US mortgage carnage

[dhukka]

Might be a couple more to come yet??
Cheers
........Kauri
lingering talk of large losses at US financial institutions, including reports on BoA, Wachovia, Goldman Sachs and Morgan Stanley, look to be spurring selling.

Rumours are floating about that JP Morgan will write down another $3 billion or so.

 

[ithatheekret]

They'll have netting across underwriters windows , they should be bars , but that's another story . $3B is chicken feed , compared to what's to come , when they find the next hidden treasure trove stashed in plastic CDO's , we haven't even found that box , under all the dust and camoflauge they've started to work their way back through .

The squawk they haven't started crowing yet , is that the last re-rating in October has just been blown out of the water .

How do we know that ?

The Central banks have just joined forces to bolster commercial bankers confidence . Not consumer confidence , not homeowner confidence , none of that , that would mean we mattered .

Does that mean banks think that banks are a bad credit risk ? Surely not ....

The Central banks must think so or the new relief the grief plan would never have been born . Save the banks ........ before the mobs come .

We're the mob , and ...........
we're their bread and butter for morning toast , now they're squeezing the orange juice out of us .

This is heart surgery without sedation and the doctors are telling us , " it won't hurt a bit " .

Of course we believe them ..... don't we .

Doctors and Surgeons bury their mistakes .

 

[dhukka]

Morgan Stanley writes off another $5.7 billion in addition to the $3.7 billion they already announced in November. That's a nice $9.4 billion in writeoffs in total for the fourth quarter. However they got a $5 billion injection from China which rather than be taken as a sign of how bad things are will probably be cheered by Wall Street.

 

[Bushman]

Morgan Stanley writes off another $5.7 billion in addition to the $3.7 billion they already announced in November. That's a nice $9.4 billion in writeoffs in total for the fourth quarter. However they got a $5 billion injection from China which rather than be taken as a sign of how bad things are will probably be cheered by Wall Street.

In response, the Morgan Stanley CEO Mr Mack has graciously refused his 2007 bonus allocation.

The obvious question I have is why was he offered a bonus in the first place?

And we wonder why there is a crisis in Wall Street...

 

[numbercruncher]

ANd it seems we havnt even got to the Juicy bits yet !

 

[numbercruncher]

Morgan Stanley writes off another $5.7 billion in addition to the $3.7 billion they already announced in November. That's a nice $9.4 billion in writeoffs in total for the fourth quarter. However they got a $5 billion injection from China which rather than be taken as a sign of how bad things are will probably be cheered by Wall Street.

wow thats like a 10pc stake - If this was a game of monopoly Id think China was looking like winning ... Chinese Sovereign wealth funds might do some serious shopping hey ....

 

[numbercruncher]

WASHINGTON (AP) -- Mortgage application volume plummeted 19.5 percent during the week ending Dec. 14, according to the Mortgage Bankers Association's weekly application survey.

The trade group's application index fell to 653.8 from 811.8 the previous week.

Refinance volume tumbled 27.3 percent during the week, while purchase volume fell 10.6 percent. Refinance applications accounted for 53.2 percent of total mortgage applications, down from 57.6 percent during the prior week.

The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

http://money.cnn.com/2007/12/19/real_estate/mortgage_applications.ap/index.htm


Ouchers, just Imagine what effect the loss of Duties etc must be having on Local Authorities addicted to "last Years" figures

 

[websman]

I can't wait to get some good deals on Repo'd homes!

 

[Aussiejeff]

I can't wait to get some good deals on Repo'd homes!

Who knows - with the main sub-prime re-set ****e really hitting the fan from Feb-March next year (regardless of Bush's rather impotent *freeze* bail-out attempt), maybe the Re-po 'dozers will start marching on some sub-prime US Real Estate ghost towns (ya'll know - tha ones with zillions of fer sale signs plastered on every "house" in tha block!). Them deserted houses gotta be near worthless - whos a'gonna want ter buy 'em if'n they can't RESELL 'em? May as well set up TENT cities for yon dis-affected families.... 'bout all theys can afford now ....

AJ

 

[numbercruncher]

Let the Lawsuits begin!

