Do we need a new category to describe CFC loans? If CFC has a deliquency rate far higher than subprime in general, then they weren't a subprime lender. Cow-plop mortgages?
New orders for long-lasting U.S.-made manufactured goods rose by a much bigger-than-expected 5.2 percent in December...
Nondefense capital goods orders excluding aircraft, a proxy for business investment, rose a much greater than-expected 4.4 percent. It was the first rise in that category since September, a Commerce Department official said...
Analysts polled by Reuters had expected orders for durables to rise 1.5 percent and for non-defense capital goods excluding aircraft to rise 0.1 percent..."
CR, I know we've seen earlier guesstimates of the delinquency rates on subprimes, but I can't find them. Do you recall who was doing all the prognosticatin'?
I got on board of a Westbound 747
Didn't think before decided what to do
All of them talk about those TV breaks and the movies
They ain't true, Lord it sure ain't true
Seems it never rains in Southern California
Seems I've all been hurt that kind of tough before
It never rains in California
But girl don't be warn ya
It pours, man it pours
Out of work
I'm out of my head
Out of self respect
I'm out of bread
I'm on the love
Then I'm on the fade
I wanna go home
It never rains in California
But girl don't be warn ya
It pours, man it pours
Well you tell the folks back home
I nearly made it
I had all thoughts
Didn't know which one to take
Please don't tell them how you found me
Oh don't tell how you found me
Gimme a break
Oh gimme a break
Seems it never rains in Southern California
Seems I've all been hurt that kind of tough before
It never rains in California
But girl don't be warn ya
It pours, man it pours
And that was before America watched 60 Minutes. Expect that number will go up as people decide to just patiently wait to be foreclosed while they live rent free for 8 - 12 months.
This may have already been addressed in the past, but when large lenders say 'subprime,' are they always excluding 'Alt-A' loans in their statistics?
Are these general categories standardized enough across companies to do a solid cross-sectional analysis, or does each company use a different definition of where they classify a loan on their books?
--
Country-Fried-Crooks are worse than Enruin and Worldcon.
The fact that Bankrupter of Americans is taking over says a lot about the corrupt econo-political system -- pushing the Crooks into too-big-to-fail protection ring.
At the time that CFC said they'd be profitable this Q, the Q was already partly on the books. Either somebody is completely out of contact with his own business or is dishonest, I'd say.
(quote)
Bank of America, the second-largest U.S. bank, on January 11 agreed to buy Countrywide in a transaction that on Monday valued the mortgage lender at about $4.3 billion.
The transaction valued Countrywide at $7.16 per share, but shares of Countrywide have since declined on speculation that Bank of America might seek to renegotiate the purchase. The bank has repeatedly denied that prospect. Chief Executive Kenneth Lewis on January 15 said the bank conducted "the mother of all due diligences" before agreeing to buy Countrywide.
(end quote)
HMMM, I guess that Mr. Lewis called the bottom, right?
I, and I'm sure many others, would be very grateful if you or Tanta could shed any light on Countrywide's 4Q/year-end report. On the face of it there seems to be a discrepancy between a 8% delinquency rate on a 1.5 trillion dollar servicing portfolio and the quoted charge-offs and provisions, but Countrywide financial statements are far from easy to decipher for non-specialists, so it is hard to work out how plausible the numbers are, taking into account hedging and other factors.
As a reminder, here is what Chief Operating Officer David Sambol said in October 2007:
"We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008."
Finance Monk, this is just subprime. The WSJ article notes that delinquency rates are rising in all categories. "Conventional loans saw its delinquency rate climb to 5.76% from 4.41%."
We have more after the conference call - oh wait, there is no conference call! I guess we need to wait for the SEC filing.
I hope they're not expecting US consumers to buy all those new durable goods:
ICSC-UBS reports flat conditions in the retail sector pointing to another disappointing month for retail sales. ICSC-UBS's same-store tally is at a +1.3 percent year-on-year pace, a very weak reading for this index. At -1.2 percent, the week-on-week change, as it often is, is distorted by calendar and seasonal factors.
And just wait til gas prices are priced for profit.
NEW YORK (Reuters) - U.S. refiner Valero Energy Corp on Tuesday said fourth-quarter earnings fell sharply on lower profits from gasoline production.
Net income in the quarter fell to $567 million, or $1.02 a share, from $1.11 billion, or $1.80 a share, last year.
Profit margins from refining were relatively weak in the quarter as gasoline prices failed to keep pace with oil prices that soared to record levels.
Case-Shiller data show a sharp acceleration in the decline of home prices in October and November. That seems to coincide reasonably well with CFC's recognition that all their mail makes noise now.
I think it's important for us to remember that this means that "only" 33% of the subprime loans they haven't already liquidated off the books are delinquent. It seems likely to me that that number will continue to aspire toward 100% as the subprime portfolio gets down to the ones not even FHASecure will take.
