crispy&cole, thanks for the heads up. Yeah, it's hard to believe they will only lose 10% on that pile of manure. So many HELOCs are now
worthless.
UrbanDigs, I think this is a smart move. Sell now - they will be worth less next year. Maybe Bear Stearns or Merrill would like to take some more losses!
They also stated they are tightening lending standards even more. Not a good sign, I am sure others will follow them...
They don't need to... they can't write loans for money they don't have. Look at the velocity of money, the eff, the ffr, BIX, BKX, ETC. The bulk of the US service economy is about debt creation and moving money around, Banks are about creating debt and moving money around. If they don't have money...well...
--
Leaders in forecasting are early and followers are late. Then there are what-me-worry clueless who fail to notice that US economy is a disaster that has been waiting to happen for a while. Now, the ball has started to role. We are already in a recession, to be followed by deflation and depression next year.
Commodities bust may already be in the early stage. When the Credit Bubble starts to burst the party is over.
Thought this was interesting. Guideline Changes for Indymac
Effective Wednesday, November 28th, the Alt-A Conforming product will undergo several
guideline updates and be re-labeled under the title Alt-A Preferred
Major Areas of Expansion in Alt-A Preferred:
First Time Homebuyer restrictions have been eliminated, and they are now
eligible for all scenarios
The minimum FICO for Full Doc 97% LTV has been reduced from 680 to
660
The maximum LTV for NINA has been increased from 80% to 90%
Stated Income, No Ratio and NINA documentation has been added for
Investment Properties
The maximum LTV for Investment Properties has been increased from
80% to 90%
The maximum LTV for 3-4 Unit properties has been increased from 80% to
90% on Stated and No Ratio Investment properties
Full Doc loans at or below 60% LTV do not require reserves, available for
all qualifying credit scores
Major Areas of Retraction in Alt-A Preferred:
Non-Resident Aliens are no longer eligible
Vesting in a qualified Business Entity is not available
Mixed-Use Properties are no longer eligible
Interest-Only for No Ratio documentation has been eliminated
Interest-Only for NINA documentation has been eliminated
The minimum reserve requirement for all Stated Income and No Ratio
loans is now 2 months PITI, regardless of LTV or FICO
The minimum reserve requirement for all 3-4 Unit properties has been
increased to 6 months PITI
The maximum LTV for Stated Income and No Ratio documentation has
been reduced from 95% to 90%
The minimum FICO for Stated Income and No Ratio documentation has
been increased from 640 to 660
The minimum FICOs for Full Doc ARM loans has been increased
The minimum FICOs for Full Doc 3-4 Unit properties has been increased
The maximum LTV for NINA 3-4 Unit properties has been reduced
It's nice that they plan to sell of $11 plus billion of loans in their portfolio.
The only problem I see is that there aren't likely many bids out there - who's gonna buy their crap??
If there's no bid they can cross their fingers, stamp their feet, swear and carry on but no bids means they ain't selling anything.
Good luck guys - it'll be like trying to sell sand in the Sahara...
On second thought I'll bid $.10 on the dollar for any 1st mortgages they are trying to sell - not interested in any 2nds or HELOCS. Tell 'em to post up their inventory here and I'll get back to them...
As WFC is 15% of his portfolio, he's got a lot of skin in the game. Another buying opportunity? (he'll need some help offseting his Citigroup losses...)
Damn, RacerX's Indymac news seems downright bizarre...
" The maximum LTV for NINA has been increased from 80% to 90%"
WTF! 90% LTV for a NINA loan when Goldman Sachs is expecting a 30% price decline in Indymac's backyard? Is that really true? That's something beyond mindboggling.... I thought they were concentrating on conforming loans?
There's a bid out there, it's just much lower than they'd prefer to sell it at. It's also much lower than the holders of similar assets that are currently listed as level 3s would like it to be sold at.
This might be a way to force other banks to pony up real money for the portfolio in order to delay level 3 valuation issues.
Wells Fargo? I thought they were exempt from this subprime stuff? I thought Wells Fargo had tight standards? Countrywide sings the blues.., well, that's expected. But a top organization like WF hit by th sweep bar?
