This is tremendously interesting if the hedge allegations are true in regard to BS. Buying individual mortgages to "prop" the index to avoid the potential repurchase of billions in swaps. All the while working on an IPO to dump to retail in the same space...
whew, who'da thought? Just shows that retail is an institutional dumping ground of mass proportion, something says "Arnold" may wish to lead legislation that says you can't dump your idiotic mistakes on mom and pop-
Another note of interest, my thoughts are that for the last 2 weeks you have seen institutional distribution in the capital markets and that this will continue, confidence is waning, and the reality that the second half will deteriorate is prevalent. The last two days has shown the correlation of tyically non-correlated asset classes and hedge fund liquidation. I would expect that any strength will continue to be sold and that advances will be limited or nonexistant.
The liklihood of a "credit event" is increasingly large due to what could potentially be a weak period for capital markets. "If" this occurs, the move in junk spreads will be very fast and catch many off-guard.
CR - Forgive me if this is an irrelevant question, but what does it mean if CT's press relese, among others, was dated in November, 2006? Does this mean it's merely business as usual?
Also, we all jump to believe it's now over for the housing industry. But your thinking is usually a little more grounded. What do you think will be the effect of this? A roadblock or just a speed bump? Or slight wind resistance?
Capitalism functions best if it is regulated. Otherwise the predators take over, stifle competition, adulterate or knockoff products and manipulate supply or demand in order to make mega millions.
It looks to me what Bear is trying to do here is repurchase loans out of existing securities when they are in the early stages of delinquency.
This would allow them to stop advancing on these loans and effectiveley have them treated as paid in full loans. This would help the securitization by reducing the delinquency rates.
Bear then owns this loan on it's books. And can modify it as it pleases.
They can then, if they wish resecuritze these types of loans in some way.
Their postion here is that they are cutting their losses by buying out now.
The Hedge funds don't like this because the longer the bad loans stay in the securitization the more money they can make.
Considering the obscene housing prices in California, and the prevalence of neg. am., I/O, teaser rates, NINA, NINJA, and other "non-traditional" loans in California, adoption of the federal guidance will have a huge impact on the buyer pool. There simply aren't enough potential buyers with the income required to buy homes at anywhere near today's prices in California. For instance, in Orange County, the median price for a SFR topped out at approximately 11 times median income (our long range average is about 4.5 to 5 times income). If people have to qualify based on the fully indexed rate, not many people will qualify.
It will also take away the ability for a lot of recent purchasers to refi their resetting loan, as they only qualified based on the teaser rate. This will inevitably lead to more foreclosures.
Knocking out potential buyers will push sales down even more and increase the months of inventory (plus the increase in actual inventory from the foreclosures), all of which will put more downward pressure on prices. In theory, this should make the correction happen quicker than the last downturn (which did not have all of these resets to deal with).
Du Dooj!!! (that's the sound of implosion)
Best of all, in space, no one can hear you scream.
Need I add, FRIST!!!
oy...
whack whack whack whack whack whack whack whack whack. Phew! getting tired. One more nail in the coffin.
SHUT THE BARN DOOR HURRY!
Please do a write up on how many people are now shut out of the market vs 2005 now with all guidance they have made please. Thx!
Message to sellers: Guess how many potential buyers can now afford your current asking price. GAME OVER.
That guarantees(when Arnold signs it) when Cali markets hit bottom, they're going to 1998 levels.
Hatzius on the economy, including a segment on housing.
Steve, thanks for the link to the Hatzius interview. Excellent. And yes, I agree with him - he will regret the recent "modest upgrade"!
Best Wishes.
http://www.dailybusinessreview.com/news.html?news_id=43542
"Peter Zalewski, head of Condo Vultures Realty"
Talk about reality being better than fiction...
credit issue (not yet an event):
Zell's Tribune LBO Runs Into Funds Seeking a Default (Update1) - Bloomberg.com
I notice that Florida is conspicoulsy absent from the list. Can we say REIC massive influence in state capital? Suprised Maryland not yet on list.
Katy BAR THE DOOR-
This is tremendously interesting if the hedge allegations are true in regard to BS. Buying individual mortgages to "prop" the index to avoid the potential repurchase of billions in swaps. All the while working on an IPO to dump to retail in the same space...
whew, who'da thought? Just shows that retail is an institutional dumping ground of mass proportion, something says "Arnold" may wish to lead legislation that says you can't dump your idiotic mistakes on mom and pop-
Hedge funds slam Bear over subprime losses: report
| Reuters
Another note of interest, my thoughts are that for the last 2 weeks you have seen institutional distribution in the capital markets and that this will continue, confidence is waning, and the reality that the second half will deteriorate is prevalent. The last two days has shown the correlation of tyically non-correlated asset classes and hedge fund liquidation. I would expect that any strength will continue to be sold and that advances will be limited or nonexistant.
The liklihood of a "credit event" is increasingly large due to what could potentially be a weak period for capital markets. "If" this occurs, the move in junk spreads will be very fast and catch many off-guard.
CR - Forgive me if this is an irrelevant question, but what does it mean if CT's press relese, among others, was dated in November, 2006? Does this mean it's merely business as usual?
Also, we all jump to believe it's now over for the housing industry. But your thinking is usually a little more grounded. What do you think will be the effect of this? A roadblock or just a speed bump? Or slight wind resistance?
Too late. This had to be done in 2004.
And now I don't even know if that will improve situation or make it even worse.
CR - what do you think?
Capitalism functions best if it is regulated. Otherwise the predators take over, stifle competition, adulterate or knockoff products and manipulate supply or demand in order to make mega millions.
So much for retail being strong in May.
Say hello to a buckling consumer.
404 Error
Tanta,
It looks to me what Bear is trying to do here is repurchase loans out of existing securities when they are in the early stages of delinquency.
This would allow them to stop advancing on these loans and effectiveley have them treated as paid in full loans. This would help the securitization by reducing the delinquency rates.
Bear then owns this loan on it's books. And can modify it as it pleases.
They can then, if they wish resecuritze these types of loans in some way.
Their postion here is that they are cutting their losses by buying out now.
The Hedge funds don't like this because the longer the bad loans stay in the securitization the more money they can make.
Considering the obscene housing prices in California, and the prevalence of neg. am., I/O, teaser rates, NINA, NINJA, and other "non-traditional" loans in California, adoption of the federal guidance will have a huge impact on the buyer pool. There simply aren't enough potential buyers with the income required to buy homes at anywhere near today's prices in California. For instance, in Orange County, the median price for a SFR topped out at approximately 11 times median income (our long range average is about 4.5 to 5 times income). If people have to qualify based on the fully indexed rate, not many people will qualify.
It will also take away the ability for a lot of recent purchasers to refi their resetting loan, as they only qualified based on the teaser rate. This will inevitably lead to more foreclosures.
Knocking out potential buyers will push sales down even more and increase the months of inventory (plus the increase in actual inventory from the foreclosures), all of which will put more downward pressure on prices. In theory, this should make the correction happen quicker than the last downturn (which did not have all of these resets to deal with).