honestly, i don't think these guys think in NIM terms anymore. if they're running out of cash, they just try to get money at any price. given CDS on CFC trade points up front ~3,500bps, paying 5.45% for deposits is a piece of cake, question is, when do they start paying 10%? another question is, are people really that stupid, and what are FHLB/FDIC thinking?
btw, FDIC only has $50bn in DIF to boot. now CFC here is attracting $4-5bn a month and has already got $61bn. given most of these volumes are CDs, how soon until FDIC turns into another fannie mae and causes a major run on the whole banking system?
That pitiful subprime lending amount is one of the stronger reasons to stay in my apartment here in Sunnyvale for the foreseeable future.
If Zillow is to be believed, prices here had stabilized in 2002-2004, but everything rocketed to the moon in 2005, and I strongly suspect the abandonment of lending standards in 2003 was the primary mover.
Once word got out that NINJA loans were available to subprime borrowers, the supply of willing and able buyers overwhelmed the market, everywhere.
What's left now is to just wait for the monkeys to fall from the trees, as hbb-types say. It's going to be a slow, slow grind, and with the distinct probability of further interventions (raising the conforming limit to $1M, mortgage rates down to 5%, balloon mortgages becoming the norm), it's tough figuring out how far down prices are going to settle to. Maybe 2003 again, maybe not.
I agree that the FDIC needs to stay alert here. Essentially, it is being used as to back the high-rate CDs which are the reserve backing riskier borrowing.
Is this where the US intended to be when it started the FDIC program? This is another of those twists of traditional programs and standards that will have (surprise!) unintended effects.
Possibly--you know me, always lookin' on the bright side--what we're seeing is some "category creep" going in the right direction.
In other words, during the boom we had a lot of subprime loans that got "renamed" Alt-A and a lot of Alt-A that got dubbed "prime."
Perhaps CFC just has to call the loans on the very bottom of the ranking "subprime" because you can't get away with calling them something else these days. It's always possible that they're the same credit quality as what was originated as "Alt" last year at this time.
Tanta - couldn't the same be said of AAA v. AA v. BBB or CTAGATGGA or whatever they're babbling about in terms of ratings? We're all graded on a curve now.
"and what are FHLB/FDIC thinking?"
chegewara | 01.09.08 - 11:36
Be careful what you ask for! Please! Every time Tanta answers that question, particularly regarding the (formerly?) biggest mortgage outfit in the country ... I start thinking maybe I should go long CFC.
FDIC like SS, PFGC, & Medicare... Just another massively unfunded government program that has gotten progressively worse as the fundamentals of our economy have been ravaged by executives and the stock market.
It appears that the housing trends in 2008 will look a lot like 2007, so Countrywide will remain under a lot of stress,'' said Tom Atteberry, a money manager in Los Angeles at First Pacific Advisors LLC, in an interview yesterday.What they are left with is a pretty low-margin business.''
Apparently loaning money to people who can repay it when Greenspan et all have been slashing rates is a pretty crappy business.
I know $6 million doesn't sound like a lot but these are $6 million worth of potential foreclosures that CW avoided by being able to refinance bad loans about to go into foreclosure and making a little money on the back in fees or loans closed in error that are not worthy of fannie or freddie. I'm interested in knowing how much of their production was refinancing their own portfolio to bring loans current.
I think you may need to think again about the CFC foreclosure proceedings involving the 'efficiently' produced letters. Maybe they need to get as many as possible through foreclosure to stop fronting money to investors. I'm not saying it was straight fraud or nefarious, but it could have been a result of forcing resolution on as much fronted money as possible.
I think if CFC goes BK, it's going to be a big blow to many financial institutions. CFC owes a lot of money to institutions who can't absorb the bad news of more debt write downs. I doubt BOA is looking forward to writing off most of their $2Billion cash infusion to CFC.
I wonder how much MBIA and Ambac will have to pay if CFC goes under. Maybe enough to put them under too. Which will cause more debt downgrades which will cause....
I wonder how much MBIA and Ambac will have to pay if CFC goes under. Maybe enough to put them under too.
MBIA and Ambac are toast, no matter what. CFC going BK will just be the equivalent of taking a guy who just shot himself in the head and throwing him off a bridge rather than waiting for him to bleed out.
"And a few other tidbits:
Countrywide made $6 million in subprime loans in December, down from $3.7 billion a year earlier ...
From $3.7 billion to $6 million (with an m) - that is quite a decline in subprime loan originations. I wonder why it isn't zero?"
How would the mid-level execs at Countrywide buy their houses if they had to provide documentation of their 2007 bonuses?
Are the $50 Billion FHLB loans, 30 year loans to Countrywide? Or does the FHLB require payment much sooner? If sooner, where does Countrywide get the money? If 30-year, WTF are they thinking? Ifwhen CFC goes bankrupt, does that $50 Billion come emmediately on the U.S. debt andor deficit calculations for that year?
LONDON (Reuters-today) - Oil at $100 a barrel should give exporters every incentive to pump more, but their difficulty in doing so shows the world is struggling to sustain production.
A growing number of leading industry figures -- the CEOs of Total and ConocoPhillips among them -- now question mainstream forecasts for supply, suggesting the era of "plateau oil" is nearer than many in the business have admitted.
While global oil demand is projected to grow to more than 100 million barrels per day later this century, some argue it may not be possible to boost flows beyond the current rate of some 86 million bpd.
Supply still falls short even after so-called unconventional oils extracted from tar sands and converted from natural gas are taken into account, said Sadad al-Husseini, a former top official at state oil giant Saudi Aramco.
"Today's oil prices are high because there are limited new supplies," Husseini, who ran exploration and production at the Saudi state oil company from 1986-2002, told Reuters. "There's a history now. We're several years into level production."
(end quote)
Peak oil, anyone??
Notice the phrase "plateau oil", the use of a kinder, more gentle "p" word.
"I think if CFC goes BK, it's going to be a big blow to many financial institutions."
They still have an altrenative of massive dilution by issuing another set of convertible preferred. It really depend on how much capitals they need to raise and whether anyone want CFC asset in case they eventually go bk...
Even if the CD's are FDIC insured, I'd rather not run the risk of having to wait for the FDIC to cut me a check for a few extra bucks.
What are the rules on that anyways? Say you invest in a 50k CD and the FDIC then has to cut you a check on your deposit. Do you just get the 50k back? Do you get the interested you were supposed to have earned?
These returns are awful, especially at the top of a cycle.
High yield is a sterilized way of saying junk bonds. Kind of like "better than new" in realtor parlance.
But hey, its called junk for a reason.
I had some super raunchy junk bonds until about the end of 2006 (including some Ford bonds). The interest payments were amazing, but I dumped them at the first sign of impending economic trouble. If conditions looked favorable I'd consider some again for short-term income, but I'd never hold junk long-term. You almost have to treat them like stocks.
Who do you approach to see if they'll accept an offer to buy back a mortgage at a discount? Someone awhile back mentioned they had done this before, if CW is looking for capital, I'd like to help.
This is the equivalent of getting kicked in the nuts while having a smile and saying, "this doesn't hurt!" At this point, Countrywide has lost its gonads so there isn't anything there to kick. They are in full survival mode.
While things are imploding all around them, they are telling consumers on the street, "hey, we offer the best rate on CDs!" Pushing rates up only to be competitive while going down at the same time would not be permissible if there was no governmental support (i.e., FDIC). Now everyone is going to have a daisy chain implosion:
Countrywide: Well, MBIA will back us up, we have insurance
MBIA: Well, the government will back us up, we have further support. Look at Fannie and Freddie
Fannie and Freddie: Well we have the support of the Fed
Fed: We have support of...well we can always milk the public
Public: We have the support of Countrywide protecting our funds.
