73%.
Let us assume an original LTV of 90% on an Option ARM. We'll just assume the lender gets 25% coverage. The MI's maximum claim is going to be based on the original insured loan amount, not the future capitalized balance. So the lender's exposure with original balance and original LTV is 67.5% (75% of 90%).
But since the loan is neg am, the real exposure is higher than that. I don't see the balance cap indicated here, so let's assume they're conservative and it's 110% of original balance. That means a $90,000 loan for a $100,000 property could have a maximum loan amount of $99,000. The MI maximum claim is still $22,500 (25% of $90,000), so the potential lender exposure is 76.5% instead of 67.5%.
If you're doing a neg am and you want to keep your exposure in the mid-sixties, you'd have to require a higher coverage percent than 25% to get there.
Applied to BKUNA, that's all just playing with examples, because they don't tell you what the original uninsured LTV is, what the coverage percent is, and what the balance cap is.
Honestly, I'd run like hell from these people just for that reason.
Now, isn't that war chest already in equities? That story a while back didn't make a whole lot of sense to me. - Max
Not from what I understand - they have just started transferring the reserves around... from PBoC to the regional & state owned banks & also to this new entity. They don't have an experienced staff together yet to make intelligent buys.
My guess is they have made baby steps into the market but that is about it. Look for late 2007 & beyond for their real weight to be felt.
However there is no law it all has to be invested in the US. China exports almost as much to Europe now.
Lotsa euros to invest too.
I'm no expert but believe that is the story.
I find it hard to believe they actually have piles of dollars siting around in some account. If they move $400B into something, they have to move it out of something else... - Max
My guess gov't bonds & agency debt.
Probably try to turnover & replace some of the agency first & see how that goes.
It will take time but a lot of what they hold on the gov't side is pretty short... at least that's what I read... but they buy so damned much one would think they have to be long too - just to manage the volume.
If the $400B goes into equities instead of MBS liquidity won't be 'dead'... just reincarnated.
Cal,
I've held the opinion that property tax increases might be another nail in the coffin for people already financially extended. This problem might reach even into the population that took out traditional mortgages in the last few years.
The feds have been pushing back responsibility to states who push back to municipalities. We haven't felt it yet due to the robust economy.
Smart money would bet on the BOJ, but someday they're going to lose.
I watch the yen like hawk. The euro? Who cares. So what if my wine costs a little more.
The day the BoJ & PboC throw in the towel is the day we all look back at as the day the 'prosperity ended'... like the Crash of '29 and The Great Depression... it will not have been the cause but it will be the milestone we all remember.
I would love to know the educated overview of Japanese economy. My feelings are they are hiding inflation and growth to keep rates status quo.
Maybe they are right, just wait another year and rates will be under 1% everywhere, including here and all around. They just need to sit tight.
I would be interested in reading an intelligent journalistic account of the Japanese economy, 1980-present. Does anyone know of one?
Here at this link is a good overview of the Florida land boom in the 1920's, which I think qualifies as the worst real estate crash in the last 107 years, and ahrbinger of the 1929 stock crash. (Was there a worse USA land value collapse in the 1800's?)
Home, Sweet Florida
cs said: "...Here at this link is a good overview of the Florida land boom in the 1920's, which I think qualifies as the worst real estate crash in the last 107 years, and harbinger of the 1929 stock crash. (Was there a worse USA land value collapse in the 1800's?)..."
Hard data that old is pretty sketchy, but I wouldn't be surprised. What we know as the "Great Depression" (1929-33) wasn't even called "Great" at the time, because the ones from the mid- to late-1800s were of comparable magnitude.
S.
cs,
I think there were deep real estate (then called "Land") collapses in parts of the former Confederate states after The Civil War. Boy, that's reaching for comparatives, isn't it?
BKUNA is my #1 short position. I'm writing something longer, but you lucky guys get the first draft.
Unless otherwise stated, all quotes are from the 8K sec filing, and all comparison are between Q1 2007 and Q4 2006.
81% were stated income/no-doc/low doc loans
85% of new loans were negative-amortization option ARMS
The total portfolio of neg-am loans have had their outstanding loan balances increase 2.5%. This is an increase from the previous quarter from 1.9%, and from the previous year of 0.7%.
