Subprime Market

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http://biz.yahoo.com/cnnm/070322/032207_toptips.html?.v=1&.pf=loans
Why you should care about the subprime fallout
Thursday March 22, 12:26 pm ET

By Gerri Willis, CNN


The Senate Banking Committee held hearings Thursday on the crisis in the subprime mortgage lending industry. But we're going to tell you why you should care about the subprime mortgage meltdown and how it's going to affect you.
1: As a homeowner

Even if you're sitting nice and cozy in your 30-year fixed mortgage rate home, this subprime lending mess could really put a dent in your home's value.

A recent study shows that about 1 in 5 subprime mortgages will go into foreclosure. And whether that foreclosed property is across the street, or in the same neighborhood, that is not going to reflect very well on your property value.

The Center for Responsible Lending estimates that one foreclosure in the neighborhood lowers the value of nearby single-family homes by about 1 percent. So, if there are 10 foreclosures in your area, you're talking about 10 percent dip in your home's value.

2: In the market

If you're in the market for a home, you're at an advantage. Sellers are becoming very competitive with each other since there are more houses on the market. And prices have come down in some areas too. That means you may be able to score your dream home at quite a bargain.

If you do have solid credit, the 30-year fixed interest rate is very attractive at just above 6 percent. If you don't have good credit however, you may find it more difficult to qualify for a loan.

3: Selling your home

It used to be that securing credit for just about anyone was a no-brainer, but those rules are changing. Lenders tightening their standards, so there may be fewer borrowers out there who qualify to get a mortgage. And that means that fewer people will have the means to buy a home.

That means if you want to sell your home, you need to price it right. You may also have to market your home more aggressively. Make low-cost improvements that can really help to sell your home like sprucing up the backyard or adding some fresh paint to the exterior.

4: In the market for a mortgage

With all the turmoil in the subprime market, it's more important now than ever that you find a mortgage lender that you trust and feel comfortable with. If you have good credit, you'll find that rates are in your favor. That's because there's a real demand now for homeowners that can make their monthly payments.

Make sure you get at least three mortgage rate quotes from banks and credit unions. You may also want to ask friends and family to recommend a lender. Don't fall for promises that seem too good to be true. The day of "low-low" rates and no money down are long gone.

What to do if your mortgage lender goes out of business

Subprime risk: Most vulnerable markets
 
Subprime Woes Slow Down Harley Davidson

Posted on Mar 27th, 2007 with stocks: HOG

(MarketWatch) submits: Regarding subrpime woes at Harley Davidson (HOG): This has been a theme here and elsewhere for months. It started when S&P put one series of securitizations on Credit Watch with negative implications because of a looming loss. That issue resolved itself, and S&P called off the dogs.

But in a report today Lehman Brothers is less sanguine. Analyst Felicia Hendrix said that in the wake of the subprime mess, she's growing more concerned about a rise in credit losses and delinquencies at Harley, which could be compounded by tighter lending practices, which in turn could slow the bike maker's unit growth projections.

She adds that many of Harley Davidson Finance's securitized loans "have underperformed, posting higher than expected credit losses and delinquencies."

http://transport.seekingalpha.com/article/30840

Okay, now they’ve gone to far…….. :mad:
 
I shed no tears for the real estate speculator - for crisesakes if you can't afford to buy then save your money until you can. There are to many guppies in this world. At least they won't be riding this bull market for several years - that's a positive.
 
Bear Growls at Subprime

By Mark DeCambre
TheStreet.com Senior Writer
3/29/2007 5:24 PM EDT

Bear Stearns (BSC) expects to put its subprime business on a diet in 2007.
At an annual investor conference at the company's Madison Avenue headquarters, Bear Stearns mortgage officials said Thursday the firm would be rolling back subprime lending activity within its mortgage division to 30% of its total business this year, from 50% in 2006.

http://www.thestreet.com/_dm/newsanalysis/wallstreet/10347585.html
 
Over the past couple of days I was following a decrease in the commercial bank credit of 98 billion. I was a bit concerned at first since it appeared to be a significant drop. Come to find out the change was caused by a conversion of a commercial bank to a thrift. So….who converted. Turns out to be Countrywide.

http://data.nationalmortgagenews.com/freedata/?what=orig

Seems Countrywide is the top Subprime lender. So what’s the fallout from the conversion? I can only speculate, but maybe a takeover or liquidation. Another one for the implode-o-meter.