Great Move. Sacrifice a billion after-tax, liquidate securities which in turn will cause additional losses at another bank and acquire them for a song.
WF might indeed not really be all that except by comparison, but daveNYC might have it: A little something to elicit a price signal? Who better than someone that might not be immediately flattened by the response?
Interesting comparisons by Herb Greenberg (at marketwatch) between WFC and WaMu. He points out that if WaMu were as agressive in writing down loans as WFC, that WaMu would be far under water (negative market value). One might also assume that the quality of WFC's shaky loans is as least as good as the typical WaMu loan.
I read the posts here frequently, but I've never posted before. I am not very financially sophisticated, so excuse me if this question is stupid: I was just notified yesterday that my mortgage has been sold to Wells Fargo. It's conforming, but why would they being buying more loans in light of today's news? Thanks.
There won't be a better time than RIGHT NOW to liquidate. Once the bond insurers go belly-up all assets will be instantly worth a lot less. A whole pile of crap.
EnglishMajor - in all likelihood, WF bought the servicing rights to your loan. This remains a lucrative business - moreso now, that you have a lesser chance of refinancing anytime soon.
racerX - was that supposed to be humor? Where did you get that info?
Shnapster--LOL that you figured out I have a liberal arts degree...in journalism, though, not in English. Nevertheless, I made a bad typo in my original post! Thanks for your help.
Not only is the quality of Wamu's HE loans worse than WFC but WaMu has $57B worth, of which 60% are in Ca and Fla!
Also, when WFC puts the HE loans out for bid they are moving them to Held for Sale category and I believe WFC will have to write down further to market if prices are below their current mark down.
OK,,
How much crying have we heard about home
owners who are wanting to sell there homes but don't because the market price is to low? 10months supply!!!
Financial Quacks say take the loose and don't screw up the game.
So now the shoe is on the other foot and its OK to hold out for a better offer?
Monkey see,, Monkey Do $$$$$
As Mike in Long Island said, sell to who exactly? Counterparties have been dropping like flies. Who wants this toxic garbage? Anybody? Bueller?
you guys don't know jack about that side of the business. your just preaching armageddon because you either believe it to happen eventually or wish it so. they'll get a lot more than .10 on the dollar.
10% writedown of HELOC's - sounds optomistic to me...
As far as I could understand, this is not just HELOCs, but the riskiest portion of their HELOCs. 10% writedowns on the riskiest HELOCs and nothing on the rest of them sounds more than optimistic...
Anonymous said, ">>As Mike in Long Island said, sell to who exactly? Counterparties have been dropping like flies. Who wants this toxic garbage? Anybody? Bueller?
you guys don't know jack about that side of the business. your just preaching armageddon because you either believe it to happen eventually or wish it so. they'll get a lot more than .10 on the dollar.
Anonymous | 11.27.07 - 11:22 pm | # "
Never claimed that I knew more than Jack, Jill, Jane or anyone else about "that side of the business". In my initial post - which you've so kindly taken out of context - I questioned the depth of the market as I can't believe there are too many people lining up to buy what WFC admittedly calls the "riskiest" loans on their books.
Maybe wry doesn't work well on haloscan at least not as well as rye does in a deli - the whole "$.10 on the dollar" is what I would offer on any 1st mortgages they are looking to unload because I'm a cheap bastard who happens to be somewhat risk averse these days.
Have a nice day and happy bidding 'cause it sounds like your from "that side of the business"
Alot of those changes to Indymac's Alt-A Conforming product is made to match what FNMA and FHLMC are buying on a negotiated basis. However, both GSE's recently announced the elimination of the NINA product beginning in March '08.
I am no expert at this, but these are just plain loans. They aren't securitized. Therefore, they are either performing or delinquent. As long as they are performing, they don't need to be written down either by WFC or whoever might buy them.
They just have to book the losses as they come in. They should reserve based on traditional models the expected losses. However, there is historical data to continue to book losses as if there were no meltdown.
Therefore it could take years and maybe they will get half or more of their 11 billion. Even though these are essentially unsecured personal loans. Some people pay their bills for whatever reason.
