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  • Mon, Jan 19 2009
  • 10:56 AM » Summers:TARP Will Focus on Consumers Rather Than Banks
    Published Mon, Jan 19 2009 10:56 AM by ml-implode.com
    "Barack Obama will focus more on helping consumers, local governments and businesses than banks as his administration deploys the second half of the $700 billion rescue fund, said Lawrence Summers, the president- elect’s top economic adviser."
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 10:56 AM » 8 Important Facts About the Federal Reserve
    Published Mon, Jan 19 2009 10:56 AM by Seeking Alpha
    These are just facts, not conspiracy. The Federal Reserve is a private institution. It is owned by the 12 regional Federal Reserve banks, which are each in turn owned by a combination of regional banks, commercial banks, foreign banks, and miscellaneous individuals who have inherited pieces passed down through generations. (Rockefellers, Rothschilds, etc.) The Federal Reserve holds a monopoly on the issuance of currency in the USA. In essence, this is the power to borrow an infinite amount of money at 0%. The dollar bill in your pocket is a 0% loan to the Federal Reserve. The Federal Reserve then uses these 0% loans to purchase income-producing assets. Before 2008, the assets purchased were primarily Treasury debt, which is backed by the taxation power of the US Government. In other words, we are exchanging the property rights to our valuable assets (land, labor, entrepreneurship) for little slips of green paper to buy trinkets with. The government can then tax these valuable assets to pay for our excess. The more we spend, the more the Fed owns. If all money created is debt and counts as principal, where does the money come from to pay interest on this debt? It comes from the money that gets printed in the future. This is why inflation is a natural result of our current monetary system. Prior the the Emergency Economic Stabilization Act/TARP Act of September 2008, commercial banks were required to hold 10% of deposits as reserves. This placed a limit on the potential amount of money creation at around 9x the original deposit. An obscure clause in the TARP Act changed the reserve requirement to 0%, immediately making the potential money supply infinite. The reason for the credit spread blowups of October/November 2008 was because in the same TARP Act the Fed was allowed to pay interest on deposits without publicly stating the interest rate . Before the TARP Act, there was around $20 billion deposited by commercial banks at the Fed. After the TARP Act, deposits immediately...
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:40 AM » Rich Dad Aint So Rich No More: The Great Real Estate Do Over
    Published Mon, Jan 19 2009 10:40 AM by loanworkout.org
    Let's face reality folks. Rich dad, aint so rich anymore. In fact, he is really in foreclosure on 27 homes, is cash poor, going through a divorce, drinking heavily and his flip this house real estate buying advice and books suck!!! My Rich Dad was really a greedy real estate speculating liar and my Poor Dad was the man who got it right.
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 10:40 AM » The Mortgage Industry, Housing Market and Inflation
    Published Mon, Jan 19 2009 10:40 AM by Seeking Alpha
    This week, the Mortgage Banker’s Association released the “good news” of mortgage rates falling and loan applications rising . But is it really? The Mortgage Industry From the mortgage industry, there’s applause when mortgage rates fall and loan applications rise. Considered healthy, innovative, and robust in 2003, the longer term effects of this outlook are now evident.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:40 AM » Krugman: Wall Street Voodoo
    Published Mon, Jan 19 2009 10:40 AM by Calculated Risk Blog
    Paul Krugman explains (once again) why "bad banks" won't work: Also see Krugman's blog today:
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Sat, Jan 17 2009
  • 9:14 AM » 2008 U.S. Foreclosure Heat Map
    Published Sat, Jan 17 2009 9:14 AM by The Big Picture
    > RealtyTrac reported this week that in 2008, the U.S. had a total of 3,157,806 foreclosure filings — default notices, auction sale notices and bank repossessions — on 2,330,483 U.S. properties. This was an 81% increase over 2007, and a 225% percent increase from 2006. The report also shows that 1.84 percent of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03 percent in 2007. > Sources: http://www.foreclosurepulse.com/blogs/mainblog/archive/2009/01/14/year-end-2008-foreclosure-data.aspx RealtyTrac, Jan. 15, 2009 http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=5681&accnt=64847
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:14 AM » Fourth Quarter Mortgage Originations Slide at Citi, BofA
    Published Sat, Jan 17 2009 9:14 AM by www.thetruthaboutmortgage.com
    Bank of America saw total mortgage production of $44.6 billion in the fourth quarter, down from $51.5 billion in the third quarter, but nearly double the $24.5 billion seen a year earlier thanks to its acquisition of Countrywide. At the same time, home equity loan originations slipped to just $5.3 billion from $7 billion a quarter [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • Fri, Jan 16 2009
