May 30 (Bloomberg) -- Japan's industrial production unexpectedly fell for a second month in April as the slowest economic growth in the U.S. in four years reduced demand for Toyota Motor Corp. and Honda Motor Co. cars.
Production slipped a seasonally adjusted 0.1 percent after declining 0.3 percent a month earlier, the Ministry of Economy, Trade and Industry said in Tokyo today. The median estimate of 46 economists was for a 0.5 percent increase
REAGAN TOPS GORE IN SQUEAKER
WED MAY 30 2007 10:19:28 ET
EXCLUSIVE
'THE REAGAN DIARIES' OUTSOLD AL GORE'S 'ASSAULT ON REASON' IN OPENING WEEK ACTION, BOOKSCAN WILL REPORT.
REAGAN WON THE RACE BY SELLING JUST 5 MORE BOOKS THAN GORE!
'DIARIES' MOVED 49,626 COPIES TO GORE'S 49,621.
SOURCES STATE THAT WERE AT LEAST FIVE REPORTS OF ELDERLY PEOPLE IN FLORIDA THAT THOUGHT THEY WERE BUYING THE GORE BOOK BUT WERE CONFUSED AND TRICKED INTO BUYING REGAN'S AS THEY WERE SIDE BY SIDE ON THE DISPLAY.
THE REVEREND JESSE JACKSON IS ALSO REPORTEDLY FLYING INTO JACKSONVILLE TO MEET WITH PEOPLE WHO CLAIM THAT THEY WERE KEPT OUT OF A LOCAL BORDERS BOOKSTORE LOCATED IN A PREDOMINANTLY REPUBLICAN PART OF DUVALL COUNTY.
THE FORMER VICE PRESIDENT HAS ASSEMBLED HIS STAFF OF LAWYERS TO CHALLENGE THE COUNT IN FLORIDAS SUPREME COURT IN AN EMERGENCY MOTION.
FORMER PRESIDENT REGAN COULD NOT BE REACHED FOR COOMENT.
ISAACSON 'EINSTEIN' BAGGED 21,007 FOR THE WEEK [208,939 SINCE RELEASE]... HITCHENS 'GOD IS NOT GREAT' EXCHANGED 17,876 [58,490].
NEW YORK (CNNMoney.com) -- Mortgage rates jumped this week on upbeat consumer sentiment and speculation that the Federal Reserve would not cut interest rates anytime soon, Freddie Mac said Thursday.
The average rate on 30-year fixed-rate loans climbed to 6.37 percent for the week ending May 24, up from 6.21 the previous week, the mortgage finance firm said. Last year at this time, 30-year mortgage rates averaged 6.62 percent.
And then look at the graph in the WSJ article it looks as if the Alt A paper is doomed to repeat what happened in the subprime.
Amazing that SP makes up 30% of the loans and of those 30% 10% are DQ. And that cuses this much strife in our RE Markets... 3% of total Mortgage loans.....
equity protection was included in the act to help the HO from all the weekly mailings he gets telling him its his money...like he never has to pay it back...
it was designed to discourage predatory lending from companies that mass mailed equity offewrs with low payments, 150% equity offers, etc. It has been around for a few years, not bail out but trying to protect what they HO has amassed in "wealth"
"Some of the questions are interesting:
Should stated income or low doc loans be prohibited for certain loans, such as loans to subprime borrowers?
Should stated income or low doc loans be prohibited for higher-risk loans, for example, for loans with high loan-to-value ratios?"
I assume those are rhetorical questions?
In the event they're not, I think we need to change the "hearings" to "listenings" as in "listen to what that still small voice of reason is telling you..."
AP
Trump Leaves Tampa High-Rise Project
Wednesday May 30, 11:40 am ET
Trump Pulls Out of Tampa High-Rise Project Initially Intended to Bear His Name
TAMPA, Fla. (AP) -- There will be no Trump Tower in Tampa.