My post in the economic thread #s 482, 488 & 492.
 
Bank of America Warns of New `Correlation Crisis' (Update1)
By Neil Unmack

March 30 (Bloomberg) -- U.S. homebuilders may trigger a ``correlation crisis'' similar to the credit sell off in 2005 when Ford Motor Co. and General Motors Corp. lost their investment-grade credit ratings, according to Bank of America Corp.'s securities unit.

The ratings cuts to the automakers triggered losses for banks and hedge funds holding the riskiest parts of collateralized debt obligations, securities that package bonds, loans and credit-default swaps and use the income to pay investors.

An increase in the perceived risk of default by homebuilders such as Dallas-based Centex Corp. and Lennar Corp. in Miami could cause similar losses this year, Banc of America Securities LLC analysts Glen Taksler and Jeffrey Rosenberg wrote in a report today. Construction company profits have plunged since the five- year U.S. housing boom ended a year ago. Rising inventories of unsold homes and reluctance by potential buyers wary of falling prices has stifled sales.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apl3CcA.P81M
 
Mortgage crisis hits million-dollar homes
Thu Mar 29, 2007 2:48PM EDT

http://tinyurl.com/2f29yn

Oh the humanity…..when will it end? :D All kidding aside in some parts of So Cal a million dollar home really isn’t that unusual.
 
Where and How will the sub-prime/ARM problems hurt other parts of the economy?

Who will get hurt first?
You are probably tired of hearing about the sub-prime problem by now. There is another aspect about sub-prime problems that the no one is talking about that has underlying implications regarding delinquent debts problems.

Larry Jeddoloh, of TIS Group, made a good observation about consumers caught in debt problems relative to their mortgage payments and losing their homes. He said that, " ... when a consumer is in deep debt, they always try to save their homes first. They will let their credit card payments go, stop payments on their car, and default on loans from a relative before they lose their house." What about those who are not in deep debt yet?

I thought about what Larry said this weekend ... and the problem is larger in another aspect. There are 700,000 ARM holders that will see their payments double this year. Let's assume for a moment, that all 700,000 three-year ARM mortgagees are paying all their debt, and credit cards on time. What happens when their $1,200 mortgage goes up to $2,400? They won't be able to make their credit card and auto payments the next month, and then ... after this problem, they will go into deep debt. This problem doesn't just affect the current consumers that are in default ... it will affect the majority of ARM mortgagees in the coming months and that will put a dent on banking financials and a dent on consumer spending.

We are now in April, when the first group of 3 year arms will have the monthly mortgage due amount go up about 100%. Even if these people refinance now, their payments will go up 60%. That means that in the coming months, these people will stop making payments on their credit cards and vehicles before they go into a mortgage default. So the sub-prime home default payment problem will only show up later ... after it shows up in credit card/auto delinquencies first. This also means that we should expect an increase in used car inventories, as well
as in increase in homes for sale.

This means that MasterCard, and other credit companies will face the problem of writing off debts before the mortgage companies foreclose on homes. While this problem builds up, it will be nearly invisible on banking financials. Why? Because the new bankruptcy law allows very few consumers to go bankrupt. Because of this, banks will be keeping these bad debts on their books as assets because consumers are required to pay off the credit over their lifetimes. As the problem gets worse, much of the related data won't show the increasing problem on an asset basis. But, it will show up as a decreased revenue problem for these lenders.

A canary in the mine?
http://www.stocktiming.com/Monday-DailyMarketUpdate.htm
 
Mortgage crisis to hit holders of risky derivatives
Most hedge funds made money, but some lost; Asian investors fingered

SAN FRANCISCO (MarketWatch) -- The shakeout in the subprime-mortgage business is inexorably worming its way through the credit markets that fueled the sector's rapid growth.

As delinquencies and foreclosures rise, losses will likely hit some of the riskiest parts, or tranches, of subprime mortgage-backed securities, or MBS, experts say. Then collateralized debt obligations, which invested in some of the lowest-rated subprime MBS tranches, will feel the pain.

But who holds these securities?

Hedge funds have become big credit-market players in recent years, and many firms trade the riskiest bits of subprime MBS and CDOs.

