US mortgage carnage

[Kimosabi]

Well the Mortgage Lender Implode--Meter just clicked through to 76

Good to see lending institutions never get greedy and crash and burn in on themselves.

http://ml-implode.com/

The only question is, when does this start happening in Australia...

 

[Kimosabi]

[Youtube]dgtpxBPYnvE[/media]

House wouldnt sell at 50% off? Real Estate never goes down?

 

[wayneL]

[Youtube]dgtpxBPYnvE[/media]

House wouldnt sell at 50% off? Real Estate never goes down?

Glad they mentioned lease options/wraps.

Often people don't understand the untenable risk they are in fact taking on.

 

[Uncle Festivus]

NEW YORK (CNNMoney.com) -- The outlook for home prices this year - already expected to post the first drop on record - got worse Wednesday as an industry group cut its forecasts for sales and prices for 2007.
The National Association of Realtors said it now sees the median price of existing homes sold falling 1.3 percent this year. That's almost twice the 0.7 percent drop forecast just two months ago, and is worse than the 1.0 percent drop in prices it estimated in May.
As recently as March, the group was forecasting a 1.2 percent rise in the median existing home price for this year.

http://money.cnn.com/2007/06/06/news/economy/homes_outlook/index.htm


NEW YORK, June 6 (Reuters) - Moody's Investors Service on Wednesday changed its outlook on D.R. Horton Inc., the largest U.S. home builder, to negative from stable, indicating the company's debt ratings are likely to be lowered into junk territory over the next 12 to 18 months.
Moody's rates Horton "Baa3," the lowest investment grade rating.
"The negative ratings outlook reflects Moody's expectation that Horton's credit metrics will continue to erode as home-building industry conditions are expected to be challenging throughout 2007, and any recovery in 2008 is likely to be sluggish," Moody's said in a statement.
Horton in April reported an 85 percent plunge in fiscal second-quarter earnings, in part due to charges related to the lower value of land.

http://www.reuters.com/article/coMktNews/idUSN0643813720070606?rpc=11

 

[dhukka]

Housing Inventory Build Worsens

 

[Uncle Festivus]

Economists See Housing Slump Enduring Longer

Economists are giving up on the idea that the U.S. housing slump will be quick and relatively painless.
Instead, more are concluding, the downturn that began nearly two years ago will last at least through the end of 2007, remaining a major drag on the U.S. economy. The culprits: a glut of homes for sale and growing caution among lenders who now regret being so free with their mortgages during the boom.

 

[Kimosabi]

Economists See Housing Slump Enduring Longer

Economists are giving up on the idea that the U.S. housing slump will be quick and relatively painless.
Instead, more are concluding, the downturn that began nearly two years ago will last at least through the end of 2007, remaining a major drag on the U.S. economy. The culprits: a glut of homes for sale and growing caution among lenders who now regret being so free with their mortgages during the boom.

I've seen some estimates that the US housing bust could last for up to 15-20 years.

 

[Uncle Festivus]

I don't beleive it; they said it wouldn't spill over to the mainstream

Turmoil in the US mortgage market took a toll on earnings at Goldman Sachs, Bear Stearns and Freddie Mac amid suggestions that Wall Street’s long run of record-breaking profits may be coming to an end.

Wall Street’s second-quarter results are being closely watched because of fears that soaring US subprime mortgage delinquencies, rising interest rates and choppy equity markets are bringing an end to the near-perfect conditions that led to record first quarter profits.

The fear now is that continued problems in the US mortgage market, rising interest rates and rocky equity markets could slice into profits.
David Viniar, chief financial officer, acknowledged on Thursday that Goldman is far from immune if conditions worsen and global liquidity begins to recede.
The problems could be more significant for Bear Stearns, which gets more of its profits from the domestic fixed income markets and has a larger presence in subprime mortgages, a market that is likely to get worse before it gets better.

And a back door bail-out by the Fed subsidiary, Freddie Mac.

Freddie Mac, the US mortgage finance provider, said it would provide backing for up to $20bn in new mortgages to aid distressed subprime borrowers.

Prepare for some interesting figures when those companies exposed to the housing bust are required to mark to market their holdings in non performng assets.

 

[robots]

hello,

http://www.theaustralian.news.com.au/story/0,20867,21874160-25658,00.html

thankyou

robots

 

[Kimosabi]

hello,

http://www.theaustralian.news.com.au/story/0,20867,21874160-25658,00.html

thankyou

robots

Good one Robots, keep up the spin.

