I learned from an old grizzled sales guy whose territory was 'the world' and who spent half of his life either in planes or airports waiting for planes that it is always happy hour somewhere.
Meanwhile, the Hope Now folks released a pathetic set of data charts on mortgage loss mitigation through April 2008. For heaven's sake, we're the financial industry, people. We're supposed to be able to use Excel properly.
Just because YOU can make a Mortgage Pig doesn't mean EVERYONE can make a Mortgage Pig...
Those first pages aren't really relevant to what's being reported. However, I think that the author is trying to extrapolate to the total market since the HopeNow Alliance and the MBA survey don't totally overlap.
Regardless, the key page is the last page that just breaks out workouts by type and quarter (w/ April 2008).
They've seen a QoQ 6% increase (Q4 07 to Q1 08) in total workouts, however that's been driven entirely by a 27% increase in loan modifications. If the April 08 number holds as the average monthly volume for Q2, then they'll see an almost 30% QoQ increase in mods for Q2 as well.
In Q3 of 2007, repayment plans were 81% of total workouts. In april, they were only 58% of workout plans. So, although repayment plans are holding steady, servicers are pretty significantly increasing their volume of loan mods.
It's easy to conclude that the majority of these loan mods are capitalizing arreages, but it would be nice to see a breakout of those vs. interest rate reductions vs. loan balance write downs, etc.
I annoy board members with my focus on the relevance of the numerator and denominator of statistics presented. I'd probably tear what non-white hair I have remaining out of my head if I read that report.
Touche, Madame Tanta. Touche. Happy Eclair and Margarita Hour.
Tanta writes:
Why not? An increase in the number of workouts is meaningless without knowing if the number of loans needing a workout increased proportionally.
I agree with your statement. However, my point was that they're relying on an extrapolation of the MBA survey data to get the total market. Looking at the footnote, it looks like the last data they have from the MBA is Q4 2007 - so they make Hope Now Alliance members strike to that so there is a common basis, then they extrapolate from there. It's not perfect, but I think you're barking up the wrong tree when you knock them for data quality issues.
So, while it would be nice to have accurate data on which to form a basis, as you suggest, HopeNow may be constrained in that area.
Re MICA and the changed methodology--yeah, right!--an astute observer suggested that perhaps BAC was forcing CFC to fess up to some of the true lies in its portfolio. Note that Sambol's decision to leave the scene of the crime was announced earlier this week as well.
It's not perfect, but I think you're barking up the wrong tree when you knock them for data quality issues.
On the first page of the report, they show subprime 60+ DQs going from 14.39% in Feb to 14.23% in March to 14.00% in May.
I was prepared to cite that as some good news. Until I noticed that they calculate those values by using an increasing count of DQ loans with a flat count of total loans.
Why would anyone with any sense even include those DQ numbers on page one if they aren't going to update the denominator each month?
Why would anyone with any sense even include those DQ numbers on page one if they aren't going to update the denominator each month?
Look, I agree with you that they're burying the lead since the most enlightening page is the final summary page - which should probably be the first page. However, there are insights to be gleaned and what's most interesting to me is the mix shift in workouts between repayment plans and mods.
on second thought, I think I'll have a Herradura Reposado en las rocas con una lima.
Which reminds me, I am looking forward to this special feature coming in Sunday's paper about how Pedro Medellín "didn't even know he was buying a home!" when he signed his mortgage documents. Now that's ridículo!
The real question...Are payments being made on the "worked out" loans. Seems to me that the number of workouts is awefully high. Who could ever imagine a "work out" where the borrower is never even contacted but their loan is "worked out" to appear to be non-delinquent for the time being.
For the 4 years my gut feelings and suspicions have consistently turned out to be more accurate than the latest "data".
barely - don't be jealous. Even IF (and it's a big if) folks are getting work outs, they are worth the effort. Think of it as some hedge fund getting screwed at the expense of some dumb ass making 60K a year. That alone has to be worth something!
And let's be honest... you don't need a work out (unless it's at the gym) because you are smart, ambitious, and have already taken your pound of flesh from the less forunate. Remember our values:
"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!"