I read the Oil Drum everyday. Lots of interesting theories over there. The takeaway I get from the site is that although NO ONE can say with 100% percent certainty...it's possible that the "cheap" oil that we have enjoyed could be going away. I believe it will be a gradual process. Supply will dwindle, price will rise, alternatives and conservation will naturally occur. Slow change is the change that is the kind that is adaptable and survivable. The economic incentives to pursue alternative forms of energy and alternative ways of using and storing energy will so be plainly obvious and the green-gold-rush will commence. I just hope that the U.S. leads the way. This country needs something to sell to the rest of the world in the worst way...as I am sure that our financial products and our debt are not going to be popular again anytime soon.
Junk bonds trade like equities. But over the last ten years, returns have been horrid, especially on a risk adjusted basis.
Junk bonds usually take a beating during recessions too.
I treated them like a hot potato, but it's very tempting to hold onto them. I remember thinking at the time that if I could rely on getting that kind of interest rate (I was getting around 9%) I could retire then and there.
the foreclosure blog has a new entry, the rate of increase in their REO has jumped, and now the total value of properties they list for sale is significantly in excess of the entire market capitalization of the company!
BAC is unlikely to lose it's 2 Billion. Infact it's likely it took a short position of some 115 million shares BEFORE it invested. That basically means if CFC goes to zero it profits to the tune of 800 million. [See k.dennigers comments on the yahoo boards]. According to his comments, BAC did the same thing with Calpine.
and as a bonus BAC gets to pick the bones of CFC's servicing portfolio
Kp, if nations and corporations truly thought we were at the peak and production is going to head down from hear, however slowly, prices would not rise slowly. It would make the currently rise to $100 look small.
Pray for slow change as the fast kind will be fugly...cheap oil will go away, the question is when. While numerous alternative sources of hydrocarbons or other energy sources exist, the ability to ramp that production up suffers from capacity constraints related to the scale and nature of the capital investments required.
Side note on the inventory report today, large crude drawdown (again) and large gasoline storage (again) - wonder what gasoline demand numbers look like (volumes) ATM?
Mike in Az, you are spot on with the peak food observation though it seems to me that is inextricably linked with peak oil (cheap energy to move it, cheap fertilizer to grow it, alternative demand for food as fuel input...).
Things could be about to get waaaaay too interesting.
Thanks for the link. Florida is on track to more than double in less than a year...The scary part is I follow local homes and they are selling at steep discounts but the inventory keeps climbing...
I put a total of $25K in 1 year & 6 month CDs in September with these guys --- 5.65% & 5.55% respectively. I thought...FDIC, right? If they can't cover, I'll probably have bigger problems. At this point, what is the worst that can happen? What would it take for it to get to where the FDIC couldn't do what the FDIC says it would do (i.e. insure the account)?
Our FHLB advances generally have maturities of 1-3 years, consistent with the weighted average
expected life of our mortgage loans held for investment. Our access to such financing is limited to no more
than 50% of our Banks ending assets for the prior month. The FHLBs financing support is uncommitted
and requests for additional advances are evaluated at the time they are received. While we normally
consider uncommitted financing programs to be less reliable sources of funding, given the FHLBs status
as a government sponsored entity and its mandate to provide a stable source of funds to support the
residential mortgage market, we classify FHLB advances as a highly reliable source of contingent liquidity.
Look what's happening. Stocks are falling sharply but the yen isn't moving.
Hedge funds are starting to take their carry and use it to short U.S. equities, especially speculative stuff like REITs and small-caps where there isn't much liquidity. They can kill this stuff while staying long in commodities and emerging markets for now.
If you're short, don't be greedy. Hedge funds make the most money on the short side when things are spikey, not straight line. Set targets and then keep moving your targets down (or up in ProShares). This phase of hedgies shorting various asset classes could last more than a year. It will just kill Joe 401k buy-and-hold.
Countrywide is still spending money on bulk email advertisements. I can attest to this after checking my inbox, where I was greeted by a CFC ad screaming "Countrywide(R): A No Closing Cost Refi -- save today!"
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 12:05am GMT 08/01/2008
Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency. On Friday, Mr Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit - officially the President's Working Group on Financial Markets - was created after the 1987 crash. ...
I meant: Set your targets, buy back shorts, sell short again on covering rallies, and then set a lower target price than before. The inverse in ProShares.
Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency.
Yeah? They're gonna do this without consulting Congress?
guys, GS is getting woodshedded today as it has been. the mkt is capitulating. yesterday broke all sorts of techincal barriers and we are headed down. don't miss i.
we all have our own styles but my short and hold strategy for the bulk of my portfolio has generated huge returns. we are in a generational cycle trend change and timing big drops like that 300 pt drop after the last rate cut can't be timed.
having said that there are always one or two stocks i will jump in and out of.
Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency.
You mean like the ~300 dollars everyone got the last time they sent out rebates? Yeah, that will help.
Kp The coming calamity in FHLB system and the resulting bailout will be truely historic.
I hear so little about FHLB, besides a few notes about the enormous loan volume in Q307. Why is there so little analysis? Is it really at risk (of needing bailout) as the other GSEs?
borkafatty - grand map! And they've normalized by estimated total housing units - so things could be worse in areas that are overbuilt. Wish there were similar maps of other years for comparisons - some of those clusters are more real than others. Hot spots do occur randomly although I've little doubt the basic pattern is right here.
That abrupt drop off in AL and MS compared to AR TN GA in even FL is intriguing. AR and MI I have to think about too.... any clues the gallery can think of?
I'm with idoc -- timing these swings is murderous. I bought LEAP puts back in May and have ridden the rollercoaster ever since. Should pay off handsomely.
CDs carry a high cost of funds, and the people who actively shop these high rate CDs are "hot money". They typical DO NOT move their "cheap" money to the bank offering the high interest CDs thus offering no value-add for the bank to offer the high interest CD other than strictly for the purposes of satisfying cap requirements. The Fed will be making moves to LOOSEN the already pretty loose cap reqs and already is actively handing out funds on any roadkill the banks have as collateral. The FHLB's are making a lot of bad/under-priced advances. It is my opinion that the FHLBs are going to be a/the point of failure.
Problem is that when an oilfield goes into decline, it does so dramatically. If those super-giants are all "mature" then the overall drop in production could be breathtaking.
Problem is, pulling your CDs out of Countrywide isn't clearly the answer.
Yes, it has Ch 11 or takeover written all over it. Right next to that is written, "This bank goes down first." That's the one that will get full FDIC coverage and a helpful hand from some other bank.
But what if you switch your money to a bank that ends up going down later--one that's NOT too big to fail, or fails when the FDIC goes broke?
Not only can the decline occur at a breathtaking rate, the amount available for export is declining even faster due to subsidized consumption in many of the exporting nations (well explained on The Oil Drum look up land export model).
And don't forget Georgia; Atlanta is giving Florida and CA at least some competition in the foreclosure sweepstakes.
They keep building here as if the drought and the whole mortgage crisis never happened ... I'mabout to fire off a nasty letter to my local planning board asking just what was in the bongwater when they approved several developments near my house that have sat empty and rotting for over two years now.
No doubt the kickbacks were spent on high times. Jas is right, a system by and for the crooks ...
The loan growth as of recent is staggering. ~30% year over year. You can bet your butt it is all on risky collateral and being used/burned to put more lipstick on the mortgage pig.
