The good news is delinquencies for HELOCs issued in 2007...
Makes perfect sense. Tanta constantly reminds us that FICO 800s are not good customers as they will jump ship for a quarter point. That's all that happened. Anybody with a brain and a LIBOR HELOC and creditworthiness scrambled to get into fixed or Prime indexed loans.
"I'm disappointed with all the US Mericans who aren't paying their loans back, especially those who used their HELOCs again and again to take all appreciation equity out of their homes. While, I admit to dipping into my HELOC on the White House a few times, I do plan on paying it back. Please be a good Merican, like me, and pay back those loans. Otherwise we will have to invade the French and loot their treasures to pay for it." -- George W.
i have a question. i am buying 26 acres that joins our farm. i have to choose between a 10 yr fixed at 6.4% or an equity line of credit(10 yr,6% adjustable)i have good credit and low debt.whats the best way to go.tia
Randy: I would take the fixed loan, on the theory that interest rates are still lower now than they are going to be for a while and that it is better to know what your payments will be in advance.
OT
Moody's Investors Service and Standard & Poor's say MBIA Inc. has enough capital to withstand losses and justify its AAA rating. MBIA's debt investors aren't so convinced.
Credit-default swaps indicating the risk that Armonk, New York-based MBIA's bond insurance unit won't be able to meet its obligations are trading at similar levels to companies such as homebuilder Pulte Homes Inc., which is rated 10 steps lower.
The discrepancy illustrates the skepticism debt investors have about the safety of MBIA's rating after the company posted $3.4 billion of losses on subprime mortgages last quarter. Moody's and S&P both said that while at least $4 billion of writedowns lie ahead, MBIA's management has made enough changes to warrant the top rating.
Pardon me if I find this a little hard to believe,'' said Richard Larkin, director of research at municipal-bond brokerage Herbert J. Sims & Co. in Iselin, New Jersey.This is basically the same management that put MBIA into this hole in the first place.''
MaxedOutMama writes:
CR - 2007 HELOCs should be benefiting from the drop in WSJ Prime. Quite a few are based on it.
MOM, I don't have the time right now but I understood that the plurality were tied to the LIBOR in a clever Wall Street shift away from the Prime rate indexing. Pigginton: A recent report from the Federal Reserve Bank of New York shows that the
six-month Libor rate will determine the reset rates for an estimated 99% of
subprime ARMs and 38% of Alt-A ARMs in the U.S. that have been securitized. A
further 1% of subprime ARMs and 22% of Alt-A ARMs will reset based on the
one-year Libor rate.
HELOCs are not Alt-A nor sub-prime ARMs but you get the drift.
Yes and the casino was open today, though it looked like someone was shaking a table leg or something...
So we basically tested 74, I wonder if we could be close to a discontinuity - one of those great lurching currency thingies going ping when some overstretched band snaps - ya think that might do good things for your PM position? [grins]
The most recent ICAP report references the same S&P data CR cites (I believe):
"Standard & Poors said delinquencies on securities backedby Alt-A mortgages continued to rise in January, as loans whichwere favored by real-estate investors increasingly fall behind. [...]
Serious delinquencies - loans at least 90 days behind as wellas properties in foreclosure and bank-owned properties - also jumped on Alt-A loans. The rates rose to 6.4%, 8.6% and 4.6%of current balances for 2005 through 2007 vintages. Those figures were up 11%, 16% and 24%, respectively, from December."
The 2007 vintage is really something to behold. Serious DQs up 24% in one friggin' month!
The FICO model has broken down completely. Think of the discussions that must be going on inside WaMu and Wachovia. These boys sit atop a mountain of this 2007 Alt-A junk.
But of course their stock will go up tomorrow as we're finally getting "clarity". Phht.
The good news is delinquencies for HELOCs issued in 2007 have moderated. That is probably a combination of tighter lending standards, and that the loans are new - the borrowers haven't run out of cash yet!
Plus the fact that the banks are cutting off the remaining balances of these lines of credit
Telling customers sorry you cant use the rest of what we agreed to.
One of the most famous phrases in naval history -- in Nimitz' orders to admirals Fletcher and Spruance for the battle of Midway -- is, "You will be governed by the principle of calculated risk, ... ."
