OK, I said this on the last thread, so I'll say it again here:

In all seriousness, what is the potential fallout from the C-BASS implosion?

If C-BASS can take a terrible hit like that, then some other parties are going to be annihilated.

I can remember a friend of mine telling me that C-BASS was making some bids on seasoned subprime ARM portfolios in January that made her company puke. The deal didn't go through because the seller was too far in denial to take the bid and C-BASS wouldn't budge.

C-BASS has some grizzled veterans on board, first-class analytics, and a "combat" servicing operation (i.e., a servicing operation that specializes not just in subprime but in distressed portfolios). So if they get hosed, these feckless hedge funds who think they're going to pick up some cheap "distressed assets" are going to get slaughtered.

You know, AHM has always struck me as the kind of outfit that works fine when everything else works fine, but has no Plan B, no willingness to even consider Plan B. Outfits like that blow up.

I honestly have always had some respect for both MGIC and C-BASS. I don't say this to comfort anyone.

"MGIC has not determined the range of an impairment charge, although the upper boundary of the range could be MGIC's entire investment, less any associated tax benefit."

Man, that is friggin hilarious. The only thing that could have been funnier is if the upper bound estimate was infinity.

Vicjim, I thought Radian bought Fieldstone. Are you saying it became part of the C-BASS JV with the merger?

I wouldn't have touched Fieldstone with a 10-foot pole.

I think that is out of character. People ask periodically when the grownups will go back in charge of the mortgage industry. MGIC has always been one of the grownups.

I think the next thing you hear on AHM is a raid by the Feds.

I bought 10 of the Sept 55 MTG puts 7 days ago on weakness in the stock. They are up 100% so far with the stock at 45. Barrons had an article last week on problems in the mortgage insurers. I also bought some PMI puts today.

It is going to be interesting. I just finished reading the Business Week Business outlook column and they are repeated BB's comment of a loss of 50-100 billion to the economy due to the subprime. The nightly business report (NPR) just had several experts saying that the worst is over and the S&P can now go up 8% before year end.

Sounds a lot like the Bush administrations estimate of a cost of 50 Billion for the Iraq War. The cost will come to over a trillion, if we factor in medical costs over the lives of veterans, even if we start leaving next week.

It was C-BASS that bought Fieldstone, Tanta--the deal finally closed two weeks ago.

WSJ Error Page - WSJ.com

Made no sense to me either.

As of 30 minutes ago (6:50 EST) MTG was down almost $4 and 9%. The volume was only 30,000 shares, so it may not mean much. RDN was only down about 2%.

What's with RWT, down over 7% today?

On the tax thing-
Former homehowners who executed a short sale, are 1099'd, with the result being a taxable gain, as it's debt never to be repaid...(tax liability)

MGIC makes stupid investment decisions, takes a whopper loss, and gets a tax benefit...

Only in Amerika

I've been telling friends for about a year now: the next big wave of lawsuits will be over subprime mortgages. Every step of the chain will beget lawsuits.

Origination, packaging, rating, and of course, who ends up holding the bag.

As an attorney, I believe the subprime mess will be a virtual "lawyer's full employment act" for 2008-2011.

I thought your currency had Her Majesty, not HRH.

Evidently not.

Camilla is a Royal Highness, though. May I impugn her honour?

Tanta,

You should take a look at the pool that MGIC and C-BASS swim in and who the other fish (jelly/shark/Sherman Financial/Litton Loan Servicing) are that are in with them.

C-BASS is well known for causing many of the same problems with the loans that it services through it's Litton Loan Servicing that I and the several hundred thousand other Fairbanks/Select Portfolio Servicing victims have had to deal with in our own cases. Payments made on time held until they're past due to manufacture defaults, assigning force placed insurance despite a home owner having their own policy, charging assorted fees not allowed by a home owner's note, etc.

Personally, I'd be only too happy if MGIC and C-Bass implode and took everyone with them but, unfortunately, it would just mean that it would be just one more opportunity for a Fairbanks/SPS or EMC or Ocwen to step in and purchase the already damaged portfolios and wreak more havoc on unsuspecting homeowners who realistically probably have not clue one about what would be about to happen to them.

Stop by Mortgage Servicing Fraud sometime and take a look at the Legal Lounge or run a search for MGIC, C-BASS, Litton etc. through the discussion forum and see what homeowners have had to deal with for at least the last decade if not longer. After all, anyone with a mortgage could end up in the situation that I've been in for the last six years. All it takes is to have the servicing rights to your note sold to the right/wrong servicer and you could be teed up for foreclosure in no time regardless of whether you are current in your payments (as I was) or not. More often than not, that loan has been bundled up nice and snug into some form of RMBS and led off to the Street for slaughter.

And it’s within those PSAs that I’ve been yelling about that the keys lay to begin the theft of homes. The sentence usually begins with “As additional servicing compensation..” and usually contains “assumption fees, forbearance fees, modification fees, late payments” and within the last few years “prepayment penalties” and ‘liquidation profits”. As I’m sure you are well aware, anything labeled “additional servicing compensation” goes right into the servicer’s pocket which means that a servicer has absolutely zero incentive to keep a home owner current in their payments. To do so would drastically cut their bottom line. And the longer a home owner can be kept in some level of default the servicer, and the BPO agency, and the force placed insurance underwriter (oftentimes Countrywide’s Balboa) and the foreclosure mill attorneys all keep making money hand over fist until the home owner can no longer keep up with the additional fees levied against them.