Yearning to learn asked: "...Or is this just the first wave before the mania hits...."
You're wondering which FDIC-insured bank to put your money into...and you don't think the mania has hit?
Unless you have a proven, objective plan you probably should just sit still and do nothing. Some of the worst investing/trading decisions I've ever made came because I was reacting to the markets instead of looking past the emotional extremes and playing my own objective, dispassionate game.
borkafatty - and that explains MS and AL and LA how?? Something else is up with TN and it's weird how it seems to be the entire state and doesn't seem to have a strong metro area push (that pattern in OH and FL makes more sense).
ya...I am going to take my 300 bucks, if they do send it, and put that towards a 90 inch big screen TV (made in China)....and throw the rest on my credit card.
Well I think...I think, a lot of former Big Easy folk ended up in Tennessee after the hurricane...i mean there were thousands of displace people...and well again...we all need shelter...sign here...and thank you...just speculation on my part of course. And well those resets are coming to the front burner or already have.
Possibly a contributing factor within TN, but it still doesn't explain the regional pattern. I doubt TN was the only state displaced people ended up and bought homes. No one stayed in TX where it was working out so well for them?
I keep a close watch on eastern Tenn, the reason for my question. Currently there are an enormous number of empty houses on the market for sale. My sister (who lives there) can't explain it either. Her hunch is it could be bad, just not sure exactly.
I was thinking the same thing KP...but i like the rest am trying to figure out why the whole state seems to be imploding and well i was thinking exodus.
Isn't now the time to do an ARM? I mean hasn't it been historically shown to go counter to the market to benefit? I mean if rates are dropping because of all this; isn't the risk of upward rate adjustments mitigated?
Gary asked: "Sebastian (and for once I am not being facetious) what is the latest from the Wright Model B?"
Recession probability still falling, having never reached a minimum 50% probability level.
I also chart the "plain vanilla" spread between 10-year Treasuries and T-bills(with no adjustment for Fed funds rate). It did reach a peak of around 70% but it's fallen to 35% currently.
None of the last 6 recessions have begun with the probability that low, so either we're in a recession already or we've missed the "window" and won't see one on this cycle.
I also thought the low foreclosure rates in AL and MS, compared to AK, TN, GA, and FL were pretty striking. Lots of places with big changes right at the state border. My family is from AL, and AFAICT, they had a bubble and have serious oversupply. My mom was showing my some places in my old hometown and the prices were pretty jawdropping. The neighborhood my parents used to live in, the condo my mom is in, and the new development my brother is in all have lots of vacancies.
Maybe AL got some protection from their trial-lawyer-friendly legal system.
I think the lesson I have learned is that ARMs only make sense at historically high rates and when they can be made for relatively short terms.
I am pretty sure that we are not at historically high rates. ~6% is pretty cheap money....why not just lock in 6% and re-fi if things were to get dramatically cheaper for some reason in the future?
This is a real Zillow listing.
The house was sold for 350k in November and they show it valued at 485k down 30k from last month.
ZESTIMATE®: $484,107 What's this?
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Zestimate
A Zestimate home valuation is Zillow's estimated market value. It is not an appraisal. Use it as a starting point to determine a home's value.
Learn more
The Value Range is the high and low estimated market value for which Zillow values a home. The more information, the smaller the range, and the more accurate the Zestimate. See data coverage and accuracy table Value Range: $421,173 - $605,134
30-day change: -$30,736
Zestimate updated: 12/18/2007
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Tax Assessor's Value
Depending on the jurisdiction where you live, this value could be the tax assessed, tax appraised, or market assessed value. This value comes from the taxing authority of the city, county or state where you live; this is not Zillow's value.
Note: Tax assessor's values differ from Zillow's Zestimate, which is computed by entering numerous data points into a proprietary formula, often resulting in a more accurate value estimate.
Last sale and tax info
Sold 11/06/2007: $350,000
2007 Property Tax: $5,778
or reality just decides not to follow what the polling, pundits or models tell it should happen. I'm sure Doug Adams said it better somewhere - I've vague memories of The Heart of Gold telling it to go get twisted, but that may be statistics. In any case, The Guide is Definitive.
I know the Memphis area is way overbuilt. It has
a large minority population, both african-american
and latino. The wages in this area do not support
the housing prices. I remember hearing that 1 in 8
Memphians were either directly or indirectly employed in the real estate sector. Not 100% sure
of that stat though. I believe Regions problems are
largely located in Memphis.
Fair Economist - don't forget that one of the skew points from state to state is the legal speed limit for foreclosures. That is, what sort of delays in getting from "you're late" to "our house now" are tolerated. IIRC, Georgia is very aggressive and TN is not - as one example.
"Unless you have a proven, objective plan you probably should just sit still and do nothing.
Good advice, from a consistent voice of reason."
LOL! You must not have been around exactly 1 year ago when Sebasian was boasting about charging into NEW, weeks before they got de-listed. He failed to realize that the whole business model was about to vanish, and for obvious reasons. That move made despite all the consistent "voices of reason" on this site. Still amazes me...
Nice point Kirk. Why is it I always end up wanting more comprehensive spatially- referenced data? Tax and Law codes, plus migration patterns, plus foreclosures by county, plus house prices and stock by county, household income and asset data by county..... I am SUCH a junkie, o bother.
there is likely no "calamity" coming to the fhlb system. advances to members like CFC are usually overcollateralized. moreover, the fhlb has a blanket lien on all other non-pledged assets. hence, if the fhlb perfects its interest and has sound margins, there is little credit risk. the system has never had a credit loss from an advance since the system started in 1932.
the coming calamity is to the fdic, who is in a junior position (like a home equity loan to CFC). should CFC go belly-up, the fdic will write a large check to the fhlb. btw, this is no different treatment than discount window borrowings from the fed.
the real issue here is what is the ots/fdic doing at CFC. it is like the zombie thrfts of the 1980s that were paying high rates on CDs for liquidity purposes. right now, CFC is not on the problem bank list (see 3q fdic qbp). therefore, CFC is allowed to pay whatever rate on its deposits (no need for broker deposit waiver). also, CFC is paying among the lowest rate for its deposit insurance from the fdic. this is the relevant question -- why is the fdic not charging CFC a higher rate for its deposit insurance coverage.
interestingly, senator schumer was questioning the advances by fhlb to CFC. without fhlb borrowings, CFC likely would have closed (not sure if the fdic sticker is sufficient for liquidity purposes). a CFC failure would likely be very disruptive, so schumer's criticisms are perplexing. the servicing book of CFC is so large and think about trying to do loss mitigation why servicing is being transfered. hence, cutting off CFC from fhlb borrowings would likely mean fewer FCs get reworked and lower home values in affected communities. if schumer wants to help FBs in FC and stem declining home prices, then cutting off CFC is not the way to go.
Yearningtolearn - Consider that it does not matter how much MSNBC talks about gold. It only matters how many people are buying gold. Do you know anyone who is buying gold right now who has not owned gold for a long time? I do not think gold is popular at all. I think it is still treated as a pariah by the investing community. The new high is being treated as an interesting anomaly.
In your article "Countrywide: Foreclosures, Overdue Loans Rise" you make the following statement: Countrywide's bank attracted a net $2.3 billion in deposits in December, ending the year at $61 billion. The bank is boosting interest rates to help attract deposits, while borrowing more than $50 billion from the Federal Home Loan Bank system.