Real estate mogul Donald Trump has pulled out of the $300 million, 52-story Trump Tower condominium project in Tampa, according to a lawsuit filed Friday in U.S. District Court.
ADVERTISEMENT
Trump said in the lawsuit that developer SimDag owes him more than $1 million in unpaid licensing fees. Trump also said SimDag failed to show it had sold enough condos, valued between $700,000 and $6.2 million, to meet contractual obligations to him. Trump was entitled to half the profits of the sale of 190 condos and a licensing fee of $2.8 million.
The loss of the famous name could end the project.
"We could continue without Trump, but I don't know if we'd even want to, " said Eric Fordin of the Related Group, a Miami developer enlisted by SimDag to revive the project.
The project, billed in January 2005 as one of the tallest and grandest towers on the Gulf of Mexico, has been burdened by financial setbacks, legal troubles and the slump in the housing market. Construction stalled in November and the lot is now empty.
The phone at SimDag's Clearwater corporate office was listed disconnected Wednesday. Phone messages left at the company's Sea Isle City, N.J., office and with a spokesman in Tampa were not immediately returned.
Time to lever up and borrow fixed as the last dregs of credit are dispensed to the worthy.
Bond sales splattering means lower dollar and higher commodities...perversely, the rest of the world may enjoy dropping commodity costs while we pay higher;-}
Anybody want to buy some shag carpent and avocado appliances?
it means they take a loan in YEN (at 1%) convert it to NZ$ and get 6% from NZ.
How can gov of NZ finance that is a mystery.
as long as funds go into NZ they just make the NZ$ higher and higher but when they want OUT (with 6% more for every year the money has been to NZ) - what will atke place at that time ?
This is some kind of magic which I fail to understand. Generating money out of thin air.
For this not to be thin air you would have to beleive that NZ is more productive than Japan......
As someone with a fixed rate mortgage, I always had this picture in my head that those with ARMs and lower rates would eventually have to pay at least as much as me through either prepayment penalty or higher rates later. They seem to make sense to me as opposed to some of the other practices.
It's a CNN/Money article titled "Wow, I could've had a prime mortgage - Why many borrowers who qualified for prime-rate loans wound up with subprimes instead."
From the article:
"'I reviewed several hundred [subprime] loans recently for our wholesale division,' said Allen Hardester, director of development for mortgage-broker, Guaranteed Rate, 'and all of them, with one exception, qualified for a prime-rate loan.'
Freddie Mac, a government-sponsored mortgage-loan buyer, estimated that borrowers of 15 to 35 percent of all subprime loans it bought in 2005 could have qualified for prime-rate loans.
Fannie Mae, another government-sponsored loan buyer, estimated up to 50 percent of the borrowers, whose subprimes it bought that year, had credit profiles that could have qualified them for prime rates."
...
I expected some fudging by brokers to try to increase their take, it's human nature, but not that high. Far be it for me to predict things, but that has congressional investigation and/or class action written all over it.
I'd like to suggest that Tanta take a look at FNMA's 0705 bulletin. FNMA is revising its credit eligibility for MyCommunity loans (no more EA-II), and slapping a 1% premium on top of them. They are also extending amortization terms to 40 years.
Rose Berger: "IF YOU LOOK AT THE FOLLOWING ARTICLE AND SEE THE DELENQUCIES AS A PERCENTAGE"
I second this link to the attention of CR (indeed spent half the day yesterday jumping up and down on this one like a demented gerbil). Here's a sample, see Rose's link for the correct format. Column two is 60+ delinquent & other bad stuff ...