But while some funds, such as Saye Capital's Tranquility fund and others managed by Cheyne Capital and Cambridge Place Investment Management, have suffered, most hedge funds made a lot of money in February betting that the subprime crisis would hit, according to several investors who didn't want to be identified.

http://tinyurl.com/yqvg46
 
If they employee 6,400 people, they must have a couple hundred million worth of buildings and grounds just to fit those people. I suspect these companies are after the real-estate not the business. New Century is being pillaged.

Oldcoin said:
New Century files for bankruptcy; selling units
Subprime lender cuts 3,200 jobs; gets financing from CIT, Greenwich Capital

http://tinyurl.com/3cov95
Click to expand...
 
M&T Bank Shares Sink on Lower Demand for Mortgages

Mon Apr 2, 2007 10:01 PM BST


By Jonathan Stempel

NEW YORK (Reuters) - Shares of M&T Bank Corp. (MTB.N: Quote, Profile , Research), whose largest outside shareholder is Berkshire Hathaway Inc., fell 8.5 percent to its lowest close in 17 months, on Monday after the Northeast U.S. regional bank cut its first-quarter profit forecast amid weak demand for mortgages.

The bank late on Friday projected earnings of $1.50 to $1.60 per share, as much as 19 percent below the average analyst forecast of $1.86 per share, according to Reuters Estimates.

Buffalo, New York-based M&T lowered its forecast by $11 million, or 10 cents per share, because it fetched low bids on some mortgages it tried to sell, and because rising defaults forced it to buy back some loans it had sold. It also said lower lending margins and rising expenses would hurt profit.

http://tinyurl.com/325dja
 
H&R Block says subprime woes delaying unit sale

Fri Mar 30, 2007 2:05PM BST

NEW YORK (Reuters) - Tax preparation company H&R Block Inc. (HRB.N: Quote, Profile, Research) said on Friday it was still in talks to sell its subprime lending unit but that market conditions had affected its plan to conclude a deal by the end of March.

H&R Block cited "recent events in the subprime industry" for the delay. It did not say when it now expects to wrap up sale talks for its Option One Mortgage Corp. unit.

H&R Block shares were down 84 cents, or 4 percent, at $20 in electronic premarket trading.

http://uk.reuters.com/article/companyNews/idUKWEN594120070330

They’ve been trying to sell that turkey since November.
 
U.S. MBA's Mortgage Applications Index Fell 3.2% Last Week

By Shobhana Chandra

April 4 (Bloomberg) -- Mortgage applications in the U.S. fell for the third consecutive week as purchases cooled and fewer homeowners refinanced, an industry report showed today.

The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped 3.2 percent last week to 649.5 from the prior week. Home-purchase applications and refinancing both declined to the lowest levels in five weeks.

http://www.bloomberg.com/apps/news?pid=20601170&sid=aBU4bG709pZs&refer=home
 
NovaStar Cuts Off Credit Lines for Mortgage Bankers (Update2)
By Yalman Onaran

April 5 (Bloomberg) -- NovaStar Financial Inc., the subprime home lender whose stock has plunged 80 percent this year, will stop financing independent mortgage bankers.

WarehouseUSA Capital Corp., a unit of NovaStar, said on its Web site that as of March 30, it's no longer accepting applications from mortgage bankers for credit lines and that the so-called warehouse lending business will close. New loans under existing agreements are scheduled to end April 27, the notice said. The shutdown won't affect lending by NovaStar itself, said Roswell, Georgia-based WarehouseUSA.

http://www.bloomberg.com/apps/news?pid=20601170&sid=azYh0yJFpPD4&refer=home
 
Nygren Says Market `Overreacting' to Subprime Crisis (Update2)
By Sree Vidya Bhaktavatsalam

April 5 (Bloomberg) -- Bill Nygren, manager of the top- performing Oakmark Fund, said investors are making a mistake by selling shares of banks such as Citigroup Inc. and Washington Mutual Inc.

Nygren has 13 percent of the $5.9 billion mutual fund's assets in financial stocks, which have declined on concern a rout in the market for subprime mortgages may spread to credit- card and car-loan companies. Shares of Washington Mutual, the fund's biggest holding, dropped 12 percent this year and Citigroup's stock fell 8 percent.