Since when is "Countrywide" an FHLB member& what creditable assets are they putting up as collateral? I'm sending you a list of FHLB members as of Oct 12, 2007.
FEDERAL HOME LOAN BANK OF BOSTONDISTRICT 1
First New England Federal Credit Union ..................... East Hartford .......... Connecticut.
Ledge Light Federal Credit Union .............................. Groton .................... Connecticut.
Connecticut Community Bank, N.A ........................... Norwalk .................. Connecticut.
Eastern Federal Bank .... Norwich .................. Connecticut.
Putnam Savings Bank .............................................. Putnam .................. Connecticut.
Merrill Merchants Bank ............................................. Bangor ................... Maine.
Seaboard Federal Credit Union .................................. Bucksport ............... Maine.
Union Trust Company .... Ellsworth .............. Maine.
NorState Federal Credit Union ... . .................. Madawaska ............ Maine.
Norway Savings Bank ............................................... Norway .................. Maine.
Infinity Federal Credit Union ...................................... Westbrook .............. Maine.
Belmont Savings Bank ............................................. Belmont .................. Massachusetts.
University Credit Union ............................................. Boston .................... Massachusetts.
The Lenox National Bank .......................................... Lenox ..................... Massachusetts.
Enterprise Bank and Trust Company .......................... Lowell .................... Massachusetts.
Butler Bank, a Co-operative Bank .............................. Lowell ..................... Massachusetts.
Northmark Bank ....................................................... North Andover ...... Massachusetts.
RTN Federal Credit Union ......................................... Waltham ................. Massachusetts.
Commerce Bank & Trust Company ........................... Worcester ............... Massachusetts.
Chittenden Trust Company ........................................ Burlington ............... Vermont.
New England Federal Credit Union ............................ Williston .................. Vermont.
FEDERAL HOME LOAN BANK OF NEW YORKDISTRICT 2
Affinity Federal Credit Union ...................................... Basking Ridge ......... New Jersey.
Boardwalk Bank ....................................................... Linwood .................. New Jersey.
Millville Savings and Loan Association ....
Someone needs to say something about this! http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
I know that many company today who allows people to borrow are loosing their money because of people who don't know to pay there loans. It maybe allow people who wants to borrow to be more responsible when it comes to their debts.
honestly, i don't think these guys think in NIM terms anymore. if they're running out of cash, they just try to get money at any price. given CDS on CFC trade points up front ~3,500bps, paying 5.45% for deposits is a piece of cake, question is, when do they start paying 10%? another question is, are people really that stupid, and what are FHLB/FDIC thinking?
"sqeezing"? this looks more like a rear-naked-choke...
ouch....
fyi: Rear naked choke - Wikipedia, the free encyclopedia
btw, FDIC only has $50bn in DIF to boot. now CFC here is attracting $4-5bn a month and has already got $61bn. given most of these volumes are CDs, how soon until FDIC turns into another fannie mae and causes a major run on the whole banking system?
Why would anyone want to lend money to countrywide, knowing their laxity in lending money ?
A 99.8% drop. Pretty darn close to zero if you ask me CR.
Cheers,
BAC knife-catching may have caused it more that $1.3B?! We'll never really run out of greater fools...
$6 million in loans is basically zero.
we're talking about somewhere around 10-20 loans across the whole country over an entire month.
Wow I'm first
Countrywide Foreclosures.
That pitiful subprime lending amount is one of the stronger reasons to stay in my apartment here in Sunnyvale for the foreseeable future.
If Zillow is to be believed, prices here had stabilized in 2002-2004, but everything rocketed to the moon in 2005, and I strongly suspect the abandonment of lending standards in 2003 was the primary mover.
Once word got out that NINJA loans were available to subprime borrowers, the supply of willing and able buyers overwhelmed the market, everywhere.
What's left now is to just wait for the monkeys to fall from the trees, as hbb-types say. It's going to be a slow, slow grind, and with the distinct probability of further interventions (raising the conforming limit to $1M, mortgage rates down to 5%, balloon mortgages becoming the norm), it's tough figuring out how far down prices are going to settle to. Maybe 2003 again, maybe not.
I agree that the FDIC needs to stay alert here. Essentially, it is being used as to back the high-rate CDs which are the reserve backing riskier borrowing.
Is this where the US intended to be when it started the FDIC program? This is another of those twists of traditional programs and standards that will have (surprise!) unintended effects.
$6 million in loans is basically zero.
Possibly--you know me, always lookin' on the bright side--what we're seeing is some "category creep" going in the right direction.
In other words, during the boom we had a lot of subprime loans that got "renamed" Alt-A and a lot of Alt-A that got dubbed "prime."
Perhaps CFC just has to call the loans on the very bottom of the ranking "subprime" because you can't get away with calling them something else these days. It's always possible that they're the same credit quality as what was originated as "Alt" last year at this time.
Tanta - couldn't the same be said of AAA v. AA v. BBB or CTAGATGGA or whatever they're babbling about in terms of ratings? We're all graded on a curve now.
CFC Rolling 13 Month Stats
Servicing portfolio performance is deteriorating rapdily.
"and what are FHLB/FDIC thinking?"
chegewara | 01.09.08 - 11:36
Be careful what you ask for! Please! Every time Tanta answers that question, particularly regarding the (formerly?) biggest mortgage outfit in the country ... I start thinking maybe I should go long CFC.
So does anyone think the FDIC is actually trying to manage the banking risk these days?
When do I get my half price REO?
FDIC like SS, PFGC, & Medicare... Just another massively unfunded government program that has gotten progressively worse as the fundamentals of our economy have been ravaged by executives and the stock market.
Systemic failures coming.
Wall Steet no longer puts a premium on the value of the servicing portfolio.
Servicing the loans has now become a serious negative cash flow all at a time Countrywide cannot afford it.
Lender stung by fears on finances - Los Angeles Times
This is some funny sh*t.
It appears that the housing trends in 2008 will look a lot like 2007, so Countrywide will remain under a lot of stress,'' said Tom Atteberry, a money manager in Los Angeles at First Pacific Advisors LLC, in an interview yesterday.What they are left with is a pretty low-margin business.''
Apparently loaning money to people who can repay it when Greenspan et all have been slashing rates is a pretty crappy business.
What they are left with....
Any fresh bank runs on CFC after yesterday's "rumors* about BK?
Nov '06 to Dec '06 loans in process dropped ~8%... Nov '07 to Dec '07 loans in process dropped ~17.5%
Reminds me of the S&L crisis hey days.
The eventual public charges multiply very quickly during the last few months as the struggling institution attract insured deposits with higher rates.
Moral hazard in action! In the end, it's our tax dollars.
I know $6 million doesn't sound like a lot but these are $6 million worth of potential foreclosures that CW avoided by being able to refinance bad loans about to go into foreclosure and making a little money on the back in fees or loans closed in error that are not worthy of fannie or freddie. I'm interested in knowing how much of their production was refinancing their own portfolio to bring loans current.
I think you may need to think again about the CFC foreclosure proceedings involving the 'efficiently' produced letters. Maybe they need to get as many as possible through foreclosure to stop fronting money to investors. I'm not saying it was straight fraud or nefarious, but it could have been a result of forcing resolution on as much fronted money as possible.
barely,
"Systemic failures coming."
Yep, pretty grim.
Cheers,
I think if CFC goes BK, it's going to be a big blow to many financial institutions. CFC owes a lot of money to institutions who can't absorb the bad news of more debt write downs. I doubt BOA is looking forward to writing off most of their $2Billion cash infusion to CFC.