Fitch Affirms Countrywide's IDR at 'A'; Outlook Stable
5 minutes ago - BusinessWire
excerpt
The ratings for CFC reflect the company's leadership in the U.S. mortgage banking industry, good financial performance amid extreme sector weakness and diverse funding profile augmented by deposit growth at Countrywide Bank FSB. CFC's macro-hedge strategy, or the benefits of mortgage production and servicing combined, has delivered consistent operating performance over multiple cycles. Fallout in the subprime sector and overall market conditions caused higher than expected credit costs and unanticipated mark-to-market write-downs in the first quarter of 2007. Fitch believes that market conditions for 2007 will continue to be challenging, pressuring operating performance. However, Fitch believes CFC will be a long term beneficiary of eventual market rationalization, particularly in the subprime arena. For the subprime sector, the competitive landscape has changed dramatically with several monoline mortgage companies exiting the market.
Future rating actions will be based on CFC's success in executing its growth strategy while employing effective risk management and maintaining appropriate risk-adjusted capital levels. Positive factors include successful navigation through difficult market conditions which include, withstanding the housing market malaise, absorbing potential subprime aftershocks and managing through record-high adjustable-rate mortgage (ARM) resets. However, further deterioration of credit performance, aggressive capital management or negative consequences from regulatory and legislative scrutiny could pressure ratings.
The company is in the early stages of integrating Countrywide Home Loans, Inc. (CHL) into the Countrywide Bank to lower funding costs and reduce reliance on unsecured debt markets. Although the company remains committed to maintaining credit metrics throughout this transition, Fitch will monitor the structural impact on CFC and CHL. Recognizing that changes in credit metrics may be temporary and transitional, rating actions on CFC and CHL may not be warranted. However, if differing credit profiles are more permanent in nature, Fitch would consider specific rating actions to be applied to the affected entities.
I don't buy that over-whelming numbers of prime borrowers were herded like cattle into sub-prime & Alt-A loans. If those pools are full of prime borrowers, why are the deliquency rates spiking so far above the true primes?
AllanF - because subprime loans generally carry much higher underlying interest rates, they are more costly than prime loans. For borrowers who are stretched, a difference of 200 basis points is a very big difference in monthly payments. Higher rates are needed because of the higher default rates of subprime borrowers.
The non-agency subprimes of recent history were often originated with very low initial rates, but adjust considerably higher after 2 or 3 years. At that point, even a "prime" borrower who got one of these loans may experience payment shock.
Due to the "affordability" feature of these loans, many of the prime/subprime cohort bought more home than they would have qualified for under the subprime lending standards of a few years ago. They could afford the initial payment, that's true, but they may well not have completed the transaction if they had been contemplating the "real" payment.
The carry trade does not create money out of thin air. It simply robs Peter (Japanese savers) to give Paul (hedge funders). If it unwinds, it is the other way round.
yal, I believe the black Swan function explains a lot of what we are seeing in today's markets. Picking up pennies in front of the steamroller....so say the NZ dollar tanks a good 17% in six months like early 2006- so yen folks are now totally underwater and have been driving the currency into the toilet due to people dropping the carry trade like a hot potato. Now they all pile right back again and drive it 20% the other way! Lever it up and you can make biiiiiig money. Or lose big. Read Soros's book and see him describe some of his maalox moments regarding currency trading.
Fundamentals? We ain't got no stinkin fundamentals! We only are interested in making money.
Credit lockup has to be coming- after all there is no way that Japan is going to provide eternal springs of liquidity to fund everyone else's trade deficits- not when the Chinese now have to do it;-}
Ironically,
many of the current participants in the yen carry trade are Japanese investors- almost a billion dollars at the end of last quarter- wanna bet who loses? They will when the BOJ pushes the yen up to get some commodities relief and sells some bonds (US Bonds!!!) to soak up some of the oceans of liquidity! When the small guy shows up for the crumbs he usually gets stuck with the tab!
"The correction of the housing sector was likely to continue to weigh heavily on economic activity through most of this year,"...That assessment was "somewhat longer than previously expected," the Fed said.
michaelcampion & all, I'm working on another dreaded UberNerd post on what HOEPA is. I thought it would help everyone understand what this hearing is going to be about, and maybe even encourage our readers to submit comments.