US banks such as Citigroup, Merrill Lynch and UBS are facing a wave of multibillion-dollar class-action lawsuits, as law firms race to build cases against them on the basis that they did not reveal to investors the dangers lurking in their sub-prime mortgage-related investment portfolios.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3080893.ece

 

[YELNATS]

Let the Lawsuits begin!



http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3080893.ece

Ligitigation-mad aren't they in the US?

Surely it should be a case of "caveat emptor" ie. "Let the buyer beware". Buyers, ie. the mortgagees, must carry a responsibility to research products, ie. their loans, before they sign-up to them. According to Wikepedia "The only exception (would be) if the seller actively concealed latent defects".

The only winners in this process will be the lawyers.

 

[numbercruncher]

Yes they are litigation mad !

I think these guys have pretty solid basis for launching a suit though, toxic waste dressed as aaa would have me a bit mad too! Irrational exhuberance on both sides in alot of this im sure

 

[macca]

I can't help but wonder how they were ever labelled AAA, if they were a lower rating fair enough BUT AAA

There are a lot of places restricted by their internal laws to invest in bulletproof stuff which used to be AAA.

It would seem anything qualifies as that now, we will need a new rating for sovereign backed bonds now.

AAA is reserved for any thing that you can't sell, how about AAAAAAAAAAAAAAAAAAAAAAAAAAAAA

 

[macca]

It would appear we have more problems on the horizon, more news articles of concern, credit cards paying more than 20% interest with rises to come ............

<<SAN FRANCISCO (AP) -- Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.>>

http://biz.yahoo.com/ap/071223/credit_card_crunch.html

I guess that good idea actually sucks ........................

<<SOME of America's biggest banks have pulled the plug on a plan backed by the Treasury Department to rescue troubled structured investment vehicles that were levelled by the subprime mortgage crisis.

The decision came on Friday after it became clear that neither the banks nor the structured investment vehicles were willing to create a fund to bail out the SIVs. >>

http://business.smh.com.au/us-banks-reject-siv-rescue-fund/20071223-1ir2.html

More clandestine meetings required I guess

 

[Uncle Festivus]

Woops, they've done it again - they just can't help themselves those Yanks!

From the story above, what could be another sub-prime like disaster waiting to happen -

The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors -- similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.

And sub-prime was 'only' 20% of the mortgage market, this sector is 45%.

So they have 'securitized' credit card debt too. Will this one be 'contained' as well?

Investors also are backing away from buying securitized credit-card debt

Among the trusts examined, Bank of America Corp. had the highest delinquency volume, with overdue accounts valued at $5 billion. Bank of America defaults in October were almost 200 percent higher than in October 2006.

Other trusts -- including those linked to Capital One, American Express Co., Discover Financial Services Co. and those containing "branded" cards from Wal-Mart Stores Inc., Home Depot Inc., Lowe's Companies Inc., Target Corp. and Circuit City Stores Inc. -- also reported striking increases in year-over-year delinquency and default rates for October. Most banks and other financial institutions holding credit card debt on their own books also reported double-digit increases in delinquencies.

"You're looking at more and more distress -- consumers desperately trying to preserve their credit lines, but there's nowhere else to go," said Robert Manning, director of the Center for Consumer Financial Services at Rochester Institute of Technology. "It's like a game of dominoes."

 

[numbercruncher]

Section 13 (3) allows the Fed to take emergency action when banks become "unwilling or very reluctant to provide credit". A vote by five governors can - in "exigent circumstances" - authorise the bank to lend money to anybody, and take upon itself the credit risk. This clause has not been evoked since the Slump.

http://www.telegraph.co.uk/money/main.jhtml;jsessionid=REIF2EPDHBC1PQFIQMFSFFOAVCBQ0IV0?xml=/money/2007/12/23/cccrisis123.xml&page=3


No worries the Fed will gallop to the rescue eventually

 

[dhukka]

Woops, they've done it again - they just can't help themselves those Yanks!

From the story above, what could be another sub-prime like disaster waiting to happen -



And sub-prime was 'only' 20% of the mortgage market, this sector is 45%.

So they have 'securitized' credit card debt too. Will this one be 'contained' as well?



"You're looking at more and more distress -- consumers desperately trying to preserve their credit lines, but there's nowhere else to go," said Robert Manning, director of the Center for Consumer Financial Services at Rochester Institute of Technology. "It's like a game of dominoes."