Since I don't know banking, is this right or am I missing something.
Wells Fargo Home Mortgage headquarters is here in my town. I play in a poker game with 9 employees. Anyone who says they have had strict loan standards is full of crap. My girlfriend worked in their fourth mortgage division, they were not stringent at all. Constantly gave mortgages to California and Nevada. She on multiple occasions arranged fourth mortgages for women she assumed were sex workers in Nevada. No verification of income, employment, etc.
meep
Key is - they intend to liquidate some $11.9 B of their riskiest mortgages.
A clear sign of no faith in this market, and either a very smart move, or a very desperate one!
10% writedown of HELOC's - sounds optomistic to me...
crispy&cole, thanks for the heads up. Yeah, it's hard to believe they will only lose 10% on that pile of manure. So many HELOCs are now
worthless.
UrbanDigs, I think this is a smart move. Sell now - they will be worth less next year. Maybe Bear Stearns or Merrill would like to take some more losses!
Best Wishes.
This is just the beginning... Can you say;
Level 3
They also stated they are tightening lending standards even more. Not a good sign, I am sure others will follow them...
It will be interesting to watch the bid on the $11.9b portfolio.
They also stated they are tightening lending standards even more. Not a good sign, I am sure others will follow them...
They don't need to... they can't write loans for money they don't have. Look at the velocity of money, the eff, the ffr, BIX, BKX, ETC. The bulk of the US service economy is about debt creation and moving money around, Banks are about creating debt and moving money around. If they don't have money...well...
Only 3% of their total portfolio, so that means they have to visit the confessional for the other 97%.
They can continue to write off a billion a quarter more or less forever. Whether they need to or not.
only a billion?
we-want-blood!
we-want-blood!we-want-blood!
we-want-blood!we-want-blood!we-want-blood!
we-want-blood!we-want-blood!we-want-blood!
--
Leaders in forecasting are early and followers are late. Then there are what-me-worry clueless who fail to notice that US economy is a disaster that has been waiting to happen for a while. Now, the ball has started to role. We are already in a recession, to be followed by deflation and depression next year.
Commodities bust may already be in the early stage. When the Credit Bubble starts to burst the party is over.
Jas
Shoot --- I didn't know Jas was a deflation-ist. OH-MY-GOSH!
Thought this was interesting. Guideline Changes for Indymac
Effective Wednesday, November 28th, the Alt-A Conforming product will undergo several
guideline updates and be re-labeled under the title Alt-A Preferred
Major Areas of Expansion in Alt-A Preferred:
First Time Homebuyer restrictions have been eliminated, and they are now
eligible for all scenarios
The minimum FICO for Full Doc 97% LTV has been reduced from 680 to
660
The maximum LTV for NINA has been increased from 80% to 90%
Stated Income, No Ratio and NINA documentation has been added for
Investment Properties
The maximum LTV for Investment Properties has been increased from
80% to 90%
The maximum LTV for 3-4 Unit properties has been increased from 80% to
90% on Stated and No Ratio Investment properties
Full Doc loans at or below 60% LTV do not require reserves, available for
all qualifying credit scores
Major Areas of Retraction in Alt-A Preferred:
Non-Resident Aliens are no longer eligible
Vesting in a qualified Business Entity is not available
Mixed-Use Properties are no longer eligible
Interest-Only for No Ratio documentation has been eliminated
Interest-Only for NINA documentation has been eliminated
The minimum reserve requirement for all Stated Income and No Ratio
loans is now 2 months PITI, regardless of LTV or FICO
The minimum reserve requirement for all 3-4 Unit properties has been
increased to 6 months PITI
The maximum LTV for Stated Income and No Ratio documentation has
been reduced from 95% to 90%
The minimum FICO for Stated Income and No Ratio documentation has
been increased from 640 to 660
The minimum FICOs for Full Doc ARM loans has been increased
The minimum FICOs for Full Doc 3-4 Unit properties has been increased
The maximum LTV for NINA 3-4 Unit properties has been reduced
It's nice that they plan to sell of $11 plus billion of loans in their portfolio.
The only problem I see is that there aren't likely many bids out there - who's gonna buy their crap??