At least 30 U.S. home lenders have halted operations or sought buyers during the past 12 months as late payments on subprime mortgages made to people with poor or inadequate credit reached a four-year high in the fourth quarter.
``Investors are overreacting to the upturn in mortgage delinquencies,'' the 48-year-old Nygren said in an interview from his office in Chicago. ``As an investor who's committing money for five years or longer, I'm getting higher-quality companies than usual for less of a premium.''

http://www.bloomberg.com/apps/news?pid=20601170&sid=an7jdl.sCUGE&refer=home
 
BEING STREET SMART

by Sy Harding

LENDERS HAVE TO LOVE THE NEW BANKRUPTCY LAW! April 13, 2007.

I began last week’s column with the statement that “Home foreclosures nationally hit their highest level ever in the last quarter of 2006, and rose still more in the quarter just ended.”

The column pointed out that many foreclosures could probably be avoided, or at least postponed, if troubled borrowers would contact their lenders for help before it’s too late.

Bankruptcies are also surging, the number of filings in the first three months of this year 70% higher than in the first quarter of last year. But that is a very misleading statistic. Bankruptcy filings hit an all-time low in 2006, so they are only 70% higher than in the lowest year ever, which is nowhere near as many as in normal years prior to last year.

That is because of the tough new bankruptcy law Congress passed in 2005, which made filing for bankruptcy protection much more difficult for those in financial trouble.

In this column I said at the time that it was sold to the public as a good idea, based on closing the door on the O.J. Simpsons and corrupt corporate chieftains who declare bankruptcy to shield themselves from judgments they could otherwise be forced to pay. But there are probably more folks who become hopelessly indebted through no fault of their own, due to accidents, medical bills, and loss of jobs.

I said in the column at the time that, “It disturbs me, but doesn’t surprise me, that those pushing the bill are powerful finance and credit-card companies and their lobbyists. I’d feel better about it if there was at least a companion bill making it illegal for those companies to indiscriminately stuff mailboxes with ‘pre-approved’ loan applications and credit-cards, many of which reach those who might be desperate.”

I also said that “It bothers me even more that consumers didn’t get themselves in excessive debt entirely on their own. I remember 2001 very clearly. Two trillion dollars of investors’ savings and investments had been wiped out in the bear market, and consumers had pulled back on their spending. And then the terrorist attacks hit and it was feared that would be another serious blow to the economy. . . . Washington ’s immediate response was that the most important thing Americans could do was to get out and spend. It was the patriotic thing to do, as it would get the economy back on its feet, and show the terrorists that they could not destroy the spirit of the American people. . . . We were given tax rebates, and told not to squirrel them away but to get out and spend them to help the economy. Everyone got into the act of convincing Americans to spend, that even going in debt to do so was the patriotic thing to do. The Fed cut interest rates to 40-year lows. Banks and mortgage companies lowered their credit standards . . . Consumers were encouraged to refinance mortgages to take money out of the equity in their homes. Credit-card companies offered new cards with low introductory rates. Auto companies offered zero percent financing, and rebates that could be used as down-payments. . . . And Washington ’s plan worked. Consumers came through with flying colors. They did in fact spend the economy out of trouble. . . . And that’s what really bothers me about credit-card and finance companies pushing for, and Congress passing, severe revision of bankruptcy laws with this particular timing, after they enticed consumers into record levels of debt, with the most dangerous creative financing offers ever seen.”

Congress even had the nerve to call the new 2005 law ‘The Bankruptcy Prevention and Consumer Protection Act’. Certainly easier to sell under that name. But, the bill protected banks and credit-card companies, and promised consumers only a much more difficult time if they ever should need the protection of bankruptcy.

And sure enough, as mentioned, bankruptcies hit an all-time low the following year, 2006. So that they are running 70% higher so far this year compared to that all-time low year, is not terrible news for lenders. They remain well protected.

Consumer groups and bankruptcy attorney organizations are now trying to lobby Congress to fix the mistake. Don’t be surprised if lenders and their lobbyists lay low and don't fight back. They got what they wanted in 2005 and have it now when they no doubt anticipated they would need it. Given the current climate of complaints and investigations into their predatory lending practices in 2002 through 2006, it would not be smart of them to remind people of how hard they worked to get the bankruptcy laws changed to their advantage.

They also know consumers' groups don't have near the lobbying power the financial powerhouses had in getting the new law passed. So getting Congress to reverse the damage is not likely. And even if it were to take place, it would take years.

http://www.streetsmartreport.com/comm3.html
 
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