I wonder how much MBIA and Ambac will have to pay if CFC goes under. Maybe enough to put them under too. Which will cause more debt downgrades which will cause....
This may be the final straw.
subprime loan originations. I wonder why it isn't zero?
Presumably b/c they were GSE eligible. I doubt they were mods as speculated above, b/c they wouldn't report those as new originations.
Just speculatin'
Too bad Countrywide stock is now so low that you can't short it any further....
"It appears that the housing trends in 2008 will look a lot like 2007, so Countrywide will remain under a lot of stress,''
2008 like 2007 would make CFC a minus $40 stock.
So when do the holders of FHLB paper start asking about the government backstop?
I wonder how much MBIA and Ambac will have to pay if CFC goes under. Maybe enough to put them under too.
MBIA and Ambac are toast, no matter what. CFC going BK will just be the equivalent of taking a guy who just shot himself in the head and throwing him off a bridge rather than waiting for him to bleed out.
"And a few other tidbits:
Countrywide made $6 million in subprime loans in December, down from $3.7 billion a year earlier ...
From $3.7 billion to $6 million (with an m) - that is quite a decline in subprime loan originations. I wonder why it isn't zero?"
How would the mid-level execs at Countrywide buy their houses if they had to provide documentation of their 2007 bonuses?
Are the $50 Billion FHLB loans, 30 year loans to Countrywide? Or does the FHLB require payment much sooner? If sooner, where does Countrywide get the money? If 30-year, WTF are they thinking? Ifwhen CFC goes bankrupt, does that $50 Billion come emmediately on the U.S. debt andor deficit calculations for that year?
Too bad Countrywide stock is now so low that you can't short it any further....
I'm sure there aren't many shares available to short.
However, deep in-the-money puts offer pretty much the same risk/reward. For example, April 2008 $10 puts currently trade at 5.50.
If CFC goes BK before then, you could theoretically double your money.
This is probably a crowded trade, though, and who knows how long they can hang on before the inevitable ch 11.
LONDON (Reuters-today) - Oil at $100 a barrel should give exporters every incentive to pump more, but their difficulty in doing so shows the world is struggling to sustain production.
A growing number of leading industry figures -- the CEOs of Total and ConocoPhillips among them -- now question mainstream forecasts for supply, suggesting the era of "plateau oil" is nearer than many in the business have admitted.
While global oil demand is projected to grow to more than 100 million barrels per day later this century, some argue it may not be possible to boost flows beyond the current rate of some 86 million bpd.
Supply still falls short even after so-called unconventional oils extracted from tar sands and converted from natural gas are taken into account, said Sadad al-Husseini, a former top official at state oil giant Saudi Aramco.
"Today's oil prices are high because there are limited new supplies," Husseini, who ran exploration and production at the Saudi state oil company from 1986-2002, told Reuters. "There's a history now. We're several years into level production."
(end quote)
Peak oil, anyone??
Notice the phrase "plateau oil", the use of a kinder, more gentle "p" word.
"I think if CFC goes BK, it's going to be a big blow to many financial institutions."
They still have an altrenative of massive dilution by issuing another set of convertible preferred. It really depend on how much capitals they need to raise and whether anyone want CFC asset in case they eventually go bk...
When do I get my half price REO?
ac | 01.09.08 - 12:20 pm | #
You have to make an offer. I would bet they'll consider it long enough to scare you into thinking they'll take.
I think if CFC goes BK, it's going to be a big blow to many financial institutions.
Quote for truth. The Florida LGIP holds some CFC paper (last time I checked). Certainly others do as well.
Paging Governor Crist to crisis room
Oh, by the way, when we said profitable in the 4th quarter we meant "profitable for anyone shorting us from that point on."
ades and 12%
i gave u my views on SRS on the last MBIA thread.
Some updated return info on the Vanguard High Yield Bond Fund as of 12/31/07.
Returns are after taxes (federal only) and include re-investment of dividends.
1yr: -0.53
3yr: 1.74
5yr: 4.92
10yr: 1.89
Above does not include -0.85% ytd loss thru 1/8/08.
These returns are awful, especially at the top of a cycle.
High yield is a sterilized way of saying junk bonds. Kind of like "better than new" in realtor parlance.
But hey, its called junk for a reason.
Even if the CD's are FDIC insured, I'd rather not run the risk of having to wait for the FDIC to cut me a check for a few extra bucks.
What are the rules on that anyways? Say you invest in a 50k CD and the FDIC then has to cut you a check on your deposit. Do you just get the 50k back? Do you get the interested you were supposed to have earned?
Sorry if this has been posted.
Goldman Sachs Sees Recession in 2008
Yahoo! 404 - Page Not Found
Peak oil, anyone??
Peak food anyone?
These returns are awful, especially at the top of a cycle.
High yield is a sterilized way of saying junk bonds. Kind of like "better than new" in realtor parlance.
But hey, its called junk for a reason.
I had some super raunchy junk bonds until about the end of 2006 (including some Ford bonds). The interest payments were amazing, but I dumped them at the first sign of impending economic trouble. If conditions looked favorable I'd consider some again for short-term income, but I'd never hold junk long-term. You almost have to treat them like stocks.
Who do you approach to see if they'll accept an offer to buy back a mortgage at a discount? Someone awhile back mentioned they had done this before, if CW is looking for capital, I'd like to help.
ac
Junk bonds trade like equities. But over the last ten years, returns have been horrid, especially on a risk adjusted basis.
Junk bonds usually take a beating during recessions too.
I wonder if the Fed has a page like this for CFC and the like...
The page cannot be found
This is the equivalent of getting kicked in the nuts while having a smile and saying, "this doesn't hurt!" At this point, Countrywide has lost its gonads so there isn't anything there to kick. They are in full survival mode.
While things are imploding all around them, they are telling consumers on the street, "hey, we offer the best rate on CDs!" Pushing rates up only to be competitive while going down at the same time would not be permissible if there was no governmental support (i.e., FDIC). Now everyone is going to have a daisy chain implosion:
Countrywide: Well, MBIA will back us up, we have insurance
MBIA: Well, the government will back us up, we have further support. Look at Fannie and Freddie
Fannie and Freddie: Well we have the support of the Fed
Fed: We have support of...well we can always milk the public
Public: We have the support of Countrywide protecting our funds.
And the circle of life goes on.
...and I mistakenly made that my homepage...ugh.
Neal:
I read the Oil Drum everyday. Lots of interesting theories over there. The takeaway I get from the site is that although NO ONE can say with 100% percent certainty...it's possible that the "cheap" oil that we have enjoyed could be going away. I believe it will be a gradual process. Supply will dwindle, price will rise, alternatives and conservation will naturally occur. Slow change is the change that is the kind that is adaptable and survivable. The economic incentives to pursue alternative forms of energy and alternative ways of using and storing energy will so be plainly obvious and the green-gold-rush will commence. I just hope that the U.S. leads the way. This country needs something to sell to the rest of the world in the worst way...as I am sure that our financial products and our debt are not going to be popular again anytime soon.
Junk bonds trade like equities. But over the last ten years, returns have been horrid, especially on a risk adjusted basis.
Junk bonds usually take a beating during recessions too.
I treated them like a hot potato, but it's very tempting to hold onto them. I remember thinking at the time that if I could rely on getting that kind of interest rate (I was getting around 9%) I could retire then and there.
When do I get my half price REO?
ac | 01.09.08 - 12:20 pm | #
ac...
It has to start soon. I figure here in SW Florida we are about 6 months ahead of most of the country. I just pulled the sales numbers for my county...