Freddie Mac goes from a $2 Billion Profit to First-Quarter Loss of $211 Million and they have a direct connection to the Money Making Machine

Freddie Mac Posts 1Q Loss of $211M
Thursday June 14, 5:13 pm ET

By Marcy Gordon, AP Business Writer Freddie Mac Reports First-Quarter Loss of $211 Million Vs. $2 Billion Profit a Year Ago


WASHINGTON (AP) -- Freddie Mac, the nation's second largest buyer and guarantor of home mortgages, reported a first-quarter loss of $211 million amid turbulence in the market and erosion in the value of financial instruments it uses to hedge against interest-rate swings.

The government-sponsored company, which is emerging from an accounting scandal, said Thursday it lost 46 cents a share for the three months ended March 31. That contrasted with a profit of $2 billion, or $2.80 a share, in the same period a year ago.


It was Freddie Mac's first regular quarterly report in five years. The company announced a target of releasing its 2007 financial results within 60 days of year's end and meeting the requirements of the Sarbanes-Oxley corporate governance law by the end of 2008.

The company's results remain volatile from quarter to quarter.
While the full effect of the current housing slump has yet to play out, Freddie Mac's "credit position has remained strong relative to our historical levels and the market as a whole," Richard Syron, the chairman and chief executive, said in a statement.

"The first quarter was a tough period for our industry," he told a conference call with analysts. "Tough times show which companies are built to last over the long run."

He added: "We believe we are on the upswing operationally."
Amid a distressed market for so-called subprime mortgages -- higher-priced loans targeted at borrowers with tarnished credit or low incomes -- Freddie Mac reported that its credit-related expenses more than tripled in the first quarter, to $193 million from $60 million a year earlier.

The increase in expenses was largely the result of higher provisions for credit losses as mortgages purchased last year moved more frequently from delinquency to foreclosure, the company said. It said it expects such charge-offs to increase in the future "from today's very low levels."
Freddie Mac shares dropped 62 cents to $65.24 Thursday.

Freddie Mac announced in April that it will buy as much as $20 billion in fixed-rate and adjustable-rate loans over the next few years to help borrowers keep their homes. The new mortgages, expected to be available by midsummer, will include loans with longer fixed-rate terms.

Foreclosures and delinquencies have surged nationwide in recent months, particularly among homeowners who took out the high-risk mortgages. The distress has forced several mortgage lenders into bankruptcy and stoked anxiety that the problems could spill over into the broader economy.

Late payments and new foreclosures on adjustable-rate mortgages in the subprime category spiked to all-time highs in the first quarter, according to figures released Thursday by the Mortgage Bankers Association. The percentage of payments that were 30 or more days past due for such loans rose to 15.75 percent from 14.44 percent in the final quarter of 2006.

"Worsening expectations" for risk of mortgage defaults hurt Freddie Mac's financial results in the first quarter, the McLean, Va.-based company said. Losses came in derivatives, which are the complex financial instruments that Freddie Mac uses to hedge against swings in interest rates.

The company disclosed in mid-2003 that it had misstated earnings by some $5 billion -- mostly underreported -- for 2000-2002, and its top executives were ousted. Freddie Mac paid a then-record $125 million civil fine in 2003 in a settlement with federal regulators, who blamed management misconduct for the faulty accounting.
Freddie Mac and its larger government-sponsored sibling Fannie Mae were created by Congress to pump money into the $8 trillion home-mortgage market by buying home loans from banks and other lenders and bundling them into securities for sale on Wall Street.

http://biz.yahoo.com/ap/070614/earns_freddie_mac.html?.v=4

 

[robots]

hello,

its all spin

but guess what, it hasnt taken down the world markets, US hasnt fallen to pieces, AUS hasnt fallen to pieces and good property is still kicking ass

oh, I have to wait?

goodluck

thankyou

robots

 

[Uncle Festivus]

hello,

its all spin

but guess what, it hasnt taken down the world markets, US hasnt fallen to pieces, AUS hasnt fallen to pieces and good property is still kicking ass

oh, I have to wait?

goodluck

thankyou

robots

Freddie & Fannie are the lenders of last resort eg the government bail-out henchmen. Where do you think they are getting the money from? Giving money to the people all the other lenders wouldn't touch with a barge pole.

I don't need the luck, but the good & decent overspending citizens of the USA will be needing lot's of it soon.

I doubt if even Freddie Mac knows exactly what the mark to market value of their loans books are, not that it matters as they have a direct link to the money printing machine called the Fed.

