I would be suspicious of the 2006 line chart since many 2006 loans aren't 12 months old yet, and haven't had as much opportunity to get 90 days behind. Since Summer is the peak season for closing, loans for purchase you'd be looking at loans that went 90days delinquent in their first 9 months. Even with the large percentage of REFIs, this could throw the figures off.
sam, there wouldn't be enough borrowers to carry the huge explosion of subprime lending if it were limited to borrowers with FICOs under 600. Last numbers I saw indicated that around 12% of people with scores had a FICO under 600. Only a percentage of those would be potential mortgage borrowers. There are almost as many people in the category of 600-660 as there are in the category 300-559.
People like me would generally use the term "subprime" for FICOs under 620, and "near prime" or "A minus" for FICOs 620-659. Obviously, as soon as you start other "risk layering," the FICO has to keep getting higher to keep the loan out of the subprime category.
Not everybody makes that distinction or uses the terms carefully, so welcome to the wonderful world of category creep. You simply have to imagine "prime" and "subprime" as two ends of a spectrum with a lot of disputed territory in the middle. One name for that middle "disputed territory" is "Alt-A."
Jim, certainly the books aren't closed on 2006 for a final report of first-year serious defaults if you want total numbers, for the reason you indicated.
I think the usefulness, though, of expanding the reporting of "EPDs" from the rather "legalistic" one (from the perspective of repurchases) of "early" meaning within 90-120 days of the sale of a loan (which is at some point, possibly even a few months, after its origination), to just the first year of the loan, gives us a better total picture of what a horror this vintage is.
I assume Fitch did true vintage analysis here, which means they compared the so-far 2006 performance with the earlier vintages at the same point in their seasoning. They don't footnote that, but it's the whole point of vintage analysis.
"Credit costs increased $1.26 billion, primarily driven by an increase in net credit losses of $509 million and a net charge of $597 million to increase loan loss reserves," the bank said. It said the $597 million charge compared with a net reserve release of $154 million a year earlier.
This included higher losses and reserves in the U.S. consumer division, Citi said, reflecting "an increase in delinquencies in second mortgages and a change in estimate of loan losses inherent in the portfolio."
Tuesday's One-Two Punch at http://infohype.blogspot.com
The market has been reacting positively to negative economic data because it implies a rate cut. I wouldn't count on the market going down in response to any news.
Remember, risk is no longer a factor in pricing stocks.
It's important every so often to separate rhetoric from reality. The reality in SoCal is money's STILL free & mtg. credit VERY cheap.
On Friday I received three unsolicited credit card offers from major bank affiliates, each offering 0% interest on balance-transfers AND purchases for the next TWELVE months. Two of these banks are MAJOR mtg. players. Isn't it reasonable for someone at the FED to ask national banks why they're offering FREE money to Californians at the same time they're asking the Gov't. to protect them from subprime fallout?
A current picture of CA mtg. business presents a similar dilemma for national bank regulators. Why are so many 100%+, no-doc mortgage loans STILL being advertised on T.V. DAILY? Is it a prerequisite that bank regulators DON'T watch T.V., thus immunizing themselves from any awareness how ludicrous this is?Understand, I love the argument. Liquidity does follow inflation & the r.e. game of musical chairs IS over. But, the reality in SoCal is, a lot of FREE money is readily available to those too stupid to understand.
This approach to bank supervision may be a sign of our times, but make NO mistake about it - it's worse than negligent.
Tanta, I am beginning to understand your posts better.
You really are talking from the point of view of the mortgage acquisition and risk layering process.
That is really fascinating. In the first place, I guess it is where the rubber meets the road.
In the second, you seem to imply rather frequently that the process is dysfunctional.
In your description of the process within the GSE's it was possible to come away with a warm, fuzzy feeling...at least until you remembered that Jim Lockhart is regulating the GSE's and that they can't seem to report their own accounting data reliably.
"thought subprime meant lower than 600 FICO,~100 LTV and possibly no/little docs.."