  • 1:42 PM » The End of Large-Bank Wholesale Lending - Time For the Mortgage Banker
    Published Fri, Jan 16 2009 1:42 PM by mrmortgage.ml-implode.com
    The End of Large Bank Wholesale Lending - A Resurgence of Middle Market Mortgage Banking – Chase…a Leading Indicator This week Chase shut down wholesale mortgage lending but kept retail and correspondent alive. I believe this hasty move is a result of the terrible performance (low pull-though rates and low margin) despite loan application volume soaring. This may be the first visible sign of how tough the mortgage industry really is right now and how little of this recent surge in loan applications are actually resulting in profitably funded loans. Of note, Credit Suisse recently shut down their wholesale division (Lime) in December out of the blue. This was a newer operation formed in 2008 only doing Fannie, Freddie and FHA loans with no baggage. Wholesale is priced better than retail because it is supposed to be easier on the lender, leveraging and army of mortgage brokers to aggregate the necessary paperwork and qualify the borrowers prior to the wholesale lender ever seeing it. Because this makes the loan process for the wholesale lender much quicker and efficient, they offer a below market rates to the broker in order for the broker to add in their fees and still be able offer a market rate to the borrower. But wholesale has turned into a very expensive origination channel since rates turned down in late Nov. The mortgage application/rate lock fall-out, especially on the wholesale side, is extreme due to a) brokers locking and submitting with multiple lenders trying to get the best rate and the largest commissions b) appraisals coming in too low killing the deal c) borrowers not qualifying for today’s sensible underwriting standards d) turn-times being so long borrowers switch lenders for better rates/quicker funding creating even longer turn-times e) rates not really being what borrowers hear quoted in the news or up-front by the loan officer f) lack of reasonably priced Jumbo money. Many of these ‘challenges’ also effect the retail channel as well. If fall-out...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 11:36 AM » BofA, Citi Report Losses
    Published Fri, Jan 16 2009 11:36 AM by Calculated Risk Blog
    From the WSJ: Bank of America Corp. swung to a fourth-quarter loss as provisions for credit-losses nearly tripled, while the company showed why it needed further help from the government to support its acquisition of Merrill Lynch, whose preliminary loss was $15.31 billion. And from the WSJ: Citigroup Inc. reported an $8.29 billion net loss for the fourth quarter, putting the year's red ink at $18.72 billion, as the company announced it will reorganize into two business lines focused on banking and other financial services.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:36 AM » Wilbur Ross gets his bank
    Published Fri, Jan 16 2009 11:36 AM by CNN
    Billionaire vulture investor Wilbur Ross agreed Friday to take over a small Florida bank.
  • 11:36 AM » With Big Loss, BofA Gets Big Bailout
    Published Fri, Jan 16 2009 11:36 AM by www.portfolio.com
    F ederal officials have given $20 billion more in bailout money and have guaranteed the bank against some $100 billion in mortgage loan losses. Meanwhile, the bank reported a net loss of $1.79 billion in the fourth quarter. That compares to net income of $268 million a year earlier. The latest assistance from the U.S. Treasury Department and the Federal Deposit Insurance Corp. comes amid growing concerns about the bank’s financial condition. In particular there have been reports that BofA has found losses in Merrill Lynch & Co., which it acquired Jan. 1, that are worse than expected. Federal officials announced the deal early this morning. After the bailout news, Bank of America reported its harsh earnings report. The net loss applicable to common shareholders was $2.39 billion, or 48 cents per diluted share, down from net income of $215 million, or 5 cents per share, in the same period in 2007. The results include Countrywide Financial, which BofA purchased on July 1, but not Merrill Lynch & Co. Inc., which was acquired on Jan. 1. The bank says fourth-quarter results were driven by escalating credit costs, including additions to reserves, and significant writedowns and trading losses in the capital markets businesses. These actions reflect the deepening economic recession and extremely challenging financial environment, both of which significantly intensified in the last three months of 2008, the bank said in a release, Global Consumer and Small Business Banking and Global Wealth and Investment Management were profitable, paced by Bank of America’s successful and expanding deposit business. Negative results in Capital Markets and Advisory Services masked the profitability in business Lending and Treasury Services within Global Corporate and Investment Banking. Merrill Lynch preliminary results indicate a fourth-quarter net loss of $15.31 billion, or $9.62 per diluted share, driven by severe capital markets dislocations. The additional $20 billion from the government...
