"It could be issued within the next few months", or maybe they could hold off for just one more housing season. That is one sorry weather balloon; Amazing.
this story is not "new" news. it's been in the financial media for nearly 6 months. what IS noteworthy is the fact that the washington post is talking about it, not the wall street journal or the american banker. the bubble popping phenomena seems to be going mainstream. look out below!
anon, this proposed guidance was originally released on 12/20/2005. Since then I've been tracking the progress. They extended the comment period (ended last week) and I've linked to the comments as they have become available.
I linked to this WaPo story because it provides the first new clue (after the comment period) as to when the guidance might actually be released. That is the only new news.
Yes, its been discussed for almost a year (I just reviewed about a dozen posts on agency speeches from early last year until the release of the Guidance.)
Also, this guidance on Nontraditional Mortgage Products shouldn't be confused with the home equity guidance released last May.
I think the guidance is too little, too late. If it were issued, say, two years ago, things might turn out different. The way things are, with the 30-year T-bill now above 5.00% and climbing, a tsunami will soon wallop marginal borrowers. Foreclosure city, here we come.
I just love that title: "Director of the Office of Thrift Supervision".
He could start by getting thrifty with the number of words in his title, no?
'Thrift Boss' might be too drastic to take all in one step, but we could take incremental steps (monthly maybe) to get there following the Fed's example of taking due care and attention with the 25bp:
Step 1: Director of Thrift Supervision (everyone knows there's an office)
Step 2: Head Supervisor of Thrift (supervisors always direct)
Step 3: Director of Thrift (saving precious letters)
Step 4: Thrift Boss
Ok, it's not perfect but I swear it has everything to do with that word 'thrift' and I just can't toss that jewel in the wastebasket, you?
Have you been thrifty today?
According to Indymac Financial, a CA lender whose loans are mostly "stated income" AND "option ARM", these guidelines will do NOTHING to change their lending practices.
I think the regulators are tinkering at the margin, because they are afraid of getting blamed (like the RTC was in the 90's) for popping the bubble.
Once the bubble is popped and foreclosures spike, however, they will scramble to stop this kind of lending to avoid getting the blame for CAUSING the bubble.
That's the way regulators work: they keep credit loose when it needs to be tight, and tighten it when it needs to be loose!
bailey, the question is how much of those profits will dissapear with the wind, since so much of them were just unpaid interest added to principal. When the defaults come, I'm guessing that alot of people holding second mortgage paper will be hosed by foreclosure on upside down homeowners.
"It could be issued within the next few months", or maybe they could hold off for just one more housing season. That is one sorry weather balloon; Amazing.
this story is not "new" news. it's been in the financial media for nearly 6 months. what IS noteworthy is the fact that the washington post is talking about it, not the wall street journal or the american banker. the bubble popping phenomena seems to be going mainstream. look out below!
anon, this proposed guidance was originally released on 12/20/2005. Since then I've been tracking the progress. They extended the comment period (ended last week) and I've linked to the comments as they have become available.
I linked to this WaPo story because it provides the first new clue (after the comment period) as to when the guidance might actually be released. That is the only new news.
Yes, its been discussed for almost a year (I just reviewed about a dozen posts on agency speeches from early last year until the release of the Guidance.)
Also, this guidance on Nontraditional Mortgage Products shouldn't be confused with the home equity guidance released last May.
Best Wishes.
It is hard to imagine a credit based asset bubble survive a tightening of of liquidity..
I think the guidance is too little, too late. If it were issued, say, two years ago, things might turn out different. The way things are, with the 30-year T-bill now above 5.00% and climbing, a tsunami will soon wallop marginal borrowers. Foreclosure city, here we come.
Emmanuel. Agreed, but in the last year they booked ENORMOUS profits & now have the Fed to blame.
Sounds like an industry getting a litle worried about class action lawsuits.
Lawyers will be smacking lips next several years.
The credit meltdown is in progress.
I just love that title: "Director of the Office of Thrift Supervision".
He could start by getting thrifty with the number of words in his title, no?
'Thrift Boss' might be too drastic to take all in one step, but we could take incremental steps (monthly maybe) to get there following the Fed's example of taking due care and attention with the 25bp:
Step 1: Director of Thrift Supervision (everyone knows there's an office)
Step 2: Head Supervisor of Thrift (supervisors always direct)
Step 3: Director of Thrift (saving precious letters)
Step 4: Thrift Boss
Ok, it's not perfect but I swear it has everything to do with that word 'thrift' and I just can't toss that jewel in the wastebasket, you?
Have you been thrifty today?
Too Little, Too Late.
According to Indymac Financial, a CA lender whose loans are mostly "stated income" AND "option ARM", these guidelines will do NOTHING to change their lending practices.
I think the regulators are tinkering at the margin, because they are afraid of getting blamed (like the RTC was in the 90's) for popping the bubble.
Once the bubble is popped and foreclosures spike, however, they will scramble to stop this kind of lending to avoid getting the blame for CAUSING the bubble.
That's the way regulators work: they keep credit loose when it needs to be tight, and tighten it when it needs to be loose!
bailey, the question is how much of those profits will dissapear with the wind, since so much of them were just unpaid interest added to principal. When the defaults come, I'm guessing that alot of people holding second mortgage paper will be hosed by foreclosure on upside down homeowners.
It's all happening because of SEC Regulation 'AB' that went into effect on 01 January 2006.
The effects of this on the Secondary Mortgage market were immediate, and dramatic.
SEC Reg. AB will do what "the regulators" want to do, sooner.