 

[Uncle Festivus]

June 26, 2007: 01:16 PM EST

NEW YORK (Dow Jones) -- Pimco Chief Investment Officer and founder Bill Gross Tuesday predicted that the subprime mortgage crisis's impact will spread beyond the housing sector and prompt the Federal Reserve to cut rates to stir a flagging economy.
Gross, in an outlook for July posted on the Pimco Web site, said the mortgage- sector crisis will impact consumption and new home building over the next year to year and a half.
The crisis "may be just what the Fed has been looking for: easy credit becoming less easy, excessive liquidity returning to more rational levels."
The bond guru predicted that the Fed will reduce the fed funds rate, which is now at 5.25%, over the next six months.
Gross also declared that the deterioration of two Bear Stearns Cos. Inc. (BSC) hedge funds was reminiscient of the collapse of Long Term Capital Management in the 1990s.
Although some investors believe the Bear Stearns funds problems to be a one- off event, Gross said the implications are more complex.
"The right places to look for contagion are therefore not in the white-washed Bear Stearns hedge funds, but in the subprime resets to come and the ultimate effect they will have on the prices of homes -- the collateral that's so critical in this asset-backed, and therefore interest-sensitive financed-based economy of 2007 and beyond," he wrote.
"The flaw, dear readers, lies in the homes that were financed with cheap and in some cases gratuitous money in 2004, 2005, and 2006," he wrote.
"Because while the Bear Stearns hedge funds are now primarily history, those millions and millions of homes are not. They're not going anywhere...except for their mortgages that is. Mortgage payments are going up, up, and up...and so are delinquencies and defaults."

 

[ozambersand]

Pimco Chief Investment Officer and founder Bill Gross Tuesday predicted that the subprime mortgage crisis's impact will spread beyond the housing sector and prompt the Federal Reserve to cut rates to stir a flagging economy.

Given that there will be an announcement on Friday (their time?) on US Fed interest rates, do you see a cut in the interest rates then?

If the rates aren't cut (or stay the same), what is the likelihood of their market (and ours) going even lower?

 

[wayneL]

Cutting interest rates would torpedo the the USD. The Fed is caught between a rock and a hard place right now.

If it happens expect to see USD/AUD parity in the near future.

 

[Uncle Festivus]

Timeline - the next 12 months
Actions - the Fed keeps talking inflation up, housing implodes further, Fed cuts rates.............

WASHINGTON (MarketWatch) -- The U.S. housing market weakened further in May, as contract signings on sales of previously owned homes fell 3.5% to the lowest level since September 2001, the National Association of Realtors reported Tuesday.
Pending sales are down 13.3% compared with a year earlier and are down 23% from the peak in early 2005.
"This is horrendous," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. "These numbers give the lie to the idea that any sort of recovery, or even stabilization, is underway in the housing market. In fact, it continues to deteriorate, rapidly."

http://www.marketwatch.com/news/sto...-3F7D-4930-90EE-60B6078A06FC}&dist=TNMostRead

The pending-homes-sales index is considered a reliable leading indicator of existing-home sales, which fell to 5.99 million annualized in May, down 10.3% compared with a year earlier. Inventories of unsold homes rose to a 15-year high in May.

 

[Kimosabi]

Yep, this is a nicely constructed Bloodbath by the US Fed.

ML Implode is sitting at 92 Mortgage lenders that have bit the dust since late 2006.

http://ml-implode.com/

It's now starting to spread into hedge funds, etc.

I've seen predictions Prices will go back to 2001 levels once this has all finished.

 

[Uncle Festivus]

Why the US housing market is so critical to continued prosperity.....

...... But one sector of the US stock market which has not responded positively to the Fed’s heavy injections of monetary steroids has been the home builders, once regarded as a top bull-market leader from 2003 thru August 2005. The Dow Jones Home Construction Index, a yardstick that measures home builder performance, is off 25% this year, and is flirting with key support at the 525 level, which if penetrated, would be especially bearish.

On July 2nd, Paulson sent a discreet signal to Wall Street power-brokers to avoid dumping the home builders. “In terms of housing, it’s had a significant impact on the economy. No one is forecasting when, with any degree of clarity, that the upturn in housing is going to come, other than it’s at or near the bottom.

http://sirchartsalot.com/article.php?id=61

'The Boss' Paulson has called a bottom? Time to start investing again with confidence as the Fed will back the market.

 

[Uncle Festivus]

Home builders falling like dominos, implications for the economy & sharemarket.

BOSTON (MarketWatch) -- Home-building bellwether D.R. Horton Inc. early Tuesday said quarterly orders for new homes fell 40% from a year earlier and that it expects to post a loss after impairment charges.


http://www.marketwatch.com/news/sto...x?guid={435B3B41-CB11-49CF-B2AE-461155901C70}

 

[wayneL]

Great article from UK Moneyweek Magazine:

http://www.moneyweek.com/file/31699...lapse-why-bear-stearns-is-just-the-start.html

Subprime mortgage collapse: why Bear Stearns is just the start.

This is not the idle chatter of permanent bears. The subprime mortgage collapse now hitting Bear Stearns may be just the start.

Serious analysts from big investment firms are talking ominously about "the big one". It will make you angry to learn just how the investment industry has got you involved.

If you can understand what's happening, you should have time to move. So let's get to the bottom of it now, and in plain English..............