    Click Here to Read the Full Article

    Source: www.portfolio.com
  • 8:30 AM » PBS Documentary: The Ascent of Money
    Published Fri, Jan 16 2009 8:30 AM by ml-implode.com
    Must watch "TV" - excellent summary of centuries of monetary policy up thru current situation and beyond. Done like only PBS can do it. Available to watch online! Two hours viewing. Get a BIG cup of coffee!
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 8:30 AM » Regional Bank Woes Are Just Beginning
    Published Fri, Jan 16 2009 8:30 AM by Seeking Alpha
    I have been keeping an eye on the financial condition of local banks in my area to determine the impact of the economic crisis on regional banks. The three banks that I looked at were M&T Bank (MTB), First Mariner Bank (FMAR) and Provident Bank Corp (PBKS). The first bank, M&T Bank, is the second largest bank in the local area. M&T owns the naming rights to the Baltimore Ravens stadium. M&T Bank shares dropped to a 52 week low of $47.44 Wednesday. M&T recently agreed to acquire a small local bank, Provident Bank, for 400 million dollars. M&T says that they are well capitalized but they recently borrowed 600 million from the US Government’s TARP program. This is probably only the beginning of capital raising for M&T. Roughly 35% of M&T’s loan portfolio is tied to commercial real estate. As retail store owners and commercial property developers continue to go bankrupt, M&T will see its losses escalate. M&T will survive this but I think there is much more pain ahead for M&T shareholders.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Thu, Jan 15 2009
  • 5:21 PM » Higher Priced Home Sales Hindered by Pricey Jumbo Financing
    Published Thu, Jan 15 2009 5:21 PM by www.thetruthaboutmortgage.com
    The recent drop in the high cost conforming jumbo loan limit has hurt home sales in higher-priced areas of the country, according to data from the National Association of Realtors. The latest existing-home sales report revealed that transactions under $400,000 were off just three percent from a year ago, while homes priced at or above $750,000 [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 5:21 PM » The Real Cause of the Financial Crisis: An MIT Blackjack Team Perspective
    Published Thu, Jan 15 2009 5:21 PM by yourmortgageoryourlife.wordpress.com
    By Guest Author The mathematics of probability that govern the trade-offs of risk and reward are fundamentally counter-intuitive. The reason that societies ban outright, instead of relying on the market to make them unprofitable, is that most people trust their intuition, and their intuition leads them astray. If you were to wait for the market to run its course on a pyramid scheme, the losses could devastate a whole country, as found out a few years ago. In our () days of outwitting casinos around the world, we have come across many people who thought that they also had a great system, but were in fact compulsive gamblers who eventually lost everything. Among the false systems that intuitively feel right, there is none as insidious and deadly as the , where a player doubles his bet after every loss. The Martingale system works as follows: suppose you need an extra $100. You go down to your nearest casino, and bet $100 on a hand of blackjack, or on any other almost 50/50 proposition. Should you win right away, you have reached your goal and gotten your money. Now if you lose, you bet $200. If you win the second bet, you’re up $100 over all and once again successful. But a little more than one out of four times you’ll lose both, and end up down $300. In that event you simply bet $400. If you lose again you bet $800, and you just keep doubling your bet until you win once. Clearly you have to win at least once eventually, and with this system you end up with your $100 profit even if you start out losing for a while. If you’re willing to bet up to ten times for instance, your chance of losing all ten bets is close to one in a thousand. That means that with a probability of almost 99.9%, you will win one of those ten bets, and therefore walk away with your $100. Of course there’s a catch that few people notice. When the unlikely one in a thousand event happens and you do lose ten in a row, the actual amount that you’ve lost is over $100,000, all risked to win a mere hundred...