Yal, Andrew, MOM, thanks for the other things I need to look at. I also have three items screaming for my attention in my email. This is almost getting to be like the old employed days--I'm starting to have to make up excuses for you guys!
"equity protection was included in the act to help the HO from all the weekly mailings he gets telling him its his money...like he never has to pay it back...
it was designed to discourage predatory lending from companies that mass mailed equity offewrs with low payments, 150% equity offers, etc. It has been around for a few years, not bail out but trying to protect what they HO has amassed in "wealth""
It is a bailout...it's monetizing inflationary gains created via credit liquidity (m3) out of control for 5+ years. If that happens, then the savers get screwed...I'll bet there are lots of savers that post here. The next time you see some DouchBag realtor or mortgage broker driving around in a BMW or Porshce, that's where your real value of your savings went over the past several years. Nice Huh.....
Tanta - "Yal, Andrew, MOM, thanks for the other things I need to look at. I also have three items screaming for my attention in my email. This is almost getting to be like the old employed days--I'm starting to have to make up excuses for you guys! I'm getting right on it."
Careful Tanta, you don't want to make this too much like work, it'll cease being fun. We definitely don't want to lose your insightful and sarcastic wit around here.
Eh, Andrew, don't worry about me. The wretched part of the employment scene--you all have my endless sympathy--is the effort that has to be invested in an excuse that is 1) plausible 2) socially-acceptable and 3) not reused frequently. I'd be like, look, I'd have this shit done if I didn't have to spend all this time making up stories about why it's not done, OK?
But this blog gig is easy livin.' I just say, "hey, I was sitting out on the patio in my jammies drinking lemonade and watching the squirrels frolic, and that made me so sleepy I had to come in and take a nap." And you all, like, instantly believe it because it's true! And I can use it on you over and over again! And you can't fire me! You can make me come in on Saturdays, but you can't make me not post ABBA videos! Heh!
"Afghani and other subprime veterans say their job was to reel in borrowers, period. Never mind whether customers needed loans or could manage payments."
sorry for the "hijack" but real etstae is king:
Deutsche Bank upgrades REITs; Archstone-Smith deal cited - MarketWatch
May 30 (Bloomberg) -- Japan's industrial production unexpectedly fell for a second month in April as the slowest economic growth in the U.S. in four years reduced demand for Toyota Motor Corp. and Honda Motor Co. cars.
Production slipped a seasonally adjusted 0.1 percent after declining 0.3 percent a month earlier, the Ministry of Economy, Trade and Industry said in Tokyo today. The median estimate of 46 economists was for a 0.5 percent increase
W.C. Varones Blog: Rocket man
How about instead:
Whats wrong with stated income/low doc loans?
NOTHING. You just have to assume they are probbaly fraudulent. Assume that, and its easy.
Yal, the REIT upgrade story reminded me instantly of Blodgett et al in Jan 2000.
BTW, to all, as a regular lurker I have to agree the comments and posts here are always worthwhile.
OT
AP NEWSWIRE
REAGAN TOPS GORE IN SQUEAKER
WED MAY 30 2007 10:19:28 ET
EXCLUSIVE
'THE REAGAN DIARIES' OUTSOLD AL GORE'S 'ASSAULT ON REASON' IN OPENING WEEK ACTION, BOOKSCAN WILL REPORT.
REAGAN WON THE RACE BY SELLING JUST 5 MORE BOOKS THAN GORE!
'DIARIES' MOVED 49,626 COPIES TO GORE'S 49,621.
SOURCES STATE THAT WERE AT LEAST FIVE REPORTS OF ELDERLY PEOPLE IN FLORIDA THAT THOUGHT THEY WERE BUYING THE GORE BOOK BUT WERE CONFUSED AND TRICKED INTO BUYING REGAN'S AS THEY WERE SIDE BY SIDE ON THE DISPLAY.