890-sales for December
390-(approx) regular sales
500-100.00 transfers.
Usually trust and misc. transfers are roughly 10% of the list. Even if we double to 20% that means we had more FC's than real sales...
Heck the first 20 sales of 2008 listed thru today are all FC's...
I think the next 6 months will give a good idea of how ugly it'll be here in Florida.
Chris
15,783 Homes Offered For Sale on Countrywide Financial's Website - Countrywide Foreclosures (REO) Blog
the foreclosure blog has a new entry, the rate of increase in their REO has jumped, and now the total value of properties they list for sale is significantly in excess of the entire market capitalization of the company!
BAC is unlikely to lose it's 2 Billion. Infact it's likely it took a short position of some 115 million shares BEFORE it invested. That basically means if CFC goes to zero it profits to the tune of 800 million. [See k.dennigers comments on the yahoo boards]. According to his comments, BAC did the same thing with Calpine.
Kp, if nations and corporations truly thought we were at the peak and production is going to head down from hear, however slowly, prices would not rise slowly. It would make the currently rise to $100 look small.
Neal, Kp:
Pray for slow change as the fast kind will be fugly...cheap oil will go away, the question is when. While numerous alternative sources of hydrocarbons or other energy sources exist, the ability to ramp that production up suffers from capacity constraints related to the scale and nature of the capital investments required.
Side note on the inventory report today, large crude drawdown (again) and large gasoline storage (again) - wonder what gasoline demand numbers look like (volumes) ATM?
Mike in Az, you are spot on with the peak food observation though it seems to me that is inextricably linked with peak oil (cheap energy to move it, cheap fertilizer to grow it, alternative demand for food as fuel input...).
Things could be about to get waaaaay too interesting.
Justin | 01.09.08 - 1:58 pm |
Thanks for the link. Florida is on track to more than double in less than a year...The scary part is I follow local homes and they are selling at steep discounts but the inventory keeps climbing...
Chris
I put a total of $25K in 1 year & 6 month CDs in September with these guys --- 5.65% & 5.55% respectively. I thought...FDIC, right? If they can't cover, I'll probably have bigger problems. At this point, what is the worst that can happen? What would it take for it to get to where the FDIC couldn't do what the FDIC says it would do (i.e. insure the account)?
From CFCs K -
Our FHLB advances generally have maturities of 1-3 years, consistent with the weighted average
expected life of our mortgage loans held for investment. Our access to such financing is limited to no more
than 50% of our Banks ending assets for the prior month. The FHLBs financing support is uncommitted
and requests for additional advances are evaluated at the time they are received. While we normally
consider uncommitted financing programs to be less reliable sources of funding, given the FHLBs status
as a government sponsored entity and its mandate to provide a stable source of funds to support the
residential mortgage market, we classify FHLB advances as a highly reliable source of contingent liquidity.
Look what's happening. Stocks are falling sharply but the yen isn't moving.
Hedge funds are starting to take their carry and use it to short U.S. equities, especially speculative stuff like REITs and small-caps where there isn't much liquidity. They can kill this stuff while staying long in commodities and emerging markets for now.
If you're short, don't be greedy. Hedge funds make the most money on the short side when things are spikey, not straight line. Set targets and then keep moving your targets down (or up in ProShares). This phase of hedgies shorting various asset classes could last more than a year. It will just kill Joe 401k buy-and-hold.
Countrywide is still spending money on bulk email advertisements. I can attest to this after checking my inbox, where I was greeted by a CFC ad screaming "Countrywide(R): A No Closing Cost Refi -- save today!"
OT
Is there a PPT or not?
Hat tip Minyanville.
Bush convenes Plunge Protection Team - Telegraph
From UK Telegraph
Bush convenes Plunge Protection Team
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 12:05am GMT 08/01/2008
Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency. On Friday, Mr Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit - officially the President's Working Group on Financial Markets - was created after the 1987 crash. ...
Hiding Out
I meant: Set your targets, buy back shorts, sell short again on covering rallies, and then set a lower target price than before. The inverse in ProShares.
Hiding out,
Yeah? They're gonna do this without consulting Congress?
Don't think so.
Way OT, but I'm in a heavily geographic tidbit mood.
Personal bankruptcy jumps 96% in Orlando: The mortgage crisis is affecting borrowers at all income levels.
guys, GS is getting woodshedded today as it has been. the mkt is capitulating. yesterday broke all sorts of techincal barriers and we are headed down. don't miss i.
ingdirect is under 5% for 6-month CDs.
But I dont think that extra 0.5% is worth going with countrywide.
don't miss iT
Bank of America's Countrywide trap:
Can Bank of America salvage its Countrywide stake? - Jan. 9, 2008
California is toast...and Florida forget it
Foreclosure Patters by County - Right Mind
rich
we all have our own styles but my short and hold strategy for the bulk of my portfolio has generated huge returns. we are in a generational cycle trend change and timing big drops like that 300 pt drop after the last rate cut can't be timed.
having said that there are always one or two stocks i will jump in and out of.
Plunge Protection Team? LOL!
With the Fed handing out the cheap hooch like water as they look the other way on capital requirements....a lot of banks are letting go of the CDs.
I know the one I work for is.
The coming calamity in FHLB system and the resulting bailout will be truely historic.
that's REO they're selling as servicer, not as owner, so you're REO vs. Mkt Cap comparison doesn't make much sense
Kp, what does 'letting go the CD's' mean?
Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency.
You mean like the ~300 dollars everyone got the last time they sent out rebates? Yeah, that will help.
Kp The coming calamity in FHLB system and the resulting bailout will be truely historic.
I hear so little about FHLB, besides a few notes about the enormous loan volume in Q307. Why is there so little analysis? Is it really at risk (of needing bailout) as the other GSEs?
borkafatty - grand map! And they've normalized by estimated total housing units - so things could be worse in areas that are overbuilt. Wish there were similar maps of other years for comparisons - some of those clusters are more real than others. Hot spots do occur randomly although I've little doubt the basic pattern is right here.
That abrupt drop off in AL and MS compared to AR TN GA in even FL is intriguing. AR and MI I have to think about too.... any clues the gallery can think of?
I'm with idoc -- timing these swings is murderous. I bought LEAP puts back in May and have ridden the rollercoaster ever since. Should pay off handsomely.
Me:
CDs = Certificates of Deposit
CDs carry a high cost of funds, and the people who actively shop these high rate CDs are "hot money". They typical DO NOT move their "cheap" money to the bank offering the high interest CDs thus offering no value-add for the bank to offer the high interest CD other than strictly for the purposes of satisfying cap requirements. The Fed will be making moves to LOOSEN the already pretty loose cap reqs and already is actively handing out funds on any roadkill the banks have as collateral. The FHLB's are making a lot of bad/under-priced advances. It is my opinion that the FHLBs are going to be a/the point of failure.
Serious Ill take the rebate and flip it to make $2000 thanks GWB.
RE: Peak Oil
Problem is that when an oilfield goes into decline, it does so dramatically. If those super-giants are all "mature" then the overall drop in production could be breathtaking.
Found some free help for bankruptcy here.
"I hear so little about FHLB"
It's like the FHLB is beyond collective comprehension. Plenty of coverage on the TAFs, but little coverage of a huge bailout.
As I indicated, once CFC goes down, this topic will likely be near the top.
Problem is that when an oilfield goes into decline, it does so dramatically
Example: Cantarell.
Back to topic:
I'm definitely feeling very worried right now.
I've been thinking about doing the INGDirect CD.