Uncle,

This is what a lot of people don't get. This was never a sub-prime problem. Sub-prime was a symptom of a much larger disease called cheap and easy credit. Cheap credit for everything, housing, commercial real estate, auto loans, credit cards you name it. It's all been packaged up rated AAA and sold on to some sap who was too lazy to check what they were buying.

You still have Wall Street muppets running around saying the housing meltdown has not spilled over to main street. Housing is just the first place it showed up. Soon delinquencies across a number of asset classes will be showing significant rises. Commercial Real Estate has just started to follow residential, credit card delinquencies are rising as a strapped consumer no longer can turn to the ATM on their front lawn for help.

IMHO we're still at the beginning of a huge deflationary process that will necessitate the deflation of a broad range of assets classes and the tightening of credit.

 

[ithatheekret]

There's a lot of funds that will have to reorganise there portfolios due to re-ratings . Many funds are bound to certain rated instruments and many have just found themselves in a technical breach of guidelines .

The fun has only just started .

 

[Real1ty]

It's not just the U.S either

U.K. House Prices Fall the Most in Three Years, Hometrack Says

By Craig Stirling
Enlarge Image/Details

Dec. 24 (Bloomberg) -- U.K. house prices fell the most in three years in December, and the threat of more declines may cause the property market to seize up in 2008, Hometrack Ltd. said.

The average cost of a home in England and Wales slipped for a third month, dropping 0.3 percent to 175,200 pounds ($348,350), the London-based research group said today. The number of property transactions will fall 17 percent and prices will rise just 1 percent next year, Hometrack forecast.

Bank of England policy makers said this month that a drop in house prices seemed ``more pronounced'' than expected as they cut their benchmark interest rate for the first time in two years. Record debt, higher mortgage costs and the property market's worst performance since 1995 have discouraged homebuyers.

``The second half of the year has seen a major reversal in confidence,'' Richard Donnell, director of research at Hometrack, said in a statement. ``Just as the financial markets have faced a liquidity squeeze, so the housing market is in danger of facing its own liquidity squeeze.''

Prices increased 3 percent from a year earlier, the least in 18 months, Hometrack said. The average selling time for a home rose to 8.3 weeks, the most since the survey of real-estate agents and surveyors began in 2001.

Mortgage lender HBOS Plc said Dec. 5 that home values fell for a third month in November, the worst streak in 12 years. Estate agents and surveyors became the most pessimistic about house prices since at least 1998 last month, the Royal Institution of Chartered Surveyors said Dec. 13.

Lack of Homes

The number of property transactions will fall because uncertainty among sellers about the health of the market will cause a ``major lack'' of homes for sale in the first quarter, Donnell said.

``This will act as a support to prices, while also leading to greater price volatility in those markets where there is the greatest lack of supply,'' he said.

Citigroup Inc. has been less optimistic, forecasting that a ``toxic mix'' of overvaluation, record debt levels and prohibitive mortgage costs will probably lead to further price declines.

Britons face higher loan costs after contagion from the U.S. subprime-mortgage collapse froze lending between banks. That also led to a run on the deposits of mortgage lender Northern Rock Plc in September, the first on a British bank in more than a century.

Average Rate

The average rate offered by lenders on a mortgage for 95 percent of the price of a property, fixed for 24 months, increased to 6.44 percent from 6.42 percent in October, the Bank of England said Dec. 11. Total outstanding consumer debt is 1.4 trillion pounds.

The central bank cut the benchmark rate by a quarter point to 5.5 percent on Dec. 6 on concern about the prospects for economic growth. That may nevertheless not be enough to lure buyers back into the market, said Hometrack.

``Levels of market activity are likely to remain subdued over the course of 2008, especially over the first half of the year,'' Donnell said. ``Lower interest rates and continued growth in household incomes will help to ease affordability pressures but it is a trend that will need to run for a good 12 to 18 months.''

To contact the reporter on this story: Craig Stirling in London at Cstirling1@bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1eWSCy6oCM4&refer=home

 

[numbercruncher]

on the subject of credit card debt .....

SAN FRANCISCO (AP) -- Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

http://money.cnn.com/2007/12/23/news/economy/credit_card_crunch.ap/index.htm