THE REVEREND JESSE JACKSON IS ALSO REPORTEDLY FLYING INTO JACKSONVILLE TO MEET WITH PEOPLE WHO CLAIM THAT THEY WERE KEPT OUT OF A LOCAL BORDERS BOOKSTORE LOCATED IN A PREDOMINANTLY REPUBLICAN PART OF DUVALL COUNTY.
THE FORMER VICE PRESIDENT HAS ASSEMBLED HIS STAFF OF LAWYERS TO CHALLENGE THE COUNT IN FLORIDAS SUPREME COURT IN AN EMERGENCY MOTION.
FORMER PRESIDENT REGAN COULD NOT BE REACHED FOR COOMENT.
ISAACSON 'EINSTEIN' BAGGED 21,007 FOR THE WEEK [208,939 SINCE RELEASE]... HITCHENS 'GOD IS NOT GREAT' EXCHANGED 17,876 [58,490].
Formula for foreclosure: resets, no equity
Expired
NEW YORK (CNNMoney.com) -- Mortgage rates jumped this week on upbeat consumer sentiment and speculation that the Federal Reserve would not cut interest rates anytime soon, Freddie Mac said Thursday.
The average rate on 30-year fixed-rate loans climbed to 6.37 percent for the week ending May 24, up from 6.21 the previous week, the mortgage finance firm said. Last year at this time, 30-year mortgage rates averaged 6.62 percent.
ok IF YOU LOOK AT THE FOLLOWING ARTICLE AND SEE THE DELENQUCIES AS A PERCENTAGE..
Luminent Mortgage Capital Provides Seasoned Loan Level Credit Performance
And then look at the graph in the WSJ article it looks as if the Alt A paper is doomed to repeat what happened in the subprime.
Amazing that SP makes up 30% of the loans and of those 30% 10% are DQ. And that cuses this much strife in our RE Markets... 3% of total Mortgage loans.....
Home Ownership and Equity Protection Act
Does anyone know what they are referring to?
.........
Sacramento Real Estate Statistics: Loan Fraud, Foreclosures, Personal Responsibility Rant
Tanta: Wow, I could've had a prime mortgage - May. 30, 2007
The page cannot be found
great article with the facts to back it up...
Housing is Falling Much Faster than Reported
michaelcampion: "Equity protection" distinctly sounds like bailout. But then it wouldn't be the first Act with a pompous and misleading name.
equity protection was included in the act to help the HO from all the weekly mailings he gets telling him its his money...like he never has to pay it back...
it was designed to discourage predatory lending from companies that mass mailed equity offewrs with low payments, 150% equity offers, etc. It has been around for a few years, not bail out but trying to protect what they HO has amassed in "wealth"
"Some of the questions are interesting:
Should stated income or low doc loans be prohibited for certain loans, such as loans to subprime borrowers?
Should stated income or low doc loans be prohibited for higher-risk loans, for example, for loans with high loan-to-value ratios?"
I assume those are rhetorical questions?
In the event they're not, I think we need to change the "hearings" to "listenings" as in "listen to what that still small voice of reason is telling you..."
While REITs are upgarded:
AP
Trump Leaves Tampa High-Rise Project
Wednesday May 30, 11:40 am ET
Trump Pulls Out of Tampa High-Rise Project Initially Intended to Bear His Name
TAMPA, Fla. (AP) -- There will be no Trump Tower in Tampa.
Real estate mogul Donald Trump has pulled out of the $300 million, 52-story Trump Tower condominium project in Tampa, according to a lawsuit filed Friday in U.S. District Court.
ADVERTISEMENT
Trump said in the lawsuit that developer SimDag owes him more than $1 million in unpaid licensing fees. Trump also said SimDag failed to show it had sold enough condos, valued between $700,000 and $6.2 million, to meet contractual obligations to him. Trump was entitled to half the profits of the sale of 190 condos and a licensing fee of $2.8 million.