Perhaps CR is a naval history buff.
Perhaps even a relative of one of those illustrious admirals. Nimitz was an excellent mathematician, and Spruance probably was too.
and that the loans are new - the borrowers haven't run out of cash yet!
HAHAHAH! Too funny.
These stats will trump any FFR reductions, the mortgage rates will keep going up.
I bet 2008 HELOCs are doing even better!
(if there were any)
The good news is delinquencies for HELOCs issued in 2007...
Makes perfect sense. Tanta constantly reminds us that FICO 800s are not good customers as they will jump ship for a quarter point. That's all that happened. Anybody with a brain and a LIBOR HELOC and creditworthiness scrambled to get into fixed or Prime indexed loans.
This question is orthogonal to the post, but as it's burning in my mind I'll ask it in hopes that someone knows the answer.
Q: What ever happened to that monoline bailout that was supposed to happen monday or tuesday?
aoeui, I have that same question burning a hole in my brain.
aoeui, that was just pillow talk.
Interesting that Ben didn't mention anything about this.
FDIC to Add Staff as Bank Failures Loom - WSJ.com
They are AAA, y do they need bailout?
Q: What ever happened to that monoline bailout that was supposed to happen monday or tuesday?
CNBC has decided to stop talking about it until the market falls for two consecutive days. Then it will be news again.
"I'm disappointed with all the US Mericans who aren't paying their loans back, especially those who used their HELOCs again and again to take all appreciation equity out of their homes. While, I admit to dipping into my HELOC on the White House a few times, I do plan on paying it back. Please be a good Merican, like me, and pay back those loans. Otherwise we will have to invade the French and loot their treasures to pay for it." -- George W.
CR - 2007 HELOCs should be benefiting from the drop in WSJ Prime. Quite a few are based on it.
i have a question. i am buying 26 acres that joins our farm. i have to choose between a 10 yr fixed at 6.4% or an equity line of credit(10 yr,6% adjustable)i have good credit and low debt.whats the best way to go.tia
The news just keeps getting better. 15000 point spike in DOW tomorrow. Whoot!
Cheers,
A question:
when they say:
delinquencies are up 6 percent to 7 percent
does that mean the delinquencies went from 1% to 7% (up 6%)
or
delinquencies went from 6.6% to 7% (up 6%)
likewies when they say Delinquencies on prime jumbo loans are up as much as 18.2 percent.
aoeui writes: "Q: What ever happened to that monoline bailout that was supposed to happen monday or tuesday?"
It's progressing... nothing to see...move along
Randy: I would take the fixed loan, on the theory that interest rates are still lower now than they are going to be for a while and that it is better to know what your payments will be in advance.
OT
Moody's Investors Service and Standard & Poor's say MBIA Inc. has enough capital to withstand losses and justify its AAA rating. MBIA's debt investors aren't so convinced.
Credit-default swaps indicating the risk that Armonk, New York-based MBIA's bond insurance unit won't be able to meet its obligations are trading at similar levels to companies such as homebuilder Pulte Homes Inc., which is rated 10 steps lower.
The discrepancy illustrates the skepticism debt investors have about the safety of MBIA's rating after the company posted $3.4 billion of losses on subprime mortgages last quarter. Moody's and S&P both said that while at least $4 billion of writedowns lie ahead, MBIA's management has made enough changes to warrant the top rating.
Pardon me if I find this a little hard to believe,'' said Richard Larkin, director of research at municipal-bond brokerage Herbert J. Sims & Co. in Iselin, New Jersey.This is basically the same management that put MBIA into this hole in the first place.''
Moody's, S&P Say MBIA Is AAA; Debt Market Not So Sure (Update3) - Bloomberg.com
LOL
ALL ABX Indices again hit record lows today: Products and Services Overview
Many CMBX spreads blew out again today as well, though not to records.
Debt or equity, who is right? We shall see.
SDM
SDM,
Now lets not be alarmist - all but two hit new lows today - for like the third day in a row!
The CMBX deterioration seemed to be inversely related to credit quality, relatively sharper declines for higher credits...
The LCDX appears to be opening back up but that closes at 6:30 pm...and the CDX hasn't been updated it may be on the same schedule.