On the face of it there seems to be a discrepancy between a 8% delinquency rate on a 1.5 trillion dollar servicing portfolio
The delinquency rate is on the investment portfolio, not the servicing portfolio. (Loans serviced for CFC's own investment portfolio is a subset of the entire servicing portfolio, which includes loans serviced for some other investor.)
Been watching that, have you been watching refinery utilization rates? I have the impression they have been down but I can't say that I have been watching that stat.
And what were the volumes involved, did we start to see some softening in gasoline demand due to price increases before the cost of oil is fully reflected in those prices?
OT
Will fed rate cuts cause money to go into the stock market?
According to Herb Greenberg, Charles Biderman of Trimtabs.com, who tracks money flows does not think that money will flow into the market even if the fed cuts rates below the rate of inflation.
"Wont happen this time, Charlie says, because the mortgage market isnt what it once was. Since August, 90% of non-conforming loans loans have not gotten funded. That translates based upon quarterly federal reserve analysis of equity (cash) extraction from homes via cash over mortgage at sale, cash out from refis and home equity loans into about $20 billion less per month going to the economy. That is equal to about 4% of the $430 billion monthly after tax take home pay of all 140 million or so on payrolls.
He continues: Since October, the year over year growth rate of withheld income and employments taxes has steadily slumped to about zero over the past two weeks from an average of 7.5% for the first three quarters of 2007.
Thats a long way of saying that with individuals generating less new money, there is less new money available for investment.
Add fewer new jobs to the mix, and the dominoes continue to fall through retail and the economy.
Put another way, if I understand what Charlie is saying and there are times I dont: Even if money does start flowing back into the market there wont be nearly enough to reignite the markets pricing power of recent years. At least not anytime soon."
"These borrowers are being more resourceful and bailing themselves out by putting the keys in the mail.
Yay for free enterprise."
Great. Then we can watch them and their legislators whine about why these "freedom fighters" can't get another mortgage in 3-4 years. Oh wait, there's California AB 1830 in the hopper ...
Yay for risk-based pricing and tighter underwriting.
And what were the volumes involved, did we start to see some softening in gasoline demand due to price increases before the cost of oil is fully reflected in those prices?
My belief, and OPEC seems to believe this also, is that oil prices are out of line with legitimate demand due the presence of speculators.
I think the speculators are siphoning off profits from the refineries with a little help from Bernanke and Co.
Are mortgage companies reclassifying some of the Alt-A loans as subprime so as to not 'surprise' the market?
The CFC financials use the term "prime non-agency" to indicate "Alt-A." If they're doing anything improper--and I have no evidence in this particular case--they'd be reclassifying subprime as Alt-A, not the other way around, given the numbers here.
They just took $7 billion of "prime non-agency" to the portfolio (out of the held for sale inventory) because, well, nobody wants it. (And they did record the impairment charge for that.)
This is great. All that money that used to go into paying subprime mortgages is out in the economy doing some good.
Man, if I were CFC I'd have my Ninja Accountants pouring over the original documents looking for missing commas and undotted "i"s. First late pay and I'd slap down the evidence and demand immediate payment in full. Let'em refi elsewhere so it isn't your problem. At the very least there won't be any more of this 12 months live for free going on.
The benefits of reclassifying alt-a as subprime is a big short term boost for companies reporting loss. Investors look at subprime news as an 'existing' problem affecting all companies.
As there is, at the moment, not much of an "elsewhere," there's a problem here.
(The only functioning "elsewhere" at the moment seems to be the FHASecure program. Until Congress ruins FHA for good, that means that there is nowhere for the high-balance seriously underwater subprime loans to go.)
"I were CFC I'd have my Ninja Accountants pouring over the original documents looking for missing commas and undotted "i"s. First late pay and I'd slap down the evidence and demand immediate payment in full. Let'em refi elsewhere so it isn't your problem."
Refi into what program? Dude, there is no there....there anymore. No Ratios, NINANEs are gone like a bleep in the wind.
It would appear that the held for investment portfolio is 98 billion dollars, net of a 1.8 billion allowance for loan losses. The allowance still sounds on the low side relative to the high and increasing delinquencies, but I'm probably missing something.
Jan. 29 (Bloomberg) -- New York Insurance Superintendent Eric Dinallo's attempt to bail out bond insurers is ``coming too late in the game'' to stave off ratings downgrades, CreditSights Inc. analysts said in a report.
Dinallo wants to bolster bond insurers' capital with a $15 billion guarantee fund supported by contributions from banks and securities firms, according to the New York-based bond-research firm. Setting up the fund and gaining the backing of the banks is likely to be overtaken by events, CreditSights said today.
Given the number of competing interests and levels of commitment of participants involved, we think it is unlikely that an agreement sponsored by Dinallo could be hammered out within the appropriate timeframe,'' Rob Haines, Craig Guttenplan and Joe Di Carlo wrote.In the offchance that any deal could be solidified, the rating agencies are likely to have already taken action.''