There is some argument as to what a subprime borrower is versus an Alt A borrower when the subject is Fico. Most market participants have agreed that 620 was the Mason/Dixon line but now 640 seems to be the bar for Alt. That said, there has been a significant difference in what the requirements are for trades, credit depth, and overall payment history between the two classes. Subprime generally looks at the last 12 months of credit history and ignores slow pays which are factored into the Fico whereas Alt does NOT overlook the true payment flow and hardly ignores adverse credit items such as prior BKs, NODs and collections.
" In the second, you seem to imply rather frequently that the process is dysfunctional."
I guess you have actors in any industry who think they know better or have some weird dislike for the very same industry who pays their bills, but the mortgage business is hardly dysfuntional..not perfect by any means...
"Isn't it reasonable for someone at the FED to ask national banks why they're offering FREE money to Californians at the same time they're asking the Gov't. to protect them from subprime fallout?"
What banks have asked for that?
All I have seen is certain democratic senators pushing bailout schemes for "innocent" borrowers.
arbogast, it's not that I "forget" about the GSE's accounting problems. It's just that I don't think they are the same thing as the credit quality of the underlying loans or the performance of the MBS. If anybody wanted to talk about GSE debt (rather than assets) or shares or something, well, sure, the accounting issues get rather important there. But I have been claiming all along to be talking about mortgages and mortgage money.
I am, frankly, surrounded by people who seem to think that "the loans are junk" because of the accounting problems. This concerns me because the last thing we need is to whip everyone up into a frenzy about conforming GSE mortgage loans when that's not necessarily the biggest or certainly the first risk we're looking at. I mean, we have to be able to pay attention to two different things at once.
I am tired, just profoundly, deeply, seriously, tired, of "sloganeering" about the economy in general and mortgages in particular. I think it is telling that you can't say anything less than negative about the GSEs without people getting shocked by it, or think you're "forgetting" all this bad stuff. Quite honestly I get a little amused, too, by people who couldn't rattle off one of those notoriously clear, simple, easy-to-apply FASB statements of accounting if their lives depended on it, getting all righteous about GSE accounting. I mean, in another context we could be having some interesting questions about whether it's the accounting rules themselves that aren't some part of the problem here. But to even raise that question gets you immediately accused of being an apologist for a criminal gang or something. I'd certainly like to know how many of our accountant friends think that FASB has no responsibility whatsoever for creating or allowing certain practices to go on until they just explode. Expensing stock options? Where was the accounting board on that?
I have never learned the most by only talking about those things that everybody already agrees with. If I have learned anything on this blog over the years, it's that the real lessons are to be learned on those subjects that hit certain nerves.
I guess you have actors in any industry who think they know better or have some weird dislike for the very same industry who pays their bills
Mortgage Professional, you do know, don't you, that the industry does, actually, pay some people to be risk managers, and what those people are supposed to do to earn their keep is to watch out for distortions and dysfunctions in the industry that could put it at risk? And that, furthermore, some readers of this blog are concerned about what effects that could have, in turn, on the larger economy?
If all I'm supposed to do to earn my check is to "like" my industry, and if reality-based analysis is now equivalent to being weird, I will tell you that you just proved my point: this industry has a real problem.
More analysis of a very old industry using 6-year charts. Make it relevant by including at least the 80s. No data going back that far, because subprime was never so big? Then "record" increases, decreases, volumes, levels and prices have little meaning.
This is a different "Name" posting. To the first "Name":
Do you think statistical significance is a binary property that just kicks in when you have data from the 80s? Presumably you understand that as the sample size grows, your confidence in metrics increases. 6 years of data is enough to draw some conclusions. Or are you just trolling?
THIS JUST IN: The Federal Deposit Insurance Corp. is holding an invitation-only summit on subprime foreclosures on Monday, April 16. Invited speakers include former Salomon Brothers vice chairman Lewis Ranieri, Richard A. Uhlig, CEO of Morgan Stanley Bank and Larry Litton of Litton Loan Servicing, among others. The media was not invited
A large mortgage brokerage operation in the Pacific Northwest has been tardy paying some of its branches we're told. At press time, one branch manager said he had not been paid in 18 days. Typically, he gets paid in 48 hours, he told us. Watch National Mortgage News Online/MortgageWire for an update. Don't subscribe? Telephone: (800) 221-1809 "
I don't subscribe so I can't get the details. Maybe a CR blogger could provide follow up information.