The loss of the famous name could end the project.
"We could continue without Trump, but I don't know if we'd even want to, " said Eric Fordin of the Related Group, a Miami developer enlisted by SimDag to revive the project.
The project, billed in January 2005 as one of the tallest and grandest towers on the Gulf of Mexico, has been burdened by financial setbacks, legal troubles and the slump in the housing market. Construction stalled in November and the lot is now empty.
The phone at SimDag's Clearwater corporate office was listed disconnected Wednesday. Phone messages left at the company's Sea Isle City, N.J., office and with a spokesman in Tampa were not immediately returned.
Ain't no sunshine when it rains...
Time to lever up and borrow fixed as the last dregs of credit are dispensed to the worthy.
Bond sales splattering means lower dollar and higher commodities...perversely, the rest of the world may enjoy dropping commodity costs while we pay higher;-}
Anybody want to buy some shag carpent and avocado appliances?
Someday this war's gonna end...
The carry trade is back in business and thriving.
What does it mean?
I don't know.
FT.com / Currencies - Carry trades recover after March jitters
Well, prepayment penalty must be removed, including existing loans. Lenders must amend terms for all outstanding loans. PP is evil.
arbogast,
it means they take a loan in YEN (at 1%) convert it to NZ$ and get 6% from NZ.
How can gov of NZ finance that is a mystery.
as long as funds go into NZ they just make the NZ$ higher and higher but when they want OUT (with 6% more for every year the money has been to NZ) - what will atke place at that time ?
This is some kind of magic which I fail to understand. Generating money out of thin air.
For this not to be thin air you would have to beleive that NZ is more productive than Japan......
As someone with a fixed rate mortgage, I always had this picture in my head that those with ARMs and lower rates would eventually have to pay at least as much as me through either prepayment penalty or higher rates later. They seem to make sense to me as opposed to some of the other practices.
I'll second Yal's recommended link above for Tanta's attention.
Wow, I could've had a prime mortgage - May. 30, 2007
It's a CNN/Money article titled "Wow, I could've had a prime mortgage - Why many borrowers who qualified for prime-rate loans wound up with subprimes instead."
From the article:
"'I reviewed several hundred [subprime] loans recently for our wholesale division,' said Allen Hardester, director of development for mortgage-broker, Guaranteed Rate, 'and all of them, with one exception, qualified for a prime-rate loan.'
Freddie Mac, a government-sponsored mortgage-loan buyer, estimated that borrowers of 15 to 35 percent of all subprime loans it bought in 2005 could have qualified for prime-rate loans.
Fannie Mae, another government-sponsored loan buyer, estimated up to 50 percent of the borrowers, whose subprimes it bought that year, had credit profiles that could have qualified them for prime rates."
...
I expected some fudging by brokers to try to increase their take, it's human nature, but not that high. Far be it for me to predict things, but that has congressional investigation and/or class action written all over it.
I'd like to suggest that Tanta take a look at FNMA's 0705 bulletin. FNMA is revising its credit eligibility for MyCommunity loans (no more EA-II), and slapping a 1% premium on top of them. They are also extending amortization terms to 40 years.
Yal,
That is exactly how Soros made his billions....
Vr,
Lance
UK:
Rents soar as rate rises squeeze buy-to-lets - Telegraph
Rose Berger: "IF YOU LOOK AT THE FOLLOWING ARTICLE AND SEE THE DELENQUCIES AS A PERCENTAGE"
I second this link to the attention of CR (indeed spent half the day yesterday jumping up and down on this one like a demented gerbil). Here's a sample, see Rose's link for the correct format. Column two is 60+ delinquent & other bad stuff ...
LXS (Lehman) 8.52% 7.45%
BALTA (Bear Stearns) 7.43 6.36
RAMP (RFC/GMAC) 5.70 4.63
IMSA (Impac) 5.65 4.58
MSM (Morgan Stanley) 5.64 4.57
DBALT (Deutsche Bank) 5.29 4.22
... more ...