If there's no bid they can cross their fingers, stamp their feet, swear and carry on but no bids means they ain't selling anything.
Good luck guys - it'll be like trying to sell sand in the Sahara...
On second thought I'll bid $.10 on the dollar for any 1st mortgages they are trying to sell - not interested in any 2nds or HELOCS. Tell 'em to post up their inventory here and I'll get back to them...
Visiting the confessional? They dropped a slug in the novena jar and are planning on stealing and hocking the poor box.
"That portfolio will be sold off under the guidance of a dedicated management team, the bank added."
As Mike in Long Island said, sell to who exactly? Counterparties have been dropping like flies. Who wants this toxic garbage? Anybody? Bueller?
i hear dubai has lots of money to buy stuff with.
Hey, no problem with Wells Fargo! I heard a rumor that Warren Buffer likes WFC...
Examining Warren Buffett's portfolio: Wells Fargo (WFC) - BloggingStocks
As WFC is 15% of his portfolio, he's got a lot of skin in the game. Another buying opportunity? (he'll need some help offseting his Citigroup losses...)
Damn, RacerX's Indymac news seems downright bizarre...
" The maximum LTV for NINA has been increased from 80% to 90%"
WTF! 90% LTV for a NINA loan when Goldman Sachs is expecting a 30% price decline in Indymac's backyard? Is that really true? That's something beyond mindboggling.... I thought they were concentrating on conforming loans?
Bill - yes I would agree with that! A smart move. Get rid of the toxic waste!!
There's a bid out there, it's just much lower than they'd prefer to sell it at. It's also much lower than the holders of similar assets that are currently listed as level 3s would like it to be sold at.
This might be a way to force other banks to pony up real money for the portfolio in order to delay level 3 valuation issues.
guidance of a dedicated management team, the bank added
the same group that accumulated the effulent?
l before u
NINA = No Income No Asset? Wow, how can anyone make any loan to a pauper, this day and age?
how many San Diego, Vegas, Fl HELOC's in that group? How about some quality Riverside 2nd's and 3rd's.
BSR ,
In six months paupers may be the only ones to lend to. The rich don't need loans and will not take them at these rates if they can avoid it.
Wells Fargo? I thought they were exempt from this subprime stuff? I thought Wells Fargo had tight standards? Countrywide sings the blues.., well, that's expected. But a top organization like WF hit by th sweep bar?
Now I'm worried.
For real.
where are you getting the indymac data from?
I think ron is onto something. Multiply the heloc's by 6 or 7......
Great Move. Sacrifice a billion after-tax, liquidate securities which in turn will cause additional losses at another bank and acquire them for a song.
WF might indeed not really be all that except by comparison, but daveNYC might have it: A little something to elicit a price signal? Who better than someone that might not be immediately flattened by the response?
It is fascinating to watch all these things happen that people last summer swore up and down could never happen.
One more reason for Wells to visit the confessional...
YouTube - Wells Fargo:Lootin and Pollutin in Coal Country
Interesting comparisons by Herb Greenberg (at marketwatch) between WFC and WaMu. He points out that if WaMu were as agressive in writing down loans as WFC, that WaMu would be far under water (negative market value). One might also assume that the quality of WFC's shaky loans is as least as good as the typical WaMu loan.
I read the posts here frequently, but I've never posted before. I am not very financially sophisticated, so excuse me if this question is stupid: I was just notified yesterday that my mortgage has been sold to Wells Fargo. It's conforming, but why would they being buying more loans in light of today's news? Thanks.
There won't be a better time than RIGHT NOW to liquidate. Once the bond insurers go belly-up all assets will be instantly worth a lot less. A whole pile of crap.
EnglishMajor - in all likelihood, WF bought the servicing rights to your loan. This remains a lucrative business - moreso now, that you have a lesser chance of refinancing anytime soon.
racerX - was that supposed to be humor? Where did you get that info?
Shnapster--LOL that you figured out I have a liberal arts degree...in journalism, though, not in English. Nevertheless, I made a bad typo in my original post! Thanks for your help.