Sure ING has its own issues, but it's FDIC insured, whatever that means.
Things are progressing just about how many here thought they would.
But going forward, I get nervous
Is shorting getting too popular? Or only around here?
Gold? Oil? too popular now again? they talk about both 900 times a minute on CNBC.
Or is this just the first wave before the mania hits.
I'm getting slaughtered hiding in Treasuries right now... can't... pull... the trigger...
Yearning to Learn.
How can you be getting slaughtered in Treasuries? They're up huge across the board.
Problem is, pulling your CDs out of Countrywide isn't clearly the answer.
Yes, it has Ch 11 or takeover written all over it. Right next to that is written, "This bank goes down first." That's the one that will get full FDIC coverage and a helpful hand from some other bank.
But what if you switch your money to a bank that ends up going down later--one that's NOT too big to fail, or fails when the FDIC goes broke?
These aren't easy questions.
I am staying long on physical Silver,,,and cash...No matter what cash is king and cash buys goods as well as services.
tj, ytl:
Not only can the decline occur at a breathtaking rate, the amount available for export is declining even faster due to subsidized consumption in many of the exporting nations (well explained on The Oil Drum
look up land export model).
borkafatty:
What's with Tennessee? Can someone explain why the whole state seems to be going kablooey?
Without sounding racist which i am not..there is a lot of African americans who were first time home buyers in this state, and well...
"sign on the dotted line"...."no no don't worry you can always refinance"....nuff said..with all due respect.
I have read some nightmares about predatory lending to African Americans..but read what you sign and sign what you read... I am afraid.
And don't forget Georgia; Atlanta is giving Florida and CA at least some competition in the foreclosure sweepstakes.
They keep building here as if the drought and the whole mortgage crisis never happened ... I'mabout to fire off a nasty letter to my local planning board asking just what was in the bongwater when they approved several developments near my house that have sat empty and rotting for over two years now.
No doubt the kickbacks were spent on high times. Jas is right, a system by and for the crooks ...
FHLB is a collection of 12 banks that are effectively "owned" via stock by its member banks.
Wikipedia has a good summary of history and purpose of the FHLB system.
FHLB wiki
You can start mining the numbers at the Office of Finance's website.
FHLB Office of Finance
The loan growth as of recent is staggering. ~30% year over year. You can bet your butt it is all on risky collateral and being used/burned to put more lipstick on the mortgage pig.
Oil at $100 a barrel should give exporters every incentive to pump more
or LESS, since the less you pump the more you make, and the whole point of the exercise is to maximize the area under the profit curve.
The hotshot Iranian boat jockeys were probably loaded up on DBO positions, no doubt.
My shocker is the Illinois area..seems a lot of over building around the Great Lakes region.
Yearning to learn asked: "...Or is this just the first wave before the mania hits...."
You're wondering which FDIC-insured bank to put your money into...and you don't think the mania has hit?
Unless you have a proven, objective plan you probably should just sit still and do nothing. Some of the worst investing/trading decisions I've ever made came because I was reacting to the markets instead of looking past the emotional extremes and playing my own objective, dispassionate game.
Sebastia
borkafatty - and that explains MS and AL and LA how?? Something else is up with TN and it's weird how it seems to be the entire state and doesn't seem to have a strong metro area push (that pattern in OH and FL makes more sense).
Yeah, whats going on in Tenn?
DO NOT forget that FDIC insurance takes a back seat to the FHLB.
ya...I am going to take my 300 bucks, if they do send it, and put that towards a 90 inch big screen TV (made in China)....and throw the rest on my credit card.
I am doing my share. What about you guys?
Well I think...I think, a lot of former Big Easy folk ended up in Tennessee after the hurricane...i mean there were thousands of displace people...and well again...we all need shelter...sign here...and thank you...just speculation on my part of course. And well those resets are coming to the front burner or already have.
Unless you have a proven, objective plan you probably should just sit still and do nothing.
Good advice, from a consistent voice of reason.
The most money I've lost this year was when I tried front-running the market after the Fed cut overnight and bought AAPL calls at market price.
The gap up destroyed me; by the time my orders were filled the price had been bid up way too high.
Then I compounded the error by selling at a big loss when I should have held to market close.
Emotion is the enemy of the investor, be it short term traders or long term.
Possibly a contributing factor within TN, but it still doesn't explain the regional pattern. I doubt TN was the only state displaced people ended up and bought homes. No one stayed in TX where it was working out so well for them?
Some big money just goosed the heck out of the market. Graph goes up like a rocket. Sheeesh!
Somebody is trying to generate a short squeeze methinks.
Cheers,
Does anyone know if Countrywide went to the auction thingy and borrowed from the fed?
Sebastian (and for once I am not being facetious) what is the latest from the Wright Model B?
I agree it is puzzling at best..i am going to do some research on a single town in TN to see what actually is happening.
or if anyone lives there that frequents the board can explain...that would be helpful
I keep a close watch on eastern Tenn, the reason for my question. Currently there are an enormous number of empty houses on the market for sale. My sister (who lives there) can't explain it either. Her hunch is it could be bad, just not sure exactly.
Misean - Bear market rallies are short, vicious, and have a nasty habit of leaving both longs and shorts wondering what just hit them.
Closed out my QQQQ puts this morning, God bless 'em ...
Tennessee is far too cold for New Orleans refugees.
CFC microcosm in Sept. 2005 they gave 99.2% financing on a sale at $2m, but for personal reasons the owner had to get out this year.
CFC loses $300k on a short sale. This is in tony Manhattan Beach, CA. Full story:
Close the Books on 601 Larsson | Manhattan Beach Confidential
I was thinking the same thing KP...but i like the rest am trying to figure out why the whole state seems to be imploding and well i was thinking exodus.
Bork:
Follow the money. What industries are dominant in TN? Healthcare, Manufactoring, Financial? So go the jobs....so goes everything else.
Spot on m8! did not even think of that...cheers
Isn't now the time to do an ARM? I mean hasn't it been historically shown to go counter to the market to benefit? I mean if rates are dropping because of all this; isn't the risk of upward rate adjustments mitigated?
Gary asked: "Sebastian (and for once I am not being facetious) what is the latest from the Wright Model B?"
Recession probability still falling, having never reached a minimum 50% probability level.
I also chart the "plain vanilla" spread between 10-year Treasuries and T-bills(with no adjustment for Fed funds rate). It did reach a peak of around 70% but it's fallen to 35% currently.
None of the last 6 recessions have begun with the probability that low, so either we're in a recession already or we've missed the "window" and won't see one on this cycle.
Sebastia
I also thought the low foreclosure rates in AL and MS, compared to AK, TN, GA, and FL were pretty striking. Lots of places with big changes right at the state border. My family is from AL, and AFAICT, they had a bubble and have serious oversupply. My mom was showing my some places in my old hometown and the prices were pretty jawdropping. The neighborhood my parents used to live in, the condo my mom is in, and the new development my brother is in all have lots of vacancies.
Maybe AL got some protection from their trial-lawyer-friendly legal system.
Jim:
I think the lesson I have learned is that ARMs only make sense at historically high rates and when they can be made for relatively short terms.
I am pretty sure that we are not at historically high rates. ~6% is pretty cheap money....why not just lock in 6% and re-fi if things were to get dramatically cheaper for some reason in the future?
Peak Gold?
Crude could not hold $ 97.50 today, going south kiddies!
This is a real Zillow listing.
The house was sold for 350k in November and they show it valued at 485k down 30k from last month.
ZESTIMATE®: $484,107 What's this?