The benefits of reclassifying alt-a as subprime is a big short term boost for companies reporting loss.
But there isn't any evidence I can see that that is happening.
If in fact someone is misclassifying loans, it seems the only possible way that is going is reclassifying subprime as Alt-A. The subprime total balances are getting smaller, not larger.
"According to Herb Greenberg, Charles Biderman of Trimtabs.com, who tracks money flows does not think that money will flow into the market even if the fed cuts rates below the rate of inflation."
I disagree with Biderman. IMO, money flowing into housing over the last few years actually harmed the markets. Why buy stocks if you can get high yields supposedly risk-free in MBSs? Now that that myth is shattered, solid real-economy stocks that pay dividends at rates above T-bills look pretty attractive. They look even more attractive if you're a Euro zone investor with a currency that is over-valued vs USD. And I don't need none of O-Joe's stinkin' models to tell me that.
Several NW Florida vacation neighborhoods I follow are being hit with distressed sales. 50% off from peak prices. Inventories are swollen and just not moving.
No rush IMO. But I will be actively seeking a deal. Not for a flip or investment, but as something I want to OWN, use and enjoy without the need for a greater fool.
Patience is indeed a virtue. Thanks to all for helping me maintain mine throughout the boom. This site is like Alcoholics Anonymous for my investing patience.
bacon dreamz writes:
More to come, Countrywide is still in the Confessional.
does anybody else think mozilo kind of looks like the pope?
Alexander Pope maybe. Here's a description - From early childhood he suffered numerous health problems which deformed his body and stunted his growth. He never grew beyond 1.37 metres (4 feet 6 inches) tall. Although he never married, he had many women friends and wrote them witty letters. Disclaimer - he wasn't orange
One difference: Pope was a genius on the page, an utter delight in person, and one of the great English poets of all time --in the pantheon with Keats, Milton, Chaucer and Shakespeare.
I am bemused that msnbc is tripping over themselves with durable goods orders being up this morning when coupled with the fact that Wal-Mart also came out proclaiming a Superbowl Sale(!) of 10-30% off most everything.
...I'm going flat-screen shoppin'!
I guess i should have been clear as to the reason for my crack team of Ninja Accountants. When the subprime borrower gets their first late rather than the polite letter you present them with the evidence and explain to them that they are stuck. Keep paying or else this isn't a civil matter but a criminal matter. With no hope of refinancing and facing serious criminal charges these would be jingle mailers will suddenly develop a moral imperative because it is in their best interests. At the very least it shorten the period of ultimate disposition.
coupled with the fact that Wal-Mart also came out proclaiming a Superbowl Sale(!) of 10-30% off most everything
End of the month checks coming in. Tax refund checks coming in. Most of those "rollbacks" have less to do with the current economic conditions than from walmart trying to drum up some after the holidays business. The more interesting bit is this...
The world's largest retailer also said it's also offering no interest for 18 months on purchases of $250 or more with a Wal-Mart credit card.
mmhmm. Trying to drum up new business (for higher ticket items). For the last few months, every time I have visited the local WM, they have a table set up on the front midway specifically trying to drum up new Walmart CC customers. Maybe WM sees the drop in large ticket item sales as being related to cards being maxed out.
Wow, when I did my analysis of subprime CDO's back in January I came up with a ~35% default rate needed to start eating into the top tranche. it took only 1 year to do that. amazing.
Interestingly, no one at my bank believed that that could happen. I just wish I would have had more money go short. Oh well.
I think it's important for us to remember that this means that "only" 33% of the subprime loans they haven't already liquidated off the books are delinquent. It seems likely to me that that number will continue to aspire toward 100% as the subprime portfolio gets down to the ones not even FHASecure will take.
Excellent point. This segment is in run-off now, so delinquency will only continue to climb.
does anybody else think mozilo kind of looks like the pope?
Maybe it's just his recent vow of poverty that got you thinking that, bacon.
The Federal Reserve, working to combat effects of a serious credit crisis, said Tuesday it had auctioned $30 billion in funds to commercial banks at an interest rate of 3.123 percent.
The lateset TAF auction came in lower than the Federal Funds Rate.
Other than deposit rates are going to drop like a rock, I'm not sure what this means. There isn't any cheaper source of funding out there right now. Does that mean that banks have no demand for new loans (from people who they are willing to lend to)? Or, are banks expecting even "free-er" money in the next few days?
30%-something isn't good but it isn't as bad as some were expecting. Market likes the results... stock is up 5%+... if hte subprime default rates stabilizes, it's all good...
Bank of America felt obligated to hit the wires today to re-affirm its commitment to purchase CrappySlide. Pay close attention. If BAC gets squeamish and bails on CFC... well, you'll know what to do.