Yes, very bullish out there right now. But I still maintain that a higher than expected increase in core cpi tomorrow will lead to a 3-figure selloff that will suppress the market until the Fed meets in May. However, I will say that I fully expect core to increase no more than .2% -- so it's moot.
It wouldn't be surprising to see this trend migrate to the Alt-A and Prime market places. As I've been saying for a long time, your FICO won't make your mortgage payment for you. The fact that a large percentage of prime and alt-a loans are exotics (pay-option, I/O, 2nds) and rely on stated income means the overall risk is much higher than suggested by simply lumping groups together based on a single element - FICO.
WB: Can someone who read reports look at Wachovia 10Q and see if they used the new FASB rule that allow them to remove losses from earning by way of charging them against retained earning ?
If so their whole report is misleading as far as trend.
Thomson and the other Wachovia executives emphasized the bank’s credit quality and expectations for loan losses in 2007. Although nonperforming assets comprised 40% of total loans, from 28% in the prior-year period, overall credit quality results for the quarter were good, according to Don Truslow, Wachovia’s head of risk management.
Would you use NASDAQ data 2001-2006 to understand general stock market trends?
Making linear projections during unprecedented pattern changes is not smart.
How would you do a "vintage" analysis of share prices? I'm curious. I've never seen one.
Did you read the linked report? Did you find a place where projections are being made? The only comment I saw about the potential application of this data to 2007 vintages is that with the guideline tightening going on, Fitch expects to see fewer loans with the characteristics identified in recent EPDs, and therefore considers it possible that the 2007 book will suffer from fewer early defaults.
Triple digit rally in response to a 0.7% increase in pending home sales, but no response to the unexpectedly large drop in the homebuilder index today.
Again, negative economic data is ignored or is positive because it means rate cuts are coming, positive data is an excuse to rally because... it's positive.
Tanta said: "...I have never learned the most by only talking about those things that everybody already agrees with. If I have learned anything on this blog over the years, it's that the real lessons are to be learned on those subjects that hit certain nerves..."
Tanta,
My late wife was a CPA so I got interested in things FASB and if memory serves, and many times it doesn't, FASB tried to do something about accounting for stock options but a lynch mob headed by Holy Joe and others started heading in their direction with torches, ropes, pitchforks and guns. I think at that time FASB got religion on the issue and backed off. Too bad they didn't have the spine to stand up to the fools.
Keep up the good work. I have sicked you on my young son in law who has an interest in RE investing so he can get up to speed and become a practicing Uber Nerd. He is already a Uber Nerd Engineer but needs to expand his horizons.
Best to you and all the other commenters.
May we all experience Soft Landings.
Jas ... NAHB index comes out at 1 p.m. on the day of release. Latest figures -- for April -- are as follows:
The overall index slumped to 33 this month from 36 in March. That missed forecasts for a reading of 35. It was also down substantially from a reading of 51 in April 2006.
All three sub-indices declined. An index measuring present sales dropped 3 points, while an index measuring expectations about futures sales fell by a hefty 6 points. The index measuring prospective buyer traffic dipped 1 point.
I also have a chart showing the long-term trend at my blog ...
"But he also said 3 million people in the past four or five years have used a subprime loan to buy a home, and that about 45% of all subprime loans are purchase loans. "
"Mortgage Professional, you do know, don't you, that the industry does, actually, pay some people to be risk managers, and what those people are supposed to do to earn their keep is to watch out for distortions and dysfunctions in the industry that could put it at risk?"
No, I do not know any risk managers looking for dysfuntions or would even define what they do that way.
Most of the peope I deal with on the Street who spend all of their time crunching numbers and doing statistical analysis are not looking for dysfuntion, but instead are analyzing and changing models that need to be tweaked due to the cooling of the market.
"I will tell you that you just proved my point: this industry has a real problem"
I don't think "this industry" has a real problem. Things will even out once the risk models correct and investor feeling modulate to the new real estate economy.