Let's see:
GE is AAA. MBIA is AAA. MBIA is equal to Pulte Homes. (!)
So, logically, Pulte Homes is equal to GE.
And that's why the market is ready to really take off. Simple, when you see the method behind the madness.
LOL!
MaxedOutMama writes:
CR - 2007 HELOCs should be benefiting from the drop in WSJ Prime. Quite a few are based on it.
MOM, I don't have the time right now but I understood that the plurality were tied to the LIBOR in a clever Wall Street shift away from the Prime rate indexing. Pigginton: A recent report from the Federal Reserve Bank of New York shows that the
six-month Libor rate will determine the reset rates for an estimated 99% of
subprime ARMs and 38% of Alt-A ARMs in the U.S. that have been securitized. A
further 1% of subprime ARMs and 22% of Alt-A ARMs will reset based on the
one-year Libor rate.
HELOCs are not Alt-A nor sub-prime ARMs but you get the drift.
EnergyEcon-
Dang! You are right. Sorry for the misinformation.
Correction:
Price High Low
11.50 \t98.35 \t11.41
90.79 \t100.38 \t90.09
Still waiting for BankRateMonitor
Track Economic Index Trends and Graph Financial Industry Rates
to refresh mortgage rates for today so I can see how much they increased again since B-52 Ben's last cut. Oops, that wording is also alarmist!
hehe
SDM
I've often wondered if the subprime - Libor tie was to make these more palatable to the international community.
I wonder how big the interest rate risk could become. Lets just be glad the values are fixed in USD.
OFF TOPICS:
Question for CR.
I am curious to know how you came up with name CALCULATED RISK for your blog. By the way, I love your blog.
Energy,
Of course far from me to be alarmist, but the dollar was STUCK at it's all time low all day. PM and comods up.
Tons of brilliant, wonderful news today.
Cheers,
Misean,
Yes and the casino was open today, though it looked like someone was shaking a table leg or something...
So we basically tested 74, I wonder if we could be close to a discontinuity - one of those great lurching currency thingies going ping when some overstretched band snaps - ya think that might do good things for your PM position? [grins]
Wow the ABX-HE-AAA 06-2 really got spanked today. Who is long that stuff, anyways? Oh yeah, the banks and the monolines.
Nice try today, guys, but I wont be shaken out of my SKF that easily...
The most recent ICAP report references the same S&P data CR cites (I believe):
"Standard & Poors said delinquencies on securities backedby Alt-A mortgages continued to rise in January, as loans whichwere favored by real-estate investors increasingly fall behind. [...]
Serious delinquencies - loans at least 90 days behind as wellas properties in foreclosure and bank-owned properties - also jumped on Alt-A loans. The rates rose to 6.4%, 8.6% and 4.6%of current balances for 2005 through 2007 vintages. Those figures were up 11%, 16% and 24%, respectively, from December."
The 2007 vintage is really something to behold. Serious DQs up 24% in one friggin' month!
The FICO model has broken down completely. Think of the discussions that must be going on inside WaMu and Wachovia. These boys sit atop a mountain of this 2007 Alt-A junk.
But of course their stock will go up tomorrow as we're finally getting "clarity". Phht.
I'm with YTL; change in percent or percentage change? The CNN article is unclear.
Where can I find the original data?
Another me-too on what the heck do those percentages actually mean. It is not clearly written.
CR Writes;
The good news is delinquencies for HELOCs issued in 2007 have moderated. That is probably a combination of tighter lending standards, and that the loans are new - the borrowers haven't run out of cash yet!
Plus the fact that the banks are cutting off the remaining balances of these lines of credit
Telling customers sorry you cant use the rest of what we agreed to.
Bank to customer sir we didn't recieve your last mortgage payment.
Customer yes you have.
wawawa,
One of the most famous phrases in naval history -- in Nimitz' orders to admirals Fletcher and Spruance for the battle of Midway -- is, "You will be governed by the principle of calculated risk, ... ."
Battle of Midway: June 4 - 6, 1942
Perhaps CR is a naval history buff.
Perhaps even a relative of one of those illustrious admirals. Nimitz was an excellent mathematician, and Spruance probably was too.
Thank jm, very intersting history.