What I can't understand is how the stock market continues to rally and slide, rally and slide, but basically trade sideways when the sky is falling. Can anybody tell me any good news for the economy, or publicly traded companies operating primarily in the U S economy? Our gov't is mortgaged to the hilt already, we have a Congress which refuses to realistically fund gov't operations, our policymakers are taking every step possible to increase inflation, de-value our currency, and further aggravate our trade deficit, and our # 1 commodity, oil, will undoubtedly continue to rise in price and further erode consumer confidence and spending.
IF THE END IS NIGH, WHY ARE WE SO HIGH? Riddle me that, Sunnybrook Farmers!
Kicker - the TAF bidders are trying to guesstimate what the Fed cut will be tomorrow. Based on the info in your post, looks like a .377 bp cut coming up.
Wow. 5% delinquency would be enough to get most bankers I know to panic. For a reason. And 33% on any section of the portfolio would be an absolute nightmare (assuming they were still employed, which would be doubtful).
Part of the reason they would panic at 5% is because that's a good indicator that there's substantial dollar losses coming. The other reason they would panic is because they have some idea what that likely means in terms of how they'll be spending their time over the next few months.
Anyone predicting a recovery in '08 or '09 needs a reality check. Macro effects nothing. It'll take a year just to unwind the paperwork.
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CR has posted the Downey Savings' delinquency chart before.
I have an updated chart that compares CFC's non-performing option ARMs to some of the other players including Downey. The exponential rise mirrors Downeys.
If I were a stockholder of CW, I would sue the shit out of them for putting my investment at an unreasonable risk. I concede that if I were told of this risk and still kept my money in, then tough lick for me, but if I weren't told about it, I would sue. Expect to see a class action coming down the pike.
Do we need a new category to describe CFC loans? If CFC has a deliquency rate far higher than subprime in general, then they weren't a subprime lender. Cow-plop mortgages?
New orders for long-lasting U.S.-made manufactured goods rose by a much bigger-than-expected 5.2 percent in December...
Nondefense capital goods orders excluding aircraft, a proxy for business investment, rose a much greater than-expected 4.4 percent. It was the first rise in that category since September, a Commerce Department official said...
Analysts polled by Reuters had expected orders for durables to rise 1.5 percent and for non-defense capital goods excluding aircraft to rise 0.1 percent..."
Durable goods orders jump, house prices slump
| Reuters
Makes it kinda hard for Ben to justify another 75bps.
o, no, no you're lookign at it wrong:
"Two out of three of our costumers actually paid us last month!"
See doesn't that sound better?
This provides the context for the earlier post about the January 18 letter. "Hey, has anybody noticed that some of our customers aren't paying...?"
wait, didn't management promise that they would be profitable this quarter? Have fun Ken Lewis.
Didn't the tan man, back in the Fall of '07 - say they'd be making money this quarter?
sterlingerl,
It's happy time, so good news is good, and bad news is good (means rate cut).
The only bad news this week would be the Fed cutting less than 50bps.
CR, I know we've seen earlier guesstimates of the delinquency rates on subprimes, but I can't find them. Do you recall who was doing all the prognosticatin'?
1/3 of all subprime loans looks like things that can't happen are. I wonder how many of these will end in forclosure?
Time for some Sonny and Cher
IT NEVER RAINS IN CALIFORNIA
I got on board of a Westbound 747
Didn't think before decided what to do
All of them talk about those TV breaks and the movies
They ain't true, Lord it sure ain't true
Seems it never rains in Southern California
Seems I've all been hurt that kind of tough before
It never rains in California
But girl don't be warn ya
It pours, man it pours
Out of work
I'm out of my head
Out of self respect
I'm out of bread
I'm on the love
Then I'm on the fade
I wanna go home
It never rains in California
But girl don't be warn ya
It pours, man it pours
Well you tell the folks back home
I nearly made it
I had all thoughts
Didn't know which one to take
Please don't tell them how you found me
Oh don't tell how you found me
Gimme a break
Oh gimme a break
Seems it never rains in Southern California
Seems I've all been hurt that kind of tough before
It never rains in California
But girl don't be warn ya
It pours, man it pours
It pours, man it pours
And that was before America watched 60 Minutes. Expect that number will go up as people decide to just patiently wait to be foreclosed while they live rent free for 8 - 12 months.
This may have already been addressed in the past, but when large lenders say 'subprime,' are they always excluding 'Alt-A' loans in their statistics?
Are these general categories standardized enough across companies to do a solid cross-sectional analysis, or does each company use a different definition of where they classify a loan on their books?
Why pay if the government is going to pick up the tab?
--
Country-Fried-Crooks are worse than Enruin and Worldcon.
The fact that Bankrupter of Americans is taking over says a lot about the corrupt econo-political system -- pushing the Crooks into too-big-to-fail protection ring.
Jas
At the time that CFC said they'd be profitable this Q, the Q was already partly on the books. Either somebody is completely out of contact with his own business or is dishonest, I'd say.