Has CFC wrote this ?
Fitch Affirms Countrywide's IDR at 'A'; Outlook Stable
5 minutes ago - BusinessWire
excerpt
The ratings for CFC reflect the company's leadership in the U.S. mortgage banking industry, good financial performance amid extreme sector weakness and diverse funding profile augmented by deposit growth at Countrywide Bank FSB. CFC's macro-hedge strategy, or the benefits of mortgage production and servicing combined, has delivered consistent operating performance over multiple cycles. Fallout in the subprime sector and overall market conditions caused higher than expected credit costs and unanticipated mark-to-market write-downs in the first quarter of 2007. Fitch believes that market conditions for 2007 will continue to be challenging, pressuring operating performance. However, Fitch believes CFC will be a long term beneficiary of eventual market rationalization, particularly in the subprime arena. For the subprime sector, the competitive landscape has changed dramatically with several monoline mortgage companies exiting the market.
Future rating actions will be based on CFC's success in executing its growth strategy while employing effective risk management and maintaining appropriate risk-adjusted capital levels. Positive factors include successful navigation through difficult market conditions which include, withstanding the housing market malaise, absorbing potential subprime aftershocks and managing through record-high adjustable-rate mortgage (ARM) resets. However, further deterioration of credit performance, aggressive capital management or negative consequences from regulatory and legislative scrutiny could pressure ratings.
The company is in the early stages of integrating Countrywide Home Loans, Inc. (CHL) into the Countrywide Bank to lower funding costs and reduce reliance on unsecured debt markets. Although the company remains committed to maintaining credit metrics throughout this transition, Fitch will monitor the structural impact on CFC and CHL. Recognizing that changes in credit metrics may be temporary and transitional, rating actions on CFC and CHL may not be warranted. However, if differing credit profiles are more permanent in nature, Fitch would consider specific rating actions to be applied to the affected entities.
I don't buy that over-whelming numbers of prime borrowers were herded like cattle into sub-prime & Alt-A loans. If those pools are full of prime borrowers, why are the deliquency rates spiking so far above the true primes?
AllanF - because subprime loans generally carry much higher underlying interest rates, they are more costly than prime loans. For borrowers who are stretched, a difference of 200 basis points is a very big difference in monthly payments. Higher rates are needed because of the higher default rates of subprime borrowers.
The non-agency subprimes of recent history were often originated with very low initial rates, but adjust considerably higher after 2 or 3 years. At that point, even a "prime" borrower who got one of these loans may experience payment shock.
Due to the "affordability" feature of these loans, many of the prime/subprime cohort bought more home than they would have qualified for under the subprime lending standards of a few years ago. They could afford the initial payment, that's true, but they may well not have completed the transaction if they had been contemplating the "real" payment.
Yal,
The carry trade does not create money out of thin air. It simply robs Peter (Japanese savers) to give Paul (hedge funders). If it unwinds, it is the other way round.
yal, I believe the black Swan function explains a lot of what we are seeing in today's markets. Picking up pennies in front of the steamroller....so say the NZ dollar tanks a good 17% in six months like early 2006- so yen folks are now totally underwater and have been driving the currency into the toilet due to people dropping the carry trade like a hot potato. Now they all pile right back again and drive it 20% the other way! Lever it up and you can make biiiiiig money. Or lose big. Read Soros's book and see him describe some of his maalox moments regarding currency trading.
Fundamentals? We ain't got no stinkin fundamentals! We only are interested in making money.
Credit lockup has to be coming- after all there is no way that Japan is going to provide eternal springs of liquidity to fund everyone else's trade deficits- not when the Chinese now have to do it;-}
Some day this war's gonna end...