Worried, I don't care what anyone says, certainly not about off-the-cuff remarks made in an interview. I'm data-driven, not comment- or opinion-driven.
But even if I was (and Robbins was absolutely correct), he says 45% of subprime mortgages were used for purchases. That means 55% were not, meaning the typical subprime loan was a re-finance.
He also says 3 million subprime loans were made over a period of 5-6 years. Considering how many millions of mortgages are made annually, that should put the magnitude of the subprime "problem" in perspective all by itself.
i thought subprime meant lower than 600 FICO,~100 LTV and possibly no/little docs..
I would be suspicious of the 2006 line chart since many 2006 loans aren't 12 months old yet, and haven't had as much opportunity to get 90 days behind. Since Summer is the peak season for closing, loans for purchase you'd be looking at loans that went 90days delinquent in their first 9 months. Even with the large percentage of REFIs, this could throw the figures off.
sam, there wouldn't be enough borrowers to carry the huge explosion of subprime lending if it were limited to borrowers with FICOs under 600. Last numbers I saw indicated that around 12% of people with scores had a FICO under 600. Only a percentage of those would be potential mortgage borrowers. There are almost as many people in the category of 600-660 as there are in the category 300-559.
People like me would generally use the term "subprime" for FICOs under 620, and "near prime" or "A minus" for FICOs 620-659. Obviously, as soon as you start other "risk layering," the FICO has to keep getting higher to keep the loan out of the subprime category.
Not everybody makes that distinction or uses the terms carefully, so welcome to the wonderful world of category creep. You simply have to imagine "prime" and "subprime" as two ends of a spectrum with a lot of disputed territory in the middle. One name for that middle "disputed territory" is "Alt-A."
Jim, certainly the books aren't closed on 2006 for a final report of first-year serious defaults if you want total numbers, for the reason you indicated.
I think the usefulness, though, of expanding the reporting of "EPDs" from the rather "legalistic" one (from the perspective of repurchases) of "early" meaning within 90-120 days of the sale of a loan (which is at some point, possibly even a few months, after its origination), to just the first year of the loan, gives us a better total picture of what a horror this vintage is.
I assume Fitch did true vintage analysis here, which means they compared the so-far 2006 performance with the earlier vintages at the same point in their seasoning. They don't footnote that, but it's the whole point of vintage analysis.
Citi earnings -
"Credit costs increased $1.26 billion, primarily driven by an increase in net credit losses of $509 million and a net charge of $597 million to increase loan loss reserves," the bank said. It said the $597 million charge compared with a net reserve release of $154 million a year earlier.
This included higher losses and reserves in the U.S. consumer division, Citi said, reflecting "an increase in delinquencies in second mortgages and a change in estimate of loan losses inherent in the portfolio."
Expired
Tuesday's One-Two Punch at http://infohype.blogspot.com
Tuesday's One-Two Punch at http://infohype.blogspot.com
The market has been reacting positively to negative economic data because it implies a rate cut. I wouldn't count on the market going down in response to any news.
Remember, risk is no longer a factor in pricing stocks.
It's important every so often to separate rhetoric from reality. The reality in SoCal is money's STILL free & mtg. credit VERY cheap.
On Friday I received three unsolicited credit card offers from major bank affiliates, each offering 0% interest on balance-transfers AND purchases for the next TWELVE months. Two of these banks are MAJOR mtg. players. Isn't it reasonable for someone at the FED to ask national banks why they're offering FREE money to Californians at the same time they're asking the Gov't. to protect them from subprime fallout?
A current picture of CA mtg. business presents a similar dilemma for national bank regulators. Why are so many 100%+, no-doc mortgage loans STILL being advertised on T.V. DAILY? Is it a prerequisite that bank regulators DON'T watch T.V., thus immunizing themselves from any awareness how ludicrous this is?Understand, I love the argument. Liquidity does follow inflation & the r.e. game of musical chairs IS over. But, the reality in SoCal is, a lot of FREE money is readily available to those too stupid to understand.