There is not enough servicing capacity to deal with the tsunami of defaults and the large servicers seem to be near the brink of insolvency. The longer it takes for the government to act, the more carnage there will be.
The irony of it is that the investor/ lender/servicers do not seem to understand the relationship between their tightening of credit standards and the fact the their REO depts are overwhelmed. This creates the snowball effect and locks in a self defeating, vicious circle that will not be easy to break.
Yo Tanta, risk management has crossed into something a little more dark.
You can only put so much lipstick on a pig before it starts looking like a whore and draws even more attention. You have to ugly it up to get people to look away and let the pig pass.
It is always Happy Hour with you around, Tanta. At least I mix myself a drink before I dig into one of your posts.
It is Happy Hour where I live. But it has been Happy Hour since noon.
Harrumph. Is it Happy Hour yet?
I learned from an old grizzled sales guy whose territory was 'the world' and who spent half of his life either in planes or airports waiting for planes that it is always happy hour somewhere.
Skol!
As that is not something that sounds very good, I would suggest that MICA needs to come up with a better explanation.
I'm sure they will - sometime in middle to late January 2009. Until then what's a few more months of 'faith based'?
Meanwhile, the Hope Now folks released a pathetic set of data charts on mortgage loss mitigation through April 2008. For heaven's sake, we're the financial industry, people. We're supposed to be able to use Excel properly.
Just because YOU can make a Mortgage Pig doesn't mean EVERYONE can make a Mortgage Pig...
A we making ya feel better yet, sunshine?
If you write stuff down and it doesn't make sense, did you really write?
Those first pages aren't really relevant to what's being reported. However, I think that the author is trying to extrapolate to the total market since the HopeNow Alliance and the MBA survey don't totally overlap.
Regardless, the key page is the last page that just breaks out workouts by type and quarter (w/ April 2008).
They've seen a QoQ 6% increase (Q4 07 to Q1 08) in total workouts, however that's been driven entirely by a 27% increase in loan modifications. If the April 08 number holds as the average monthly volume for Q2, then they'll see an almost 30% QoQ increase in mods for Q2 as well.
In Q3 of 2007, repayment plans were 81% of total workouts. In april, they were only 58% of workout plans. So, although repayment plans are holding steady, servicers are pretty significantly increasing their volume of loan mods.
It's easy to conclude that the majority of these loan mods are capitalizing arreages, but it would be nice to see a breakout of those vs. interest rate reductions vs. loan balance write downs, etc.
Just because YOU can make a Mortgage Pig doesn't mean EVERYONE can make a Mortgage Pig...
A we making ya feel better yet, sunshine?
Yes, you are.
Since I don't drink much these days, I have declared it to be Eclair Hour.
After another 2000 calories or so this stuff won't bother me in the least.
Tanta do they have happy hour where you live?
God i hate blue laws...
Those first pages aren't really relevant to what's being reported.
Why not? An increase in the number of workouts is meaningless without knowing if the number of loans needing a workout increased proportionally.
A we making ya feel better yet, sunshine?
Yes, you are.
Well then at least I did one thing constructive today. WoooHooo! Call it a weekend!
Oh, Tanta - you're in rare form!
Thank you!
"For heaven's sake, we're the financial industry, people. We're supposed to be able to use Excel properly."
Somehow I sense that there is a lot of explanation of the events of the recent past contained therin.
I annoy board members with my focus on the relevance of the numerator and denominator of statistics presented. I'd probably tear what non-white hair I have remaining out of my head if I read that report.
Touche, Madame Tanta. Touche. Happy Eclair and Margarita Hour.
Tanta writes:
Why not? An increase in the number of workouts is meaningless without knowing if the number of loans needing a workout increased proportionally.
I agree with your statement. However, my point was that they're relying on an extrapolation of the MBA survey data to get the total market. Looking at the footnote, it looks like the last data they have from the MBA is Q4 2007 - so they make Hope Now Alliance members strike to that so there is a common basis, then they extrapolate from there. It's not perfect, but I think you're barking up the wrong tree when you knock them for data quality issues.
So, while it would be nice to have accurate data on which to form a basis, as you suggest, HopeNow may be constrained in that area.
Happy hour is hear....
Makers Mark on the rocks...