BillD,
Not only is the quality of Wamu's HE loans worse than WFC but WaMu has $57B worth, of which 60% are in Ca and Fla!
Also, when WFC puts the HE loans out for bid they are moving them to Held for Sale category and I believe WFC will have to write down further to market if prices are below their current mark down.
Nope, it's no joke. Someone in wholesale sent it to me earlier today. I like the name Alt A preferred. I'm not sure who preferred by.
Note that Triad (MI company)cut their max LTV to 90 for AZ, CA, FL, and Nevada (goes into affect in Dec)
OK,,
How much crying have we heard about home
owners who are wanting to sell there homes but don't because the market price is to low? 10months supply!!!
Financial Quacks say take the loose and don't screw up the game.
So now the shoe is on the other foot and its OK to hold out for a better offer?
Monkey see,, Monkey Do $$$$$
you guys don't know jack about that side of the business. your just preaching armageddon because you either believe it to happen eventually or wish it so. they'll get a lot more than .10 on the dollar.
Anonymous - "they'll get a lot more than .10 on the dollar"
Really? For HELOCs? How much? Please tell.
I think a delinquent HELOC is worth NOTHING. In aggregate, maybe $0.20?
barely,
bids for 30 day DQ HELOCs are, last i saw, in the 30s. The bid all depends on the roll rates, and roll rates are pretty grim today.
bids on performing, not 100 CLTV but still high LTV helocs are in the mid-high 90s. That may sound good, but its a disaster for the originators.
As far as I could understand, this is not just HELOCs, but the riskiest portion of their HELOCs. 10% writedowns on the riskiest HELOCs and nothing on the rest of them sounds more than optimistic...
Anonymous said,
">>As Mike in Long Island said, sell to who exactly? Counterparties have been dropping like flies. Who wants this toxic garbage? Anybody? Bueller?
you guys don't know jack about that side of the business. your just preaching armageddon because you either believe it to happen eventually or wish it so. they'll get a lot more than .10 on the dollar.
Anonymous | 11.27.07 - 11:22 pm | # "
Never claimed that I knew more than Jack, Jill, Jane or anyone else about "that side of the business". In my initial post - which you've so kindly taken out of context - I questioned the depth of the market as I can't believe there are too many people lining up to buy what WFC admittedly calls the "riskiest" loans on their books.
Maybe wry doesn't work well on haloscan at least not as well as rye does in a deli - the whole "$.10 on the dollar" is what I would offer on any 1st mortgages they are looking to unload because I'm a cheap bastard who happens to be somewhat risk averse these days.
Have a nice day and happy bidding 'cause it sounds like your from "that side of the business"
WF has long claimed that they had little or no exposure to non-performing mortgages, but were only a holder and servicer for others.
Three options:
They lied.
Or, this is all they have.
Or, this is an attempt at a take-down of their competition-forcing the price to become apparent and show who is naked.
I find it interesting they place blame on brokers when the loans came from THEIR rate sheets and were underwritten by THEM.
Effing idiots.
Alot of those changes to Indymac's Alt-A Conforming product is made to match what FNMA and FHLMC are buying on a negotiated basis. However, both GSE's recently announced the elimination of the NINA product beginning in March '08.
The market liked it. At least this morning.
I am no expert at this, but these are just plain loans. They aren't securitized. Therefore, they are either performing or delinquent. As long as they are performing, they don't need to be written down either by WFC or whoever might buy them.
They just have to book the losses as they come in. They should reserve based on traditional models the expected losses. However, there is historical data to continue to book losses as if there were no meltdown.
Therefore it could take years and maybe they will get half or more of their 11 billion. Even though these are essentially unsecured personal loans. Some people pay their bills for whatever reason.
Since I don't know banking, is this right or am I missing something.
Wells Fargo Home Mortgage headquarters is here in my town. I play in a poker game with 9 employees. Anyone who says they have had strict loan standards is full of crap. My girlfriend worked in their fourth mortgage division, they were not stringent at all. Constantly gave mortgages to California and Nevada. She on multiple occasions arranged fourth mortgages for women she assumed were sex workers in Nevada. No verification of income, employment, etc.
If that was stringent what was Countrywide doing?