This approach to bank supervision may be a sign of our times, but make NO mistake about it - it's worse than negligent.
interesting story about HB in the D.C. with large inventories undercutting the resale market.
A Glut of New Houses -- and What That Means for You - washingtonpost.com
"I wouldn't count on the market going down in response to any news."
I respect your point of view, but I think we also need to remember last week's market reaction based on the Fed meeting minutes alone.
http://infohype.blogspot.com
I respect your point of view, but I think we also need to remember last week's market reaction based on the Fed meeting minutes alone.
How long did that reaction last?
Tanta, I am beginning to understand your posts better.
You really are talking from the point of view of the mortgage acquisition and risk layering process.
That is really fascinating. In the first place, I guess it is where the rubber meets the road.
In the second, you seem to imply rather frequently that the process is dysfunctional.
In your description of the process within the GSE's it was possible to come away with a warm, fuzzy feeling...at least until you remembered that Jim Lockhart is regulating the GSE's and that they can't seem to report their own accounting data reliably.
I like the focus.
"thought subprime meant lower than 600 FICO,~100 LTV and possibly no/little docs.."
There is some argument as to what a subprime borrower is versus an Alt A borrower when the subject is Fico. Most market participants have agreed that 620 was the Mason/Dixon line but now 640 seems to be the bar for Alt. That said, there has been a significant difference in what the requirements are for trades, credit depth, and overall payment history between the two classes. Subprime generally looks at the last 12 months of credit history and ignores slow pays which are factored into the Fico whereas Alt does NOT overlook the true payment flow and hardly ignores adverse credit items such as prior BKs, NODs and collections.
" In the second, you seem to imply rather frequently that the process is dysfunctional."
I guess you have actors in any industry who think they know better or have some weird dislike for the very same industry who pays their bills, but the mortgage business is hardly dysfuntional..not perfect by any means...
"Isn't it reasonable for someone at the FED to ask national banks why they're offering FREE money to Californians at the same time they're asking the Gov't. to protect them from subprime fallout?"
What banks have asked for that?
All I have seen is certain democratic senators pushing bailout schemes for "innocent" borrowers.
arbogast, it's not that I "forget" about the GSE's accounting problems. It's just that I don't think they are the same thing as the credit quality of the underlying loans or the performance of the MBS. If anybody wanted to talk about GSE debt (rather than assets) or shares or something, well, sure, the accounting issues get rather important there. But I have been claiming all along to be talking about mortgages and mortgage money.
I am, frankly, surrounded by people who seem to think that "the loans are junk" because of the accounting problems. This concerns me because the last thing we need is to whip everyone up into a frenzy about conforming GSE mortgage loans when that's not necessarily the biggest or certainly the first risk we're looking at. I mean, we have to be able to pay attention to two different things at once.
I am tired, just profoundly, deeply, seriously, tired, of "sloganeering" about the economy in general and mortgages in particular. I think it is telling that you can't say anything less than negative about the GSEs without people getting shocked by it, or think you're "forgetting" all this bad stuff. Quite honestly I get a little amused, too, by people who couldn't rattle off one of those notoriously clear, simple, easy-to-apply FASB statements of accounting if their lives depended on it, getting all righteous about GSE accounting. I mean, in another context we could be having some interesting questions about whether it's the accounting rules themselves that aren't some part of the problem here. But to even raise that question gets you immediately accused of being an apologist for a criminal gang or something. I'd certainly like to know how many of our accountant friends think that FASB has no responsibility whatsoever for creating or allowing certain practices to go on until they just explode. Expensing stock options? Where was the accounting board on that?
I have never learned the most by only talking about those things that everybody already agrees with. If I have learned anything on this blog over the years, it's that the real lessons are to be learned on those subjects that hit certain nerves.
I guess you have actors in any industry who think they know better or have some weird dislike for the very same industry who pays their bills
Mortgage Professional, you do know, don't you, that the industry does, actually, pay some people to be risk managers, and what those people are supposed to do to earn their keep is to watch out for distortions and dysfunctions in the industry that could put it at risk? And that, furthermore, some readers of this blog are concerned about what effects that could have, in turn, on the larger economy?