"Since I don't drink much these days, I have declared it to be Eclair Hour."
Yay! Beats the heck out of those spam, beer, clamato chasers mentioned the other night.
Tanta--
Re MICA and the changed methodology--yeah, right!--an astute observer suggested that perhaps BAC was forcing CFC to fess up to some of the true lies in its portfolio. Note that Sambol's decision to leave the scene of the crime was announced earlier this week as well.
Rgds.
It's not perfect, but I think you're barking up the wrong tree when you knock them for data quality issues.
On the first page of the report, they show subprime 60+ DQs going from 14.39% in Feb to 14.23% in March to 14.00% in May.
I was prepared to cite that as some good news. Until I noticed that they calculate those values by using an increasing count of DQ loans with a flat count of total loans.
Why would anyone with any sense even include those DQ numbers on page one if they aren't going to update the denominator each month?
I promise you that in less than an hour, I will be reclined all the way back on a lounge chair with a tub full of eclairs next to me.
Eclair after eclair will have their sweet filling squeezed into my mouth and I'll be tossing the empty dough hulls at passersby.
I hope the Google streetview van drives by to capture the moment.
Why would anyone with any sense even include those DQ numbers on page one if they aren't going to update the denominator each month?
Look, I agree with you that they're burying the lead since the most enlightening page is the final summary page - which should probably be the first page. However, there are insights to be gleaned and what's most interesting to me is the mix shift in workouts between repayment plans and mods.
on second thought, I think I'll have a Herradura Reposado en las rocas con una lima.
Which reminds me, I am looking forward to this special feature coming in Sunday's paper about how Pedro Medellín "didn't even know he was buying a home!" when he signed his mortgage documents. Now that's ridículo!
So the question remains unanswered:
These are critical questions that go directly to the question of bailouts. Are they needed? Are they working? Are they a waste of time and money?
You know, with all these millions of loan modifications, I'm getting a little jealous and now pissed off.
How come all these borrowers get loan modifications with principal writedowns and I DON'T? It's getting a little out of hand. I'm getting ripped off.
Shnaps - "on second thought, I think I'll have a Herradura Reposado en las rocas con una lima"
Oooooooo. Nice! That stuff is THE BEST! Not cheap but more reasonable than many, and much smoother...
4th bank down is:
6:19 First Integrity Bank NA in Staples, MN fails, fourth in 2008
MS you might get 4 this weekend!
bring em on..
The real question...Are payments being made on the "worked out" loans. Seems to me that the number of workouts is awefully high. Who could ever imagine a "work out" where the borrower is never even contacted but their loan is "worked out" to appear to be non-delinquent for the time being.
For the 4 years my gut feelings and suspicions have consistently turned out to be more accurate than the latest "data".
barely, it's perfección.
And now it's mine, all mine!!!
glug
barely - don't be jealous. Even IF (and it's a big if) folks are getting work outs, they are worth the effort. Think of it as some hedge fund getting screwed at the expense of some dumb ass making 60K a year. That alone has to be worth something!
And let's be honest... you don't need a work out (unless it's at the gym) because you are smart, ambitious, and have already taken your pound of flesh from the less forunate. Remember our values:
"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!"
Apppppppppppppy HOur stil gong strONG.
There is not enough servicing capacity to deal with the tsunami of defaults and the large servicers seem to be near the brink of insolvency. The longer it takes for the government to act, the more carnage there will be.
The irony of it is that the investor/ lender/servicers do not seem to understand the relationship between their tightening of credit standards and the fact the their REO depts are overwhelmed. This creates the snowball effect and locks in a self defeating, vicious circle that will not be easy to break.
Yo Tanta, risk management has crossed into something a little more dark.
Tanta!!! I'm your father.....
A rare grammatical error from you, Tanta. It should be these data.
must be some of that "fuzzy" math i used to hear about
That spreadsheet is damned fugly.
You'll get nothing and like it.
Zarley
This is where you have it wrong:
"the longer it takes for the GOVERNMENT to act..."
That is precisely the reason this country is going down the poop shoot.
You can only put so much lipstick on a pig before it starts looking like a whore and draws even more attention. You have to ugly it up to get people to look away and let the pig pass.