    Click Here to Read the Full Article

    Source: yourmortgageoryourlife.wordpress.com
  • 1:58 PM » A curious call from Societe Generale
    Published Thu, Jan 15 2009 1:58 PM by themessthatgreenspanmade.blogspot.com
    It's one thing to call for a depression - you don't have to look very far in the "alternate news" section of the internet to find forecasts like this and they've been a constant for many, many years - but to hear an analyst at a major firm predict a depression, that's a little different. When this same analyst also recommended buying stocks two months ago, then it become something of a curiosity. The details are in this from Reuters. Societe Generale said on Thursday that the United States' economy looks likely to enter a depression and China's could implode. In a highly bearish note, veteran cross asset strategist Albert Edwards said investors should now cut equity exposure after a turn-of-the-year rally and prepare for a rout. ... "While economic data in developed economies increasingly reflects depression rather than a deep recession , the real surprise in 2009 may lie elsewhere," Edwards wrote. "It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression." Edwards has long been one of the most bearish analysts in London, first with Dresdner Kleinwort and then with SocGen. But he called in October for clients to increase their exposure to equities , which he said were due a rebound. A target of 500 for the S&P 500 was cited - this represents a decline of another 40 percent from current levels, down almost 70 percent from the 2007 highs.
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 1:27 PM » Five Steps To A Successful Refinance
    Published Thu, Jan 15 2009 1:27 PM by CNBC
    As mortgage rates dip to multiyear lows, many homeowners wonder if a new loan could save them money. There are five crucial steps you need to follow to guarantee a successful refinance...
  • 12:24 PM » JPM Earnings Call Notes
    Published Thu, Jan 15 2009 12:24 PM by Calculated Risk Blog
    Here is the (PDF) Notes from Brian: Investment Bank – Allowance for losses 4.71% vs 3.85% q/q, NPLs 1.175B up $436MM q/q, VAR $327 vs 218 q/q Dimon comment on Bear acquisition: “It did cost us net net however you look at it several billion dollars this year.” Leverage Lending markdowns $1.8B Mortgage-related markdowns $1.1B (primarily CRE) Other credit costs $0.8B Leverage Lending commitments now marked down to 55 cents on the dollar (Note all charge off rates for Retail Financial Services, Home Equity, Prime Mortgage and Subprime Mortgage are for Heritage JPM portfolios – the assumed WaMu portfolios excluded all the credit impaired loans and have minimal loss rates and thus are excluded from the calculations) Retail Financial Services Charge off rate 2.98% vs 2.43% q/q Home Equity Originations $1.7B vs $9.8B y/y Mortgage Originations $28.1B vs $37.7B q/q vs $40.0 y/y Auto Loan Originations $2.8B vs $3.8Bq/q vs $5.6B y/y Home Equity Charge off rate 3.24% vs 2.78% q/q, vs 1.05% y/y Charge offs could reach $1B +/- over next few Q’s vs $770 in Q4 Max CLTVs now range from 50-70% vs 80% last quarter Prime Mortgage Charge off rate 1.97% vs 1.79% q/q vs .22% y/y 80% of losses from CA & FL, 90% of losses from 06 and 07 vintages Charge offs could be as high as $400MM over next few Qs vs $195MM in Q4 (or roughly 4% charge off rate!) Subprime Mortgage Charge off rate 9.76% vs 7.65% q/q vs 2.08% y/y Charge offs could be as high as $375-425MM per Q in 2009 vs $319MM in Q4 WaMu Portfolio At the time of the deal, home price decline assumptions ranged from 25-28% - Economy.com now is forecasting 31% At the time of the deal, forecasted losses were in the range of $31-37B and are now estimated in the range of $32-36B Credit Cards Charge off rate 5.29% vs 5.00% q/q vs 3.89% y/y 30 day delinquency rate 4.36% vs 3.69% q/q vs 3.48% y/y Charge off rate expected to increase to 7% in Q1 and rise to 8% over the balance of the year Other Private Equity investments written down by $1.1B in...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 12:24 PM » A bad day for Fed Governor Kohn
    Published Thu, Jan 15 2009 12:24 PM by themessthatgreenspanmade.blogspot.com
    Congress Ron Paul (R-Texas) asks who the central economic planner is for the U.S. and what exactly is going on with the $1.2 trillion increase in the Fed's balance sheet. When asked about oversight, Kohn says that just showing up before Congress is an important part of that process... Be sure to stay tuned for the Matrix clip at the very end. Rising star Congressman Alan Grayson (D-Florida) is also none to pleased with Fed's recent activity - note the "money spent " vs. "money lent " interchange. On Grayson's notecard it says: Mr. Kohn, How much of has the balance sheet of the Federal Reserve increased since September 1? What was that money spent on? Which institutions received it and how much for each institution? The follow-up questions are even better. For example, what gave the Fed the authority to promise banks they would not disclose how much money they were being given and what the Fed was getting in return.