From Washinton Post:
(quote)
Bank of America, the second-largest U.S. bank, on January 11 agreed to buy Countrywide in a transaction that on Monday valued the mortgage lender at about $4.3 billion.
The transaction valued Countrywide at $7.16 per share, but shares of Countrywide have since declined on speculation that Bank of America might seek to renegotiate the purchase. The bank has repeatedly denied that prospect. Chief Executive Kenneth Lewis on January 15 said the bank conducted "the mother of all due diligences" before agreeing to buy Countrywide.
(end quote)
HMMM, I guess that Mr. Lewis called the bottom, right?
"Makes it kinda hard for Ben to justify another 75bps."
That would be true, if the cuts were targeting the economy.
"This provides the context for the earlier post about the January 18 letter."
It's also the punchline: scapegoat achieved.
--
"HMMM, I guess that Mr. Lewis called the bottom, right?"
Mr. Lewis is not playing with his own money!
Jas
I, and I'm sure many others, would be very grateful if you or Tanta could shed any light on Countrywide's 4Q/year-end report. On the face of it there seems to be a discrepancy between a 8% delinquency rate on a 1.5 trillion dollar servicing portfolio and the quoted charge-offs and provisions, but Countrywide financial statements are far from easy to decipher for non-specialists, so it is hard to work out how plausible the numbers are, taking into account hedging and other factors.
As a reminder, here is what Chief Operating Officer David Sambol said in October 2007:
Finance Monk, this is just subprime. The WSJ article notes that delinquency rates are rising in all categories. "Conventional loans saw its delinquency rate climb to 5.76% from 4.41%."
We have more after the conference call - oh wait, there is no conference call! I guess we need to wait for the SEC filing.
Best to all.
I hope they're not expecting US consumers to buy all those new durable goods:
ICSC-UBS reports flat conditions in the retail sector pointing to another disappointing month for retail sales. ICSC-UBS's same-store tally is at a +1.3 percent year-on-year pace, a very weak reading for this index. At -1.2 percent, the week-on-week change, as it often is, is distorted by calendar and seasonal factors.
The YoY number is really bad.
Looks like CFC mortgages are neither durable nor goods.
And just wait til gas prices are priced for profit.
NEW YORK (Reuters) - U.S. refiner Valero Energy Corp on Tuesday said fourth-quarter earnings fell sharply on lower profits from gasoline production.
Net income in the quarter fell to $567 million, or $1.02 a share, from $1.11 billion, or $1.80 a share, last year.
Profit margins from refining were relatively weak in the quarter as gasoline prices failed to keep pace with oil prices that soared to record levels.
Case-Shiller data show a sharp acceleration in the decline of home prices in October and November. That seems to coincide reasonably well with CFC's recognition that all their mail makes noise now.
Meh. It's an election year. Most of these borrowers will expect to be bailed out in some fashion by state or federal legislation and/or the courts.
I think it's important for us to remember that this means that "only" 33% of the subprime loans they haven't already liquidated off the books are delinquent. It seems likely to me that that number will continue to aspire toward 100% as the subprime portfolio gets down to the ones not even FHASecure will take.
On the face of it there seems to be a discrepancy between a 8% delinquency rate on a 1.5 trillion dollar servicing portfolio
The delinquency rate is on the investment portfolio, not the servicing portfolio. (Loans serviced for CFC's own investment portfolio is a subset of the entire servicing portfolio, which includes loans serviced for some other investor.)
Are mortgage companies reclassifying some of the Alt-A loans as subprime so as to not 'surprise' the market?
Most of these borrowers will expect to be bailed out in some fashion by state or federal legislation and/or the courts.
These borrowers are being more resourceful and bailing themselves out by putting the keys in the mail.
Yay for free enterprise.
OilEquations,
Been watching that, have you been watching refinery utilization rates? I have the impression they have been down but I can't say that I have been watching that stat.
And what were the volumes involved, did we start to see some softening in gasoline demand due to price increases before the cost of oil is fully reflected in those prices?
Remind/reassure me again that BAC is buying CFC to get their servicing portfolio...right?
As an eloan client whose servicing was bought by CFC, I'm starting to worry a tad...
OT
Will fed rate cuts cause money to go into the stock market?
According to Herb Greenberg, Charles Biderman of Trimtabs.com, who tracks money flows does not think that money will flow into the market even if the fed cuts rates below the rate of inflation.
"Wont happen this time, Charlie says, because the mortgage market isnt what it once was. Since August, 90% of non-conforming loans loans have not gotten funded. That translates based upon quarterly federal reserve analysis of equity (cash) extraction from homes via cash over mortgage at sale, cash out from refis and home equity loans into about $20 billion less per month going to the economy. That is equal to about 4% of the $430 billion monthly after tax take home pay of all 140 million or so on payrolls.
He continues: Since October, the year over year growth rate of withheld income and employments taxes has steadily slumped to about zero over the past two weeks from an average of 7.5% for the first three quarters of 2007.
