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  • Sun, Dec 28 2008
  • 8:44 PM » Group of investors close to buying IndyMac
    Published Sun, Dec 28 2008 8:44 PM by CNN
    Read full story for latest details.
  • 8:44 PM » Is Social Security a Ponzi Scheme?
    Published Sun, Dec 28 2008 8:44 PM by Business Week
    Click Here to Read the Full Article

    Source: Business Week
  • 8:31 AM » Meth an Accepted Aid in Loan Processing at WaMu
    Published Sun, Dec 28 2008 8:31 AM by Google News
    A on WaMu's in the mortgage market is worth reading for the former employee quotes alone. For instance, use of controlled substances was acceptable as long as they were the productivity-enhancing sort: “I’d lie if I said every piece of documentation was properly signed and dated,” said Mr. Parsons, speaking through wire-reinforced glass at a California prison near here, where he is serving 16 months for theft after his fourth arrest — all involving drugs. While Mr. Parsons, whose incarceration is not related to his work for WaMu, oversaw a team screening mortgage applications, he was snorting methamphetamine daily, he said. “In our world, it was tolerated,” said Sherri Zaback, who worked for Mr. Parsons and recalls seeing drug paraphernalia on his desk. “Everybody said, ‘He gets the job done.’ ” As I am sure readers know all too well, that sort of thing is quietly prevalent in investment banks (well, except for being so indiscreet as to have your implements on view), as coke-snorting traders and institutional salesmen were sufficiently common in the 1980s so as to become a staple of fiction and magazine articles. Even in the seemingly innocent early 1980s, a member of Goldman's corporate finance department was known to use uppers and downers on what was presumed to be a daily basis. He made partner. A attorney buddy realized how naive he was when on a deal, with all too great frequency, the room where negotiations were being held would empty itself. It took him a couple of days to figure out everyone else wasn't making urgent phone calls, but repairing to bathrooms, and not to have sex with each other, either. I've also been told of very high level IT guys (the kind who built and ran mission critical systems, and made seven figures in the peak years) having meth habits. (Based on my very very limited anecdotal sample, meth does appear to live up to its billing and leads to much more rapid personal train wrecks than other stimulants). But banking, at least...
  • 8:31 AM » By Saying Yes, WaMu Built Empire on Shaky Loans
    Published Sun, Dec 28 2008 8:31 AM by ml-implode.com
    As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers’. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes. ... “I’d lie if I said every piece of documentation was properly signed and dated,” said Mr. Parsons, speaking through wire-reinforced glass at a California prison near here, where he is serving 16 months for theft after his fourth arrest — all involving drugs. While Mr. Parsons, whose incarceration is not related to his work for WaMu, oversaw a team screening mortgage applications, he was snorting methamphetamine daily, he said. “In our world, it was tolerated,” said Sherri Zaback, who worked for Mr. Parsons and recalls seeing drug paraphernalia on his desk. “Everybody said, ‘He gets the job done.’ ” ... Interviews with two dozen former employees, mortgage brokers, real estate agents and appraisers reveal the relentless pressure to churn out loans that produced such results. ... During Mr. Killinger’s tenure, WaMu pressed sales agents to pump out loans while disregarding borrowers’ incomes and assets, according to former employees. The bank set up what insiders described as a system of dubious legality that enabled real estate agents to collect fees of more than $10,000 for bringing in borrowers, sometimes making the agents more beholden to WaMu than they were to their clients. WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, which carried higher fees, bolstering profits and ultimately the compensation of the bank’s executives. WaMu pressured appraisers to provide inflated property values that made loans appear less risky, enabling Wall Street to bundle them more easily for sale to investors. ... “I never had a clue about the amount of off-the-cliff activity that was going on at Washington Mutual...