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 10:33 AM » Citi: How TARP Money Is Spent
    Published Thu, Jan 15 2009 10:33 AM by Seeking Alpha
    submits: div·i·dend (div- i-dend') n. 1. Mathematics A quantity to be divided. 2. a. A share of profits received by a stockholder or by a policyholder in a mutual insurance society. b. A payment pro rata to a creditor of a person adjudged bankrupt. 3. a. A share of a surplus; a bonus. b. An unexpected gain, benefit, or advantage. [The American Heritage Dictionary, 4th ed.] If you read the financial press you may think there is something wrong with the venerable Citigroup (C). They seem to imply that the recent government investment in Citi is some kind of “bailout”. In addition, the press insists in propagating malicious rumors about Citi desperately needing new capital. According to these rumors, Citi would be ready to sell assets at “fire-sale” prices. In fact, they are even trying to portray Citi’s latest strategic move, the new joint venture with Morgan Stanley (MS), as a desperate move to raise the pittance of $2.7 billion.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:17 AM » Why Loan Modifications Often Don’t Work
    Published Thu, Jan 15 2009 10:17 AM by loanworkout.org
    Despite modifications, many homeowners are still underwater. Borrowers who owe more on their homes than they are worth have little incentive to stay there, even if their payments are lower. “I’m a big advocate for principal reduction because when people are underwater by hundreds of thousands of dollars, they walk away,” says Moe Bedard, the founder of LoanSafe Solutions, a Corona, Calif.-based company that works with attorneys specializing in loan modifications.
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 10:16 AM » RealtyTrac: Foreclosure Filings Increase 81% in 2008
    Published Thu, Jan 15 2009 10:16 AM by Calculated Risk Blog
    : RealtyTrac ... today released its 2008 U.S. Foreclosure Market Report(TM), which shows a total of 3,157,806 foreclosure filings -- default notices, auction sale notices and bank repossessions -- were reported on 2,330,483 U.S. properties during the year, an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006. The report also shows that 1.84 percent of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03 percent in 2007. Foreclosure filings were reported on 303,410 U.S. properties in December, up 17 percent from the previous month and up nearly 41 percent from December 2007. Despite the spike in December, foreclosure activity for the fourth quarter was down nearly 4 percent from the previous quarter but still up nearly 40 percent from the fourth quarter of 2007. ... "State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth quarter numbers overall, but that effect appears to have worn off by December," said James J. Saccacio, chief executive officer of RealtyTrac. There is no end in sight ... I expect foreclosure activity in 2009 to be higher than 2008.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:16 AM » Senate to Vote Today on Releasing $350 Billion in TARP Funds
    Published Thu, Jan 15 2009 10:16 AM by ml-implode.com
    Lawmakers in both parties want more of the funds to be used to help homeowners at risk of defaulting on their mortgages. The House will vote today on legislation that would require Obama’s Treasury Department to set up a foreclosure-relief program and require participating banks to report how they use the money. That measure is sponsored by House Financial Services Chairman Barney Frank, who along with other lawmakers faults President George W. Bush’s administration for failing to set limits on banks including Citigroup Inc. and JPMorgan Chase & Co. that got cash from the initial $350 billion last year. Frank has said Jan. 13 he doesn’t expect his proposal to pass the Senate. Pretty distressing to see that homeowner help is basically completely off the table. Does Frank just think the Senate is malicious, or did he just construct a law he knew would not pass so he could say he "tried"? This whole "second half request" process seems like a non-issue to us (which is what we expected in the first place). If you can say one thing about Congress, it is that it certainly doesn't betray expectations.