If all I'm supposed to do to earn my check is to "like" my industry, and if reality-based analysis is now equivalent to being weird, I will tell you that you just proved my point: this industry has a real problem.
More analysis of a very old industry using 6-year charts. Make it relevant by including at least the 80s. No data going back that far, because subprime was never so big? Then "record" increases, decreases, volumes, levels and prices have little meaning.
Name, can you clarity who, exactly, is "analyzing an old industry" with recent charts, and making claims about records?
I'm not sure what you think a comparison to the 80s would tell us.
This is a different "Name" posting. To the first "Name":
Do you think statistical significance is a binary property that just kicks in when you have data from the 80s? Presumably you understand that as the sample size grows, your confidence in metrics increases. 6 years of data is enough to draw some conclusions. Or are you just trolling?
I have just picked up the following at
http://data.nationalmortgagenews.com/columns/hearing/
"What We're Hearing
By Paul Muolo
THIS JUST IN: The Federal Deposit Insurance Corp. is holding an invitation-only summit on subprime foreclosures on Monday, April 16. Invited speakers include former Salomon Brothers vice chairman Lewis Ranieri, Richard A. Uhlig, CEO of Morgan Stanley Bank and Larry Litton of Litton Loan Servicing, among others. The media was not invited
A large mortgage brokerage operation in the Pacific Northwest has been tardy paying some of its branches we're told. At press time, one branch manager said he had not been paid in 18 days. Typically, he gets paid in 48 hours, he told us. Watch National Mortgage News Online/MortgageWire for an update. Don't subscribe? Telephone: (800) 221-1809 "
I don't subscribe so I can't get the details. Maybe a CR blogger could provide follow up information.
Thanks.
"How long did that reaction last?"
Yes, very bullish out there right now. But I still maintain that a higher than expected increase in core cpi tomorrow will lead to a 3-figure selloff that will suppress the market until the Fed meets in May. However, I will say that I fully expect core to increase no more than .2% -- so it's moot.
It wouldn't be surprising to see this trend migrate to the Alt-A and Prime market places. As I've been saying for a long time, your FICO won't make your mortgage payment for you. The fact that a large percentage of prime and alt-a loans are exotics (pay-option, I/O, 2nds) and rely on stated income means the overall risk is much higher than suggested by simply lumping groups together based on a single element - FICO.
--
Q: What time of the day NAHB/Wells Fargo Housing Market Index (HMI) is released?
Also:
Hidden Home Price Decline In Silicon Valley
"Hidden" Home Price Decline In Silicon Valley
--
OT:
News Report of Suspicious FIRE -- Consequences of the Housing Bubble
From a very reliable source:
Suspicious fire in hard to reach area of Tehachapi (hilly with winding road; takes time for a fire truck to reach).
Brand new spec home. Fire sources in two parts detected.
Time: very early Sunday morning (04/15/07). It was snowing in the area (my car and parts of the front porch were covered in the morning).
Person listing (could be owner) lives in 818 area code, at least an hour away.
Listed for 899,999 (very high price for the area). I believe this is the listing:
http://www.realtor.com/FindHome/HomeListing.asp?snum=4&mlsttl=&frm=byzip&pgnum=1&mls=xmls&js=on&target=&ct=&st=&sbint=1&sbls=&sblo=1&stype=&zp=93561&exft=0&exft=0&exft=0&mnsqft=0&lid=Enter+MLS+ID&ss_aywr=&fid=so&mnprice=850000&mxprice=900000&mnbed=1&mnbat
22484 Creekside
Tehachapi, CA 93561
MLS ID#: 9954431
$899,999
6 Bed, 4 Bath
5,000 Sq. Ft.
5.56 Acres
Single Family Property, Approximately 5.56 acre(s), Year Built: 2006, View, Two story, Central air conditioning, Dining room, Laundry room
Jas
Not trolling.
Would you use NASDAQ data 2001-2006 to understand general stock market trends?
Making linear projections during unprecedented pattern changes is not smart.