Thats a long way of saying that with individuals generating less new money, there is less new money available for investment.
Add fewer new jobs to the mix, and the dominoes continue to fall through retail and the economy.
Put another way, if I understand what Charlie is saying and there are times I dont: Even if money does start flowing back into the market there wont be nearly enough to reignite the markets pricing power of recent years. At least not anytime soon."
So, it looks like the fed is trying hard to re-inflate the housing and stock market. I think that it will fail, because incomes are not sufficient to pay the existing prices for homes.
Should Investors Fight the Fed? - Herb Greenberg - MarketWatch
The Greenberg post was from me.
energyecon- I don't know, but VLO smashed analyst estimates and is up $ 4 pre-market. I was tempted to buy some last week, but didn't.
Demand from China will rise as the yuan appreciates, making oil cheaper for them.
"These borrowers are being more resourceful and bailing themselves out by putting the keys in the mail.
Yay for free enterprise."
Great. Then we can watch them and their legislators whine about why these "freedom fighters" can't get another mortgage in 3-4 years. Oh wait, there's California AB 1830 in the hopper ...
Yay for risk-based pricing and tighter underwriting.
And what were the volumes involved, did we start to see some softening in gasoline demand due to price increases before the cost of oil is fully reflected in those prices?
My belief, and OPEC seems to believe this also, is that oil prices are out of line with legitimate demand due the presence of speculators.
I think the speculators are siphoning off profits from the refineries with a little help from Bernanke and Co.
Are mortgage companies reclassifying some of the Alt-A loans as subprime so as to not 'surprise' the market?
The CFC financials use the term "prime non-agency" to indicate "Alt-A." If they're doing anything improper--and I have no evidence in this particular case--they'd be reclassifying subprime as Alt-A, not the other way around, given the numbers here.
They just took $7 billion of "prime non-agency" to the portfolio (out of the held for sale inventory) because, well, nobody wants it. (And they did record the impairment charge for that.)
This is great. All that money that used to go into paying subprime mortgages is out in the economy doing some good.
Man, if I were CFC I'd have my Ninja Accountants pouring over the original documents looking for missing commas and undotted "i"s. First late pay and I'd slap down the evidence and demand immediate payment in full. Let'em refi elsewhere so it isn't your problem. At the very least there won't be any more of this 12 months live for free going on.
softening in gasoline demand
not that I see, but then , I use the same model as O-joe.
The benefits of reclassifying alt-a as subprime is a big short term boost for companies reporting loss. Investors look at subprime news as an 'existing' problem affecting all companies.
Let'em refi elsewhere so it isn't your problem.
That was, exactly, the plan during the boom.
As there is, at the moment, not much of an "elsewhere," there's a problem here.
(The only functioning "elsewhere" at the moment seems to be the FHASecure program. Until Congress ruins FHA for good, that means that there is nowhere for the high-balance seriously underwater subprime loans to go.)
Tanta. Thanks. sorry i posted 9:30 befor i read your post @9:27.
"I were CFC I'd have my Ninja Accountants pouring over the original documents looking for missing commas and undotted "i"s. First late pay and I'd slap down the evidence and demand immediate payment in full. Let'em refi elsewhere so it isn't your problem."
Refi into what program? Dude, there is no there....there anymore. No Ratios, NINANEs are gone like a bleep in the wind.
It would appear that the held for investment portfolio is 98 billion dollars, net of a 1.8 billion allowance for loan losses. The allowance still sounds on the low side relative to the high and increasing delinquencies, but I'm probably missing something.
OE,
lol
OT note:
Bond Insurer Bailout Plan May Be `Too Late,' CreditSights Says
By John Glover
Jan. 29 (Bloomberg) -- New York Insurance Superintendent Eric Dinallo's attempt to bail out bond insurers is ``coming too late in the game'' to stave off ratings downgrades, CreditSights Inc. analysts said in a report.
Dinallo wants to bolster bond insurers' capital with a $15 billion guarantee fund supported by contributions from banks and securities firms, according to the New York-based bond-research firm. Setting up the fund and gaining the backing of the banks is likely to be overtaken by events, CreditSights said today.
Given the number of competing interests and levels of commitment of participants involved, we think it is unlikely that an agreement sponsored by Dinallo could be hammered out within the appropriate timeframe,'' Rob Haines, Craig Guttenplan and Joe Di Carlo wrote.In the offchance that any deal could be solidified, the rating agencies are likely to have already taken action.''
[snip]
The benefits of reclassifying alt-a as subprime is a big short term boost for companies reporting loss.
But there isn't any evidence I can see that that is happening.
If in fact someone is misclassifying loans, it seems the only possible way that is going is reclassifying subprime as Alt-A. The subprime total balances are getting smaller, not larger.