    Click Here to Read the Full Article

    Source: ml-implode.com
  • Sat, Dec 27 2008
  • 11:41 PM » Subprime Credit Boosted Minority Homeownership, but Now That's Slipping Away
    Published Sat, Dec 27 2008 11:41 PM by Washington Post
    STOCKTON, Calif. -- Venice Circle is a loop lined with taupe homes and green lawns, a clear sign that drivers have left the freeway south of town and entered Weston Ranch, a 21st-century Levittown. The subdivision sprang up in asparagus fields 80 miles east and a world away from the urban settings buyers were delighted to escape: gritty, violent east Oakland, and grittier, deadlier Richmond nearby.
    Click Here to Read the Full Article

    Source: Washington Post
  • 1:33 PM » CRE Boom Ends in New York
    Published Sat, Dec 27 2008 1:33 PM by Calculated Risk Blog
    From the NY Times: Nearly $5 billion in development projects in New York City have been delayed or canceled because of the economic crisis, an extraordinary body blow to an industry that last year provided 130,000 unionized jobs, according to numbers tracked by a local trade group. ... The long-term impact is potentially immense, experts said. Construction generated more than $30 billion in economic activity in New York last year, said Louis J. Coletti, the chief executive of the Building Trades Employers’ Association. The $5 billion in canceled or delayed projects tracked by Mr. Coletti’s association include all types of construction: luxury high-rise buildings, office renovations for major banks and new hospital wings. Mr. Coletti’s association, which represents 27 contractor groups, is talking to the trade unions about accepting wage cuts or freezes. So far there is no deal. Not surprisingly, unemployment in the construction industry is soaring: in October, it was up by more than 50 percent from the same period last year, labor statistics show. More bad CRE news ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Fri, Dec 26 2008
  • 7:53 PM » Demand Transparency on Mortgage Rates and Fees
    Published Fri, Dec 26 2008 7:53 PM by Washington Post
    With mortgage rates at historic lows -- 4.75 percent from several lenders in mid-December -- a new legal settlement from the Federal Trade Commission offers a cautionary note for consumers, especially if they are members of minority groups: Watch out. The rates and fees you're quoted could violate federal law.
    Click Here to Read the Full Article

    Source: Washington Post
  • 6:35 PM » Low Mortgage Rates to Spur New Wave of Defaults
    Published Fri, Dec 26 2008 6:35 PM by mrmortgage.ml-implode.com
    Talk about unintended consequences. The following is significant insight from the street level. This is especially important for those of you thinking that these low mortgage rates will lead housing and the consumer to the Promised Land. Everyone wants to refinance right now - that’s a fact. Home owners and loan officers around the nation have not been this exited in years over the low rates. The media are actually quoting mortgage rates non-stop, which is a complete story in and of itself. Loan officers and banks are very busy taking loan applications, as reflected in the faulty MBA loan application survey data (Mr Mortgage story out next week). Loan approval times at some banks is at three to four weeks making for a two month start to finish. Fall-out will be extreme over the near-term as brokers and borrowers switch banks three and four times trying to get the lowest rate available. Trying to hedge this chaotic mess is a mortgage secondary marketing manager’s worst nightmare and can lead to significant losses. Along side of being one of the biggest consumer ‘bait and switches’ of all time , this drop in rates should set the stage for a significant leg-up in mortgage loan defaults and leg down in house values and consumer / homeowner sentiment. In my opinion, the government artificially pushing rates down this quickly not only will cost the originators plenty but quickens the pace at which the Alt-A, Jumbo Prime, and ‘Prime’ implosions could begin in earnest. Please note that 4.5% never really existed unless the borrower wanted to pay thousands of dollars to buy that rate through points, which is rare. For a perfect borrower with a 740 credit score, 80% loan to value and no second mortgage attached the lowest that rates got were roughly 4.875%. Since then they are hovering around 5.25% to 5.50%. This, from 6% before rates took their dive. I am not a believer that rates can sustain these low levels without .gov permanently ‘fixing’ them somehow. Left up to the mortgage...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 6:19 PM » Winning Essays Earn Mortgage Payments from ING Direct