Claims of low default rates are just beyond belief. Florida has the highest third highest foreclosure rate in the nation, behind only Colorado and Nevada, yet the bank claims that Of the 31,700 residential loan files in our portfolio, 216 are in foreclosure.
Thats 1 in 146 loans.
That number just has no credibility.
Just in February 2007, one in 382 Florida homes fell into foreclosure. Thats not the total number in foreclosure, just the number of new foreclosures just in one month. And the 1 in 382 number includes houses that have no mortgage at all, and those bought a long time ago sitting on tons of equity. If the rate stays the same (more likely it will rise, plus Feb is a short month) it implies that 3.1% of Florida homes will fall into foreclosure in 2007. If you exclude homes that have more than 50% equity or are fully owned, this 1 in 30 rate will is more likely 1 in 20. Yet BKUNA claims 1 in 146!
See stats here:
Florida foreclosures lead nation - Mar. 26, 2007
Note that deposit quality fell Y over Y:
Total deposits increased 26% to $6.8 billion at March 31, 2007
Non-interest-bearing deposits were $368 million at March 31, 2007, down 7%
So the free money they get from customer checking accounts is down, while the number of CD's they sell at 5+% is way up.
Non performing loans that the company will actually admit to rose from .33% in the previous quarter to .53% in Q1 2007. Thats about a 65% increase in bad loans in just one quarter.
I like this gem:
"Residential loan net charge-offs were $77,384."
How credible is that to a company with total loans outstanding of about $11 billion doing the riskiest types of loans in the riskiest residential RE market in the USA?
Something in the report I dont understand is in the listing of "non-performing assets" is "Non-accrual loans." This increased QtoQ from 44.7M to 70.4M. What are these?
I noticed REOs on the balance sheet increased in just one quarter about 8-fold from 400K to 3.1M. Yet the allowance for loan losses only increased $2.6 million. That quarter.
The company did not release a cash flow chart in its report, but cash decreased from 267M to 202M QtoQ. Loans held for sale decreased from 117M to 29M. Presumably all of these sold loans boosted cash, yet cash on hand plunged.
The company had net income of 24.4M, but the amount of interest added to neg-am loans was 46.3 million.
As
As for the loans that Bank United is willing to do, I checked out Broker Outpost. Here is an interesting couple of messages that show BKUNA is will to offer a loan for closing within a week to a 660 FICO (subprime by most measures), 95% LTV, stated income, and make an exception to the rule that the buyer gets the 5% downpayment from his own funds.
gk1024 61 Posts Posted - 11/14/2006 : 10:59:10 AM
Purchase
O/O LA: $403,750 95% LTV SFR Stated SE POA
Let me know. Most cut-offs for this LTV are 680. I want to get this file off my desk! Thanks
I can do this for you stated to 95%, 1 loan, with a 660 score. I can also get it closed for you in a week. I offer the most competitive margins and can pay up to 3.75 on my ysp.
John Palma Account Executive BankUnited 631-327-0349
Property in AZ, does that matter?
Posted - 11/14/2006 : 11:19:25 AM
John,
Can you offer this on NOO purchases with no seasoning of down payment? 90% LTV?
Originally posted by jpalma
I can do this for you stated to 95%, 1 loan, with a 660 score. I can also get it closed for you in a week. I offer the most competitive margins and can pay up to 3.75 on my ysp.
John Palma Account Executive BankUnited 631-327-0349
They usually require 2 months seasoning, but it's an exception that can be made.
John Palma Account Executive BankUnited 631-327-0349
Heres another one where a BKUNA rep offer to do a 90% LTV ARM for a Las Vegas house to a non owner.
90% OPTION ARM NON OWNER
The whole "adjusted for MI" is BS. A 75% LTV no MI and a 95% LTV with 20% MI do not mean the bank has the same exposure.
The 95% LT(claimed)V, with FL prices dropping and a 6% realtor commission means the "owners" are best off walking away unless they are really in love with the house. The 75% has much lower risk because of all the equity to foreclose on or for the owner to tap.
BKUNA's losses on foreclosures in Florida I bet probably will exceed 50% of loan value. And the 20% the MI is supposedly going to pick up I bet the MI will fight tooth and nail. Give the pervasive fraud and that 81% of BKUNA's loans are no or low doc, it should not be hard to fight BKUNA's MI claims. Either BKUNA will have to spend money litigating them, or take settlement for less than the MI coverage.