Ironically,
many of the current participants in the yen carry trade are Japanese investors- almost a billion dollars at the end of last quarter- wanna bet who loses? They will when the BOJ pushes the yen up to get some commodities relief and sells some bonds (US Bonds!!!) to soak up some of the oceans of liquidity! When the small guy shows up for the crumbs he usually gets stuck with the tab!
Some day this war's gonna end...
From the Fed minutes released a little while ago:
"The correction of the housing sector was likely to continue to weigh heavily on economic activity through most of this year,"...That assessment was "somewhat longer than previously expected," the Fed said.
(via Bloomberg)
michaelcampion & all, I'm working on another dreaded UberNerd post on what HOEPA is. I thought it would help everyone understand what this hearing is going to be about, and maybe even encourage our readers to submit comments.
Yal, Andrew, MOM, thanks for the other things I need to look at. I also have three items screaming for my attention in my email. This is almost getting to be like the old employed days--I'm starting to have to make up excuses for you guys!
I'm getting right on it.
Whos Holding the Bag?
http://www.designs.valueinvestorinsight.com/bonus/pdf/IraSohnFinal.pdf
so Fed said infaltion + (almost) recession . (i.e. near stagflation).
Consumer is in a bind but stock of mall REIT SPG is up.....on buyout rumors ?
"equity protection was included in the act to help the HO from all the weekly mailings he gets telling him its his money...like he never has to pay it back...
it was designed to discourage predatory lending from companies that mass mailed equity offewrs with low payments, 150% equity offers, etc. It has been around for a few years, not bail out but trying to protect what they HO has amassed in "wealth""
It is a bailout...it's monetizing inflationary gains created via credit liquidity (m3) out of control for 5+ years. If that happens, then the savers get screwed...I'll bet there are lots of savers that post here. The next time you see some DouchBag realtor or mortgage broker driving around in a BMW or Porshce, that's where your real value of your savings went over the past several years. Nice Huh.....
So with government action, the pool of potential homeowners will become restricted, making for less buyers on top of a flood of sellers.
To quote Robbie Fulks,
"Tears only run one way, down, down, down."
Tanta - "Yal, Andrew, MOM, thanks for the other things I need to look at. I also have three items screaming for my attention in my email. This is almost getting to be like the old employed days--I'm starting to have to make up excuses for you guys! I'm getting right on it."
Careful Tanta, you don't want to make this too much like work, it'll cease being fun. We definitely don't want to lose your insightful and sarcastic wit around here.
This is almost getting to be like the old employed days--I'm starting to have to make up excuses for you guys!
Ummm, Yeah... I'm going to need you to come in on Saturday.
...
Oh, oh, and I almost forgot. Ahh, I'm also gonna need you to go ahead and come in on Sunday, too...
Good link
http://www.designs.valueinvestorinsight.com/bonus/pdf/IraSohnFinal.pdf
Eh, Andrew, don't worry about me. The wretched part of the employment scene--you all have my endless sympathy--is the effort that has to be invested in an excuse that is 1) plausible 2) socially-acceptable and 3) not reused frequently. I'd be like, look, I'd have this shit done if I didn't have to spend all this time making up stories about why it's not done, OK?
But this blog gig is easy livin.' I just say, "hey, I was sitting out on the patio in my jammies drinking lemonade and watching the squirrels frolic, and that made me so sleepy I had to come in and take a nap." And you all, like, instantly believe it because it's true! And I can use it on you over and over again! And you can't fire me! You can make me come in on Saturdays, but you can't make me not post ABBA videos! Heh!
Lurker,
That is an excellent link and a good summary with nice charts of the whole issue.
That said, their work is a bit self serving with Pershing Capital shorting MBI stock...
Well here you have it, the reason that regulation is necessary in the Mgt lending business. I just hope the FED is paying attention.
Subprime Fiasco Exposes Manipulation by Mortgage Brokerages - Bloomberg.com
"Afghani and other subprime veterans say their job was to reel in borrowers, period. Never mind whether customers needed loans or could manage payments."