No, I think that was a comment by Tanta on their relative age and wet-behind-the-ears mentality.

Forgive if already posted, but Ohio AG is on the move against subprime lenders:

Ohio Attorney General Targets Wall Street for Lending (Update2) - Bloomberg.com

"he wants to sue securities firms because their bond sales enabled consumers to get mortgages they couldn't afford."

Well, good luck with that.

MBA applications obsolete, median prices useless. OPHEO inertia not operative. Not good times for statistics.

Anon:

I disagree with your assesment.

Ms. Haddad was the first mainstream reporter to do a story on housing bubble blogs.

She is an equal opportunity offender to both sides of the housing debate.

No one buys operating systems except when they buy new machines... even thinking that they would is sooooo mid-nineties-ish... you hear me Bill?

Back on RE... I must admit I'm a bit surprised the bottom segment is doing as badly as the report suggests. I'd expect the middle to be hardest hit... with the high end 'exempt' because the rich never feel pain and the low end holding its own as people are forced to move down out of the middle.

But maybe because So Cal's low end is so high people moving down have only one option... and that's renting.

In my world some neighborhoods are so cheap they are STILL cheaper than rent (two homes within a few blocks of where I live are asking LESS than $100K and are plenty livable). Here you rent not because owning is too expensive but for other reasons (like being able to freely leave this cheap neighborhood).

Few days back TSM & UMC posted lower earnings. They are #1 & #2 contract chip manufacturers.

Expired

FED: What Is Subprime Lending?
http://research.stlouisfed.org/publications/mt/20070601/mtpub.pdf

Tanta, where can a fellow see the total originations for a specific state on a quarterly basis (preferably but not necessarily by loan type)?

In my dreams. Well, and apparently in yours, too.

There are places from which you can buy some expensive data that will estimate that for you. Otherwise, you're pretty much stuck with looking at conforming data (OFHEO, MIRS), then sampling some private lenders who disclose this, and then ballparkin'.

If I look at a lender's books and I want to ballpark loss reserves as % assets, what's the best approach? I see many people taking loss reserves as % NPAs and NPAs as % of assets, and multiplying these two numbers. Why is that?

Reserve amount = what I expect to write off, net of recovery

NPA = total balance of loan that might end up in a write-off

Reserve/NPA balance = expected loss severity per delinquent loan

loss severity times delinquency rate (NPA/assets) = cumulative loss on portfolio

That's the way an MBS does it, so to do that with a lender's portfolio makes them comparable figures.

I am also confused about forbearance vs. mods. We often had the people who came on here and piled up on lenders for mod'ing as a way to not have to write down assets, but aren't modified loans still part of NPA? And aren't some of them possibly still in non-accrual?

A modified loan that is making payments again is now "performing," so it's not in NPA, strictly speaking. Some lenders might reserve against its once-modified loans as it would for NPAs, on the theory that they are more likely to result in loss than the never-modified part of the portfolio, but one is not required to keep reporting them as nonperforming when they have started performing again. It's not in non-accrual--non-accrual is only for a loan you deem doubtful of collection. Once the borrower starts making payments again, you go back to accruing income on the loan.

Forbearance is just giving someone up to 90 days (generally) to skip or make partial payments, with the understanding that the lender won't foreclose if you catch up by the expiration of the forbearance period. Those loans would show as delinquent but not in non-accrual. You don't non-accrue until you're ready to send the notice of intent to foreclose.

In other words, a modification is a "workout." The loan will have been NPA or possibly non-accrual (depending on how severely behind it got) before it was modified, but once it's fixed, it's fixed. If the lender had to write off some interest or principal in order to fix it, that shows up in bad debt expense (charge on the reserves).

It would show up on a cumulative/historical delinquency report, but alas, a balance sheet is not a historical document. It is a snapshot of the end of a period, with some comparisons to earlier snapshots.

S&P calls housing bottom(.pdf)

Fun little topic starters as:

Homes Are Less Affordable
A Dubious Record for Home Prices

But what do they say?
housing knocks 1% off of GDP
DTI ratio drops to 280% Q1 08 from 319% Q4 06
12.1 % of borrowers have more than 40% of their income tied up in debt service

And conclusion? (here come the 3 handed economist jokes)

A: Slow decline of 8% from 2006 highs bottoming in 2008, doesn't affect the economy

B: Fast decline of 20% due to the weak US$, causing a spike in interest rate, causing a recession in Q4 07 and subsequent market correction.

And on the other other hand, doomsday scenario:
C: Nationwide price reductions like TX 80's and NE early 90's, subprime causes credit crunch, governments restrict FC's causing property values to crater, cats are sleeping with dogs.