    Published Fri, Dec 26 2008 6:19 PM by Google News
    ING has been building considerable goodwill among struggling homeowners this holiday season. First they suspended evictions from single family homes through January 15, 2009 and halted foreclosure sales through March 2009. Now, 500 lucky winners of the company’s essay contest will have a portion of their mortgage debt forgiven. “ We hope this foreclosure suspension will provide some relief during the holidays to those experiencing financial hardships,” ING Direct CEO Arkadi Kuhlman said. The suspension could make a world of difference to about 250 of I’s customers with seriously delinquent mortgages. So will winning the essay contest. Homeowners currently in the foreclosure process were not eligible for the essay contest. More than 5,500 homeowner submitted 250-word essays for the chance to win a mortgage payment, according to the (AP). From those entries, 500 winners, those with the most compelling stories, were selected. ING Direct forgave an average of $1,700 of mortgage debt per winning household. A total of more than $860,000 in January mortgage payments were forgiven. is the operating for ING bank, fsb., the nation’s largest direct bank. Headquartered in Wilmington, DE, the company recently acquired ShareBuilder in their continuing effort to meet the financial services needs of Main Street America. More than 7 million Americans have entrusted their savings to ING Direct since 2000.
  • 3:27 PM » EXCLUSIVE: FDIC to Sell IndyMac To Private Equity Firm
    Published Fri, Dec 26 2008 3:27 PM by ml-implode.com
    By Teri Buhl, with contributions from IEHI Staff. Teri Buhl is an investigative journalist covering Wall Street who writes for the New York Post. The FDIC’s most expensive bank failure, IndyMac, is slated to land in the hands of a private equity firm. The winner is New York–based Dune Capital Management, founded by two ex-Goldman partners. Dune’s Co-CEO Dan Niedich was known as the "dean" at Goldman of investing the firm's capital in real estate. Chairman and Co-CEO Steve Mnuchin comes from a family of Goldman bankers. The firm was seeded in 2004 by legendary hedge fund trader George Soros. A sale price for the transaction could not be determined. Dune Capital has recently been cleared for a bank charter. In principle this means the firm could qualify for TARP funds. The Treasury began issuing special expedited bank charters to private equity groups on November 21st, 2008. Rumors swirled the market this month around who the natural bidder for the toxic bank would be, with Bloomberg reporting this week that PNC Financial Services Group and U.S. Bancorp were a likely fit, but the media didn’t envision a “winner take all” outcome to take shape in the form of a private equity firm. Executives inside of IndyMac’s Pasadena office where told Tuesday a deal to sell the whole bank had been made, final contracts were being negotiated, and an announcement would come in the next couple of days. Assets for sale include: $6 billion in retail deposits, 33 California branches, a near-$200 billion loan servicing portfolio and platform, $16 billion in mortgage loans, and its reverse mortgage company Financial Freedom that holds a mortgage book worth $22 billion. A slew of bids came in by the extended deadline of December 15th, but only for the failed bank's individual parts. Bidders fought over hot assets such as its loan servicing portion or the reverse mortgage company. According to an executive inside of IndyMac who was involved in the deal-making, serious players...
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 3:27 PM » Amtrust Bank Added To Ailing/Watch List
    Published Fri, Dec 26 2008 3:27 PM by ml-implode.com
    We have learned that Amtrust AE's were told in a conference call on Monday, December 22, 2008 that loan locks were being suspended "with new locks to resume after 1/1/2009." Given the bank's year-end deadline to conform to regulatory orders, this could be an ominous development as pertains to Amtrust's wholesale operations.