Apologies if this has already been linked (PDF of the earnings report): http://media.corporate-ir.net/media_files/nys/cfc/news/4Q07PR.pdf
"According to Herb Greenberg, Charles Biderman of Trimtabs.com, who tracks money flows does not think that money will flow into the market even if the fed cuts rates below the rate of inflation."
I disagree with Biderman. IMO, money flowing into housing over the last few years actually harmed the markets. Why buy stocks if you can get high yields supposedly risk-free in MBSs? Now that that myth is shattered, solid real-economy stocks that pay dividends at rates above T-bills look pretty attractive. They look even more attractive if you're a Euro zone investor with a currency that is over-valued vs USD. And I don't need none of O-Joe's stinkin' models to tell me that.
All,
Several NW Florida vacation neighborhoods I follow are being hit with distressed sales. 50% off from peak prices. Inventories are swollen and just not moving.
No rush IMO. But I will be actively seeking a deal. Not for a flip or investment, but as something I want to OWN, use and enjoy without the need for a greater fool.
Patience is indeed a virtue. Thanks to all for helping me maintain mine throughout the boom. This site is like Alcoholics Anonymous for my investing patience.
More to come, Countrywide is still in the Confessional.
does anybody else think mozilo kind of looks like the pope?
Also, it is difficult to replace the estimate 80bil that went into the economy every month during the boom.
So, will lower rates reinflate the economy?
home prices plunged by a record 8.4 percent in November, marking two years of slowing returns, according to a key index released Tuesday.
Expired
S&P: Home Prices Plunge in November
more on Standard & Poor's/Case-Shiller:
Charlotte, N.C., Portland, Ore., and Seattle are the only three metro areas with positive annual growth rates.
Only 3 out of 20 left with positive growth....
bacon dreamz writes:
More to come, Countrywide is still in the Confessional.
does anybody else think mozilo kind of looks like the pope?
Alexander Pope maybe. Here's a description - From early childhood he suffered numerous health problems which deformed his body and stunted his growth. He never grew beyond 1.37 metres (4 feet 6 inches) tall. Although he never married, he had many women friends and wrote them witty letters. Disclaimer - he wasn't orange
Keep in mind that the numbers Countrywide are reporting are thru Dec 31st. They do not reflect January changes.
Do they report these numbers monthly or quarterly ?
S&P: Home Prices Plunge in November
That should be good for another 10% surge in the home builder stocks.
One difference: Pope was a genius on the page, an utter delight in person, and one of the great English poets of all time --in the pantheon with Keats, Milton, Chaucer and Shakespeare.
I am bemused that msnbc is tripping over themselves with durable goods orders being up this morning when coupled with the fact that Wal-Mart also came out proclaiming a Superbowl Sale(!) of 10-30% off most everything.
...I'm going flat-screen shoppin'!
I guess i should have been clear as to the reason for my crack team of Ninja Accountants. When the subprime borrower gets their first late rather than the polite letter you present them with the evidence and explain to them that they are stuck. Keep paying or else this isn't a civil matter but a criminal matter. With no hope of refinancing and facing serious criminal charges these would be jingle mailers will suddenly develop a moral imperative because it is in their best interests. At the very least it shorten the period of ultimate disposition.
...I'm going flat-screen shoppin'!
Save the box for yourself and family members.
Rob Dawg writes:
...I'm going flat-screen shoppin'!
Or wait until next week after the Superbowl sale flops
I'm on the love
Then I'm on the fade
Isn't that "I'm underloved, I'm underfed"?
I had all thoughts
Didn't know which one to take
Oh, and that's "had offers, didn't know which one to take."
The Superbowl Sale will flow seamlessly into the Valentines Sale into the Presidents Day sale into the Easter Sale...
Retail is in for a world of hurt and I don't see anyone predicting it in the markets.
coupled with the fact that Wal-Mart also came out proclaiming a Superbowl Sale(!) of 10-30% off most everything
End of the month checks coming in. Tax refund checks coming in. Most of those "rollbacks" have less to do with the current economic conditions than from walmart trying to drum up some after the holidays business. The more interesting bit is this...
The world's largest retailer also said it's also offering no interest for 18 months on purchases of $250 or more with a Wal-Mart credit card.
mmhmm. Trying to drum up new business (for higher ticket items). For the last few months, every time I have visited the local WM, they have a table set up on the front midway specifically trying to drum up new Walmart CC customers. Maybe WM sees the drop in large ticket item sales as being related to cards being maxed out.
--
Another UGLY Case-Shiller Index --down 2.14%, MoM, and 7.74%, YoY (Composite-20). Composite-10 even worse.
More people qualify for Walk Away.
Jas
"Didn't the tan man, back in the Fall of '07 - say they'd be making money this quarter?"
Hey they made some money and lost some money, so the Tan one was right, just so happens they lost more than they made.
Wow, when I did my analysis of subprime CDO's back in January I came up with a ~35% default rate needed to start eating into the top tranche. it took only 1 year to do that. amazing.