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 10:16 AM » Banking Crisis Could Intensify
    Published Thu, Jan 15 2009 10:16 AM by Seeking Alpha
    submits: As bad as things have been for U.S. banks over the past year, things could actually be taking a turn for the worse. The Chairman of the Federal Reserve, Ben Bernanke, said Tuesday during a speech at the London School of Economics that the stimulus package now being planned by the Obama administration will not be enough by itself to turn the economy around and that “more capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets.” It looks like Bernanke has made an economic policy break from the new administration, because he appears to be warning Mr. Obama and Congressional Democrats that most of the remaining $350 billion, or possibly even more, has to go to shoring up banks if they are to resume lending at normal levels.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Wed, Jan 14 2009
  • 11:50 PM » Fed's Beige Book on CRE: "Grim and Depressing"
    Published Wed, Jan 14 2009 11:50 PM by Calculated Risk Blog
    From the Fed's : Commercial real estate markets deteriorated in most Districts. Contacts in the Boston District described the commercial real estate market as grim and depressing , and market conditions continued to deteriorate in Richmond. In the Minneapolis District, a contact noted that the market remained in a downturn that has now lasted more than a year. Commercial real estate transactions in the Dallas District have reportedly ground to a halt . Leasing activity was minimal in the Boston District, continued to fall in the Philadelphia District, and was assessed as ranging from slowing to frozen in the Richmond District. Contacts in the Chicago District reported increases in sublease space. Office and industrial leasing is expected to remain steady through the first half of 2009 in the St. Louis District, but San Francisco reported that conditions in their commercial office market remained exceptionally weak . The New York District reported that Manhattan's office vacancy rate climbed to its highest level in two years. Contacts in the Chicago District noted elevated vacancy rates, and contacts in the Kansas City District expected higher vacancy rates going forward. Contacts in the Atlanta District also anticipate that more commercial space will become available. Reports about commercial construction activity also were downbeat. In the Philadelphia District, commercial construction activity continued to fall . Cleveland reported that construction backlogs have declined for some contractors. Commercial contractors in the Atlanta and Chicago Districts reported declines in building activity and noted that more projects were cancelled or postponed . In St. Louis, contacts in commercial and industrial construction predicted a challenging environment in early 2009. San Francisco reported that commercial construction activity was very limited . Construction-related manufacturing contacts in the Dallas District reported that demand from commercial construction is...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 5:44 PM » U.S. Negotiating More Aid for Bank of America
    Published Wed, Jan 14 2009 5:44 PM by WSJ
    The U.S. government is close to committing billions in additional aid to Bank of America Corp. as the nation's largest bank by assets tries to digest its Jan. 1 acquisition of Merrill Lynch & Co., according to people familiar with the situation.