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Zestimate
A Zestimate home valuation is Zillow's estimated market value. It is not an appraisal. Use it as a starting point to determine a home's value.
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The Value Range is the high and low estimated market value for which Zillow values a home. The more information, the smaller the range, and the more accurate the Zestimate. See data coverage and accuracy table Value Range: $421,173 - $605,134
30-day change: -$30,736
Zestimate updated: 12/18/2007
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Tax Assessor's Value
Depending on the jurisdiction where you live, this value could be the tax assessed, tax appraised, or market assessed value. This value comes from the taxing authority of the city, county or state where you live; this is not Zillow's value.
Note: Tax assessor's values differ from Zillow's Zestimate, which is computed by entering numerous data points into a proprietary formula, often resulting in a more accurate value estimate.
Last sale and tax info
Sold 11/06/2007: $350,000
2007 Property Tax: $5,778
Like Florida, Tennessee is going to be hit hard: Why? No state income tax, very reliant on property tax & sales tax.
or reality just decides not to follow what the polling, pundits or models tell it should happen. I'm sure Doug Adams said it better somewhere - I've vague memories of The Heart of Gold telling it to go get twisted, but that may be statistics. In any case, The Guide is Definitive.
I know the Memphis area is way overbuilt. It has
a large minority population, both african-american
and latino. The wages in this area do not support
the housing prices. I remember hearing that 1 in 8
Memphians were either directly or indirectly employed in the real estate sector. Not 100% sure
of that stat though. I believe Regions problems are
largely located in Memphis.
Fair Economist - don't forget that one of the skew points from state to state is the legal speed limit for foreclosures. That is, what sort of delays in getting from "you're late" to "our house now" are tolerated. IIRC, Georgia is very aggressive and TN is not - as one example.
"Unless you have a proven, objective plan you probably should just sit still and do nothing.
Good advice, from a consistent voice of reason."
LOL! You must not have been around exactly 1 year ago when Sebasian was boasting about charging into NEW, weeks before they got de-listed. He failed to realize that the whole business model was about to vanish, and for obvious reasons. That move made despite all the consistent "voices of reason" on this site. Still amazes me...
Nice point Kirk. Why is it I always end up wanting more comprehensive spatially- referenced data? Tax and Law codes, plus migration patterns, plus foreclosures by county, plus house prices and stock by county, household income and asset data by county..... I am SUCH a junkie, o bother.
there is likely no "calamity" coming to the fhlb system. advances to members like CFC are usually overcollateralized. moreover, the fhlb has a blanket lien on all other non-pledged assets. hence, if the fhlb perfects its interest and has sound margins, there is little credit risk. the system has never had a credit loss from an advance since the system started in 1932.
the coming calamity is to the fdic, who is in a junior position (like a home equity loan to CFC). should CFC go belly-up, the fdic will write a large check to the fhlb. btw, this is no different treatment than discount window borrowings from the fed.
the real issue here is what is the ots/fdic doing at CFC. it is like the zombie thrfts of the 1980s that were paying high rates on CDs for liquidity purposes. right now, CFC is not on the problem bank list (see 3q fdic qbp). therefore, CFC is allowed to pay whatever rate on its deposits (no need for broker deposit waiver). also, CFC is paying among the lowest rate for its deposit insurance from the fdic. this is the relevant question -- why is the fdic not charging CFC a higher rate for its deposit insurance coverage.
interestingly, senator schumer was questioning the advances by fhlb to CFC. without fhlb borrowings, CFC likely would have closed (not sure if the fdic sticker is sufficient for liquidity purposes). a CFC failure would likely be very disruptive, so schumer's criticisms are perplexing. the servicing book of CFC is so large and think about trying to do loss mitigation why servicing is being transfered. hence, cutting off CFC from fhlb borrowings would likely mean fewer FCs get reworked and lower home values in affected communities. if schumer wants to help FBs in FC and stem declining home prices, then cutting off CFC is not the way to go.
Yearningtolearn - Consider that it does not matter how much MSNBC talks about gold. It only matters how many people are buying gold. Do you know anyone who is buying gold right now who has not owned gold for a long time? I do not think gold is popular at all. I think it is still treated as a pariah by the investing community. The new high is being treated as an interesting anomaly.
I'd consider some again for short-term income, but I'd never hold junk long-term. You almost have to treat them like stocks.
ac | 01.09.08 - 1:46 pm |
Except all bonds pay divys until they go TU.
Re: TN
In Nashville the #1 biz is printing bibles, then healthcare(odd since it's a bottom 5 state in most healthcare stats), then country music, then auto.
Nashville was very late to the RE bubble, not starting till late 05, CRE explosion due to lax lending statewide IMO preceded the residential boom.
In your article "Countrywide: Foreclosures, Overdue Loans Rise" you make the following statement: Countrywide's bank attracted a net $2.3 billion in deposits in December, ending the year at $61 billion. The bank is boosting interest rates to help attract deposits, while borrowing more than $50 billion from the Federal Home Loan Bank system.
Since when is "Countrywide" an FHLB member& what creditable assets are they putting up as collateral? I'm sending you a list of FHLB members as of Oct 12, 2007.
FEDERAL HOME LOAN BANK OF BOSTONDISTRICT 1
First New England Federal Credit Union ..................... East Hartford .......... Connecticut.
Ledge Light Federal Credit Union .............................. Groton .................... Connecticut.
Connecticut Community Bank, N.A ........................... Norwalk .................. Connecticut.
Eastern Federal Bank .... Norwich .................. Connecticut.
Putnam Savings Bank .............................................. Putnam .................. Connecticut.
Merrill Merchants Bank ............................................. Bangor ................... Maine.
Seaboard Federal Credit Union .................................. Bucksport ............... Maine.
Union Trust Company .... Ellsworth .............. Maine.
NorState Federal Credit Union ... . .................. Madawaska ............ Maine.
Norway Savings Bank ............................................... Norway .................. Maine.
Infinity Federal Credit Union ...................................... Westbrook .............. Maine.
Belmont Savings Bank ............................................. Belmont .................. Massachusetts.
University Credit Union ............................................. Boston .................... Massachusetts.
The Lenox National Bank .......................................... Lenox ..................... Massachusetts.
Enterprise Bank and Trust Company .......................... Lowell .................... Massachusetts.
Butler Bank, a Co-operative Bank .............................. Lowell ..................... Massachusetts.
Northmark Bank ....................................................... North Andover ...... Massachusetts.
RTN Federal Credit Union ......................................... Waltham ................. Massachusetts.
Commerce Bank & Trust Company ........................... Worcester ............... Massachusetts.
Chittenden Trust Company ........................................ Burlington ............... Vermont.
New England Federal Credit Union ............................ Williston .................. Vermont.
FEDERAL HOME LOAN BANK OF NEW YORKDISTRICT 2
Affinity Federal Credit Union ...................................... Basking Ridge ......... New Jersey.
Boardwalk Bank ....................................................... Linwood .................. New Jersey.
Millville Savings and Loan Association ....
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countrywide is a member of FHLB Atlanta. See the press relase by a senator asking about the collateral it is putting up for the loans.
http://www.senate.gov/cgi-bin/404s.pl?urlminushost=/SchumerWebsite/pressroom/record.cfm&remote_addr=67.170.2.103&httphost=schumer.senate.gov - This page cannot be found.
Someone needs to say something about this! http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
I know that many company today who allows people to borrow are loosing their money because of people who don't know to pay there loans. It maybe allow people who wants to borrow to be more responsible when it comes to their debts.