Interestingly, no one at my bank believed that that could happen. I just wish I would have had more money go short. Oh well.
More to come, Countrywide is still in the Confessional.
They've been in there for a while. Should we interrupt to pass them a glass of water...or...
"Pope was a genius on the page, an utter delight in person..."
I'm too young to have known him, but I'll take your word.
I think it's important for us to remember that this means that "only" 33% of the subprime loans they haven't already liquidated off the books are delinquent. It seems likely to me that that number will continue to aspire toward 100% as the subprime portfolio gets down to the ones not even FHASecure will take.
Excellent point. This segment is in run-off now, so delinquency will only continue to climb.
does anybody else think mozilo kind of looks like the pope?
Maybe it's just his recent vow of poverty that got you thinking that, bacon.
The Federal Reserve, working to combat effects of a serious credit crisis, said Tuesday it had auctioned $30 billion in funds to commercial banks at an interest rate of 3.123 percent.
The lateset TAF auction came in lower than the Federal Funds Rate.
Other than deposit rates are going to drop like a rock, I'm not sure what this means. There isn't any cheaper source of funding out there right now. Does that mean that banks have no demand for new loans (from people who they are willing to lend to)? Or, are banks expecting even "free-er" money in the next few days?
30%-something isn't good but it isn't as bad as some were expecting. Market likes the results... stock is up 5%+... if hte subprime default rates stabilizes, it's all good...
in the pantheon with Keats, Milton, Chaucer and Shakespeare.
Who would be in the pantheon with Mozillo? Kerry Killinger, Michael Perry, Bill Dallas...
Bank of America felt obligated to hit the wires today to re-affirm its commitment to purchase CrappySlide. Pay close attention. If BAC gets squeamish and bails on CFC... well, you'll know what to do.
TheFinancialNinja
Maybe it's just his recent vow of poverty that got you thinking that, bacon.
no, i've actually seen them both in their blue speedos...yikes.
i just re-read that comment. no, i don't mean that.
What I can't understand is how the stock market continues to rally and slide, rally and slide, but basically trade sideways when the sky is falling. Can anybody tell me any good news for the economy, or publicly traded companies operating primarily in the U S economy? Our gov't is mortgaged to the hilt already, we have a Congress which refuses to realistically fund gov't operations, our policymakers are taking every step possible to increase inflation, de-value our currency, and further aggravate our trade deficit, and our # 1 commodity, oil, will undoubtedly continue to rise in price and further erode consumer confidence and spending.
IF THE END IS NIGH, WHY ARE WE SO HIGH? Riddle me that, Sunnybrook Farmers!
More to come, Countrywide is still in the Confessional.
Mozillo: I confess that I'm addicted to tanning lotions, and that I never rinse them off...
Kicker - the TAF bidders are trying to guesstimate what the Fed cut will be tomorrow. Based on the info in your post, looks like a .377 bp cut coming up.
CR, with respect to Tanta's point:
Since the press now reads this blog, might it be helpful to clearly denote in the post that the deliquency number is simply current, not cumulative?
Since the press now reads this blog, might it be helpful to clearly denote in the post that the deliquency number is simply current, not cumulative?
Good point.
HEY REPORTERS! FRACTIONS HAVE "NUMERATORS" AND "DENOMINATORS." YOU NEED TO KEEP YOUR EYE ON BOTH OF THEM. THANK YOU FOR YOUR ATTENTION TO THIS MATTER.
...I'm going flat-screen shoppin'!
I See, already pre-spending the anticipated stimulus check.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER.
Good luck with that. Dean Baker has been taking the media's economic illiteracy for while, but it hasn't made much difference.
Wow. 5% delinquency would be enough to get most bankers I know to panic. For a reason. And 33% on any section of the portfolio would be an absolute nightmare (assuming they were still employed, which would be doubtful).
Part of the reason they would panic at 5% is because that's a good indicator that there's substantial dollar losses coming. The other reason they would panic is because they have some idea what that likely means in terms of how they'll be spending their time over the next few months.
Anyone predicting a recovery in '08 or '09 needs a reality check. Macro effects nothing. It'll take a year just to unwind the paperwork.
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CR has posted the Downey Savings' delinquency chart before.
I have an updated chart that compares CFC's non-performing option ARMs to some of the other players including Downey. The exponential rise mirrors Downeys.
Financial Sight: The next storm in the mortgage crisis
If I were a stockholder of CW, I would sue the shit out of them for putting my investment at an unreasonable risk. I concede that if I were told of this risk and still kept my money in, then tough lick for me, but if I weren't told about it, I would sue. Expect to see a class action coming down the pike.
sorry, should be luck, not lick, although lick does work in a kinky sort of a way.
Am I the only one disturbed that Reuters cant tell billions from trillions, and that the error has sat ther all day?
Yes as I wrote last week Trillion is the new word and few have learned that yet.
jo6pac