  • 2:25 PM » Credit Crisis Watch: Gaining Positive Traction
    Published Wed, Jan 14 2009 2:25 PM by The Big Picture
    In order to gauge the progress being made to unclog credit markets and restore confidence in the world’s financial system, I monitor a range of financial spreads and other measures. By perusing these, as summarized in this “Credit Crisis Watch” review, one can ascertain to what extent the various central bank liquidity facilities and capital injections are having the desired effect. First up is the LIBOR rate. This is the interest rate that banks charge each other for one-month, three-month, six-month and one-year loans. LIBOR is an acronym for “London InterBank Offered Rate” and is the rate charged by London banks. This rate is then published and used as the benchmark for bank rates around the world. After having peaked on October 10 at 4.82%, the three-month dollar LIBOR rate declined sharply to 1.09%. LIBOR is therefore trading at 84 basis points above the upper band of the Fed’s target range - a great improvement, but still steep compared to an average of 12 basis points in the year before the start of the credit crisis in August 2007. Source: Importantly, US three-month Treasury Bills have started making their way higher to 0.12% after momentarily trading in negative territory in December as nervous investors were in desperate search of safety. US three-month Treasury Bill yield Source: The TED spread (i.e. three-month dollar LIBOR less three-month Treasury Bills) is a measure of perceived credit risk in the economy. This is because T-bills are considered risk-free while LIBOR reflects the credit risk of lending to commercial banks. An increase in the TED spread is a sign that lenders believe the risk of default on interbank loans (also known as counterparty risk) is increasing. On the other hand, when the risk of bank defaults is considered to be decreasing, the TED spread narrows. Since the TED spread’s peak of 4.65% on October 10, the measure has eased to a five-month low 0.97% - well above the 38-point spread it averaged during the twelve months prior to the...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 2:25 PM » It’s All About the Refis
    Published Wed, Jan 14 2009 2:25 PM by www.thetruthaboutmortgage.com
    Record low interest rates drove mortgage applications higher last week according to the latest weekly survey from the MBA. During the week ending January 9, mortgage apps increased 15.8 percent on a seasonally adjusted basis compared to one week earlier. On an unadjusted basis, volume was up a staggering 95.7 percent compared to the previous week and [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 2:25 PM » Lehman hopes for bankruptcy exit in 2 years
    Published Wed, Jan 14 2009 2:25 PM by Reuters
    NEW YORK (Reuters) - Lehman Brothers Holdings Inc said on Wednesday it hoped to exit bankruptcy protection in the next 18 to 24 months, but the judge overseeing the case warned that more international coordination would be necessary to meet that goal.
  • 8:56 AM » New Legislation Merely a Speed Bump for California Foreclosures
    Published Wed, Jan 14 2009 8:56 AM by www.thetruthaboutmortgage.com
    A bill aimed at slowing the growing foreclosure epidemic in California has done little but delay the problem, according to a new report from ForeclosureRadar.com. Notices of Default, which slowed in November after Senate Bill 1137 was implemented, rocketed back up in December, with 42,421 such filings reported. That’s nearly double the 21,557 seen a month earlier [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 8:56 AM » US bankruptcy code bill rattles the MBS market
    Published Wed, Jan 14 2009 8:56 AM by ml-implode.com
    "We are not surprised to see the market react negatively," Mr Flanagan went on. "While lenders have long maintained that [the lack of cramdown] was needed to keep mortgage rates low, that notion ultimately proved to be a farce. To say that now is not a good time to change the bankruptcy code merely echoes the sentiment of the last 30 years, and ignores the facts that [this part] of the mortgage market is shut down anyway." We echo this gentleman's fine statements. The inability to cram-down mortgages was a farce: it turns out default risk DOES still exist on mortgages. As long as that is the case, bankruptcy judges should be able to adjust mortgage debt accordingly. In fact, the very law that got rid of cram-downs likely inflated values to the point that any "benefit" of the law was undone. Now, the market's reaction is basically "oh ***, you mean we can't push ALL of the default risk onto the borrower and the government?" That's right, pricing according to risk -- the contemporary asset-backed securities market's worst nightmare.
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 8:40 AM » Deutsche Bank pegs quarterly loss at $6.4 billion, vow changes
    Published Wed, Jan 14 2009 8:40 AM by Market Watch
    Germany's Deutsche Bank sees reporting a fourth-quarter loss of some $6.4 billion, due to a weak performance in credit and equity trading and further write-downs, and forecasts red ink for the full year as well.
  • 8:40 AM » Taming inflated home appraisals
    Published Wed, Jan 14 2009 8:40 AM by CNN
    Washington policy makers have taken aim at one of the main contributing causes to the housing crisis: inflated appraisals.
  • 8:40 AM » Unfairly Rewarding Greedy Bankers, and Why It Works
    Published Wed, Jan 14 2009 8:40 AM by Washington Post
    There's been a lot of grousing lately about the Treasury's $700 billion bailout program, which, according to its many critics, has accomplished nothing other than line the pockets of undeserving bankers and their shareholders.