WB: Can someone who read reports look at Wachovia 10Q and see if they used the new FASB rule that allow them to remove losses from earning by way of charging them against retained earning ?
If so their whole report is misleading as far as trend.
Wachovia Optimistic About Loan Performance
Sorry. Page not found.
from the article:
Thomson and the other Wachovia executives emphasized the bank’s credit quality and expectations for loan losses in 2007. Although nonperforming assets comprised 40% of total loans, from 28% in the prior-year period, overall credit quality results for the quarter were good, according to Don Truslow, Wachovia’s head of risk management.
Would you use NASDAQ data 2001-2006 to understand general stock market trends?
Making linear projections during unprecedented pattern changes is not smart.
How would you do a "vintage" analysis of share prices? I'm curious. I've never seen one.
Did you read the linked report? Did you find a place where projections are being made? The only comment I saw about the potential application of this data to 2007 vintages is that with the guideline tightening going on, Fitch expects to see fewer loans with the characteristics identified in recent EPDs, and therefore considers it possible that the 2007 book will suffer from fewer early defaults.
Yes, very bullish out there right now.
Case in point:
Triple digit rally in response to a 0.7% increase in pending home sales, but no response to the unexpectedly large drop in the homebuilder index today.
Again, negative economic data is ignored or is positive because it means rate cuts are coming, positive data is an excuse to rally because... it's positive.
It's all good.
Tanta said: "...I have never learned the most by only talking about those things that everybody already agrees with. If I have learned anything on this blog over the years, it's that the real lessons are to be learned on those subjects that hit certain nerves..."
Damn straight.
Sebastia
Tanta,
My late wife was a CPA so I got interested in things FASB and if memory serves, and many times it doesn't, FASB tried to do something about accounting for stock options but a lynch mob headed by Holy Joe and others started heading in their direction with torches, ropes, pitchforks and guns. I think at that time FASB got religion on the issue and backed off. Too bad they didn't have the spine to stand up to the fools.
Keep up the good work. I have sicked you on my young son in law who has an interest in RE investing so he can get up to speed and become a practicing Uber Nerd. He is already a Uber Nerd Engineer but needs to expand his horizons.
Best to you and all the other commenters.
May we all experience Soft Landings.
Jas ... NAHB index comes out at 1 p.m. on the day of release. Latest figures -- for April -- are as follows:
I also have a chart showing the long-term trend at my blog ...
Interest Rate Roundup: NAHB index falls again
Sebastian
Were you the Sebastian on Econobrowser who said:
You might want to note what Mortgage Banker Association (MBA) Chairman John Robbins says about you being totally wrong on that view.
Mortgage Insider : The Orange County Register
"But he also said 3 million people in the past four or five years have used a subprime loan to buy a home, and that about 45% of all subprime loans are purchase loans. "
"Mortgage Professional, you do know, don't you, that the industry does, actually, pay some people to be risk managers, and what those people are supposed to do to earn their keep is to watch out for distortions and dysfunctions in the industry that could put it at risk?"
No, I do not know any risk managers looking for dysfuntions or would even define what they do that way.
Most of the peope I deal with on the Street who spend all of their time crunching numbers and doing statistical analysis are not looking for dysfuntion, but instead are analyzing and changing models that need to be tweaked due to the cooling of the market.
"I will tell you that you just proved my point: this industry has a real problem"
I don't think "this industry" has a real problem. Things will even out once the risk models correct and investor feeling modulate to the new real estate economy.
To me the interesting feature of the displayed statistics is the abrupt reversal of the average loan balance deltas between the 2 classes.
In 2006, the average delinquent loan suddenly has a (significantly) higher balance than the average performing loan.
Worried, I don't care what anyone says, certainly not about off-the-cuff remarks made in an interview. I'm data-driven, not comment- or opinion-driven.
But even if I was (and Robbins was absolutely correct), he says 45% of subprime mortgages were used for purchases. That means 55% were not, meaning the typical subprime loan was a re-finance.
He also says 3 million subprime loans were made over a period of 5-6 years. Considering how many millions of mortgages are made annually, that should put the magnitude of the subprime "problem" in perspective all by itself.
Sebastia