    Click Here to Read the Full Article

    Source: Washington Post
  • Tue, Jan 13 2009
  • 4:47 PM » Fannie Mae Could be Your New Landlord
    Published Tue, Jan 13 2009 4:47 PM by www.thetruthaboutmortgage.com
    After previously announcing that it wouldn’t kick out any tenants of foreclosed properties through the end of January, Fannie Mae has stepped up efforts with the establishment of its so-called National Real Estate Owned (REO) Rental Policy. Going forward, those renting a Fannie Mae-owned foreclosed property will be offered new month-to-month leases based on market rents [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 4:46 PM » Negative Equity the Driving Force Behind Subprime Defaults
    Published Tue, Jan 13 2009 4:46 PM by Seeking Alpha
    submits: CreditSights believes that negative equity will be the driving factor in subprime mortgage defaults this year. In the past, payment shocks such as job loss, health catastrophes or divorce have historically been identified as the primary drivers of default, CreditSights says in This lack of negative-equity-induced defaults is usually explained by ‘transaction costs’ - which encompass the greater difficulty of gaining credit in future, sentimental attachment to one’s property, moral qualms and moving costs.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 4:46 PM » The Terrible Lessons of TARP
    Published Tue, Jan 13 2009 4:46 PM by The Big Picture
    With the government now debating the release of the second half of the TARP funds, perhaps now is as good a time as any to look at how successfully spent the first $350 Billion dollars were. The evidence is not very favorable. What I can say without reservation is that the TARP spending prevented large brokers and banks from going to zero. Since the legislation was passed in the Fall, there has not been a major disruptive bankruptcy. Sure, the FDIC had to take over a few institutions that were overdue for the long dirt nap anyway, but the sort of market roiling Bear Steans collapse, and the subsequent Q3 Lehman/AIG/CitiGroup disasters have at least stopped. This is not, to be clear, any declaration that the TARP has been a success. We have avoided financial armageddon, but other than that, it has been an abject failure. The short list of criticisms starts with the ad hoc way it was formed, and foisted on the public. There were no clear goals, no over-arching strategy, no milestones to evaluate its success. Let’s take a quick look at some of the shortcomings and misfires the TARP has yielded: 1. No Strategic Plan : What was the original purpose of the TARP? Its hard to say, other than it was of the greatest importance it be passed with minimum debate and even less information. Without stated objectives, its difficult to evaluate whether it is achieving those goals. 2. Methods and Tactics : By what method was the TARP to be implemented? Buy distressed assets? Recapitalize the banks? Increase lending to businesses and consumers? Rescue foreclosed homeowners? Stimulate the economy? The constantly morphing objectives make it hard to take the original claims very seriously. 3. No Triage : There seemed to be no evaluative method in determining which banks should be saved and which should be put down. If the goal was to strengthen the financial sector, then the approach is to help those that can be strengthened, and have an orderly liquidation of those that cannot. Merely throwing...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 4:46 PM » Chase Wholesale Lending Shut Down
    Published Tue, Jan 13 2009 4:46 PM by www.thetruthaboutmortgage.com
    Chase reportedly shuttered its flagging wholesale home loan division today, according to the Mortgage Lender Implode-o-Meter. It is believed that 190 Account Executives were still employed in the division nationwide, though it’s unclear how many will be affected by today’s news. Chase is expected to hang on to its correspondent lending business, though it plans to shed [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 12:21 PM » Treasury developing tools to measure lending
    Published Tue, Jan 13 2009 12:21 PM by Washington Post
    WASHINGTON -- The Treasury Department is developing tools to measure whether banks that receive funds from the $700 billion financial industry rescue program are increasing lending.
    Click Here to Read the Full Article

    Source: Washington Post
  • 11:49 AM » Seattle FHLB Likely Short of Capital on Mortgage Debt
    Published Tue, Jan 13 2009 11:49 AM by ml-implode.com
    The Federal Home Loan Bank of Seattle joined its San Francisco counterpart in suspending dividends and “excess” stock repurchases, after the declining value of mortgage bonds likely led to a regulatory capital shortfall. The shortfall is being caused by “unrealized market value losses” on home-loan securities without government backing, the Seattle bank cooperative said in a filing with the U.S. Securities and Exchange Commission today. The Federal Home Loan Banks, or FHLBs, face potentially “substantial” losses, and in a worst-case scenario only four of the 12 would remain above capital minimums, Moody’s Investors Service said last week.
    Click Here to Read the Full Article

    Source: ml-implode.com
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