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 12:04 PM » Low Mortgage Rates, Few Qualify
    Published Fri, Dec 26 2008 12:04 PM by Calculated Risk Blog
    From the Miami Herald: Recent drops in interest rates have homeowners rushing to call local banks and mortgage lenders about refinancing. Loan applications are pouring in. Yet, South Florida homeowners are mostly getting a big fat ''No!'' from the bank when they ask to refinance. The chief reason: Falling home values mean they owe more than their homes are worth. ... In South Florida, four in 10 homeowners who bought or refinanced over the past five years owe more on their home than it is worth, according to sales and mortgage data analyzed by Zillow.com ... Many of them chose adjustable-rate loans and other expensive mortgages because that was the only way they could afford the payments. ... ''This is only putting people who are in a good position in a better position,'' [Justin Miller, a broker with Resource Mortgage Group in Plantation] said. ... Before LaPenta begins processing an application, he said he makes sure customers are aware of the essential criteria needed to refinance: 20 percent equity in the property, a homestead exemption, a credit score of 700 or higher, a mortgage debt-to-income ratio of no more than 45 percent and the ability to fully document income and assets. This is a key point - these lower rates don't help underwater homeowners. Also, I think the 45% debt-to-gross income ratio is a little higher than most lenders will allow now.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:33 AM » Credit Crisis - Signs of Progress
    Published Fri, Dec 26 2008 11:33 AM by The Big Picture
    Are the various central bank liquidity facilities and capital injections having the desired effect of unclogging credit markets and restoring confidence in the world’s financial system? This is precisely what the “Credit Crisis Watch” is all about – a regular review of a number of measures in order to ascertain to what extent the thawing of credit markets is under way. Updating the report at this time is also to gauge the credit markets’ reaction to the Federal Open Market Committee’s (FOMC) announcement of a week ago about a Fed funds rate cut and specific actions that would move the Fed further towards a quantitative easing approach to monetary policy. (Also see my “” review.) With the US and some other countries pushing monetary policy into an era of Zirp (zero-interest-rate policy), the three-month dollar LIBOR interest rate that banks charge each other declined sharply to 1.47%. At this level, LIBOR trades at 122 basis points above the upper end of the Fed funds’ target range – still steep compared to the 43 basis-point premium at the start of 2008. Source: Importantly, US three-month Treasury Bills are still yielding almost nothing (0.015%) and are simply a way for nervous investors to “warehouse” their money with safety while receiving no return. 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 1.46% – a level last seen prior to the Lehman bankruptcy in September. Source: The difference between...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 11:33 AM » What Is the Point of Fannie's Directors?
    Published Fri, Dec 26 2008 11:33 AM by Seeking Alpha
    submits: In a world where an AIG offsite meeting can cause a public uproar, it's interesting that so few people seem to care very much about the sums of money being to Fannie Mae's directors. , of course is one of them: Keep in mind that this is a newspaper that is absolutely apoplectic over autoworkers getting $27 an hour. If we assume that the board members on average will devote 500 hours a year to their board duties, this puts their pay rate at $320 an hour.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 11:01 AM » Just Let House Prices Fall To Stimulate Sales
    Published Fri, Dec 26 2008 11:01 AM by ml-implode.com
    "Sambucci makes sense. Without government interference, in the current environment, the trend would be to higher rates and lower prices. At some point, there is an interest rate at which lenders are willing to lend without government backstops. To compensate prospective buyers for the higher rates though, prices have to drop to a more attractive price. After all, it stands to reason that when economic conditions improve, rates will go down and refinancing becomes attractive. Consequently, higher rates are less of a psychological barrier to buying that higher home prices. If the government wants to jumpstart the housing market, they should quit tinkering with it.
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 8:10 AM » Firms Charge Thousands To Modify Mortgages
    Published Fri, Dec 26 2008 8:10 AM by Washington Post
    A growing industry has emerged to take advantage of the unprecedented wave of foreclosures, charging distressed homeowners for help negotiating better loan terms -- a service provided for free or for a nominal fee by many nonprofits.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:10 AM » As Property Values Plunge, Tax Bills Might Not Follow
    Published Fri, Dec 26 2008 8:10 AM by Washington Post
    Homeowners whose property values have plummeted as much as 40 percent are unlikely to see a corresponding drop in their real estate taxes next year, and some might face a tax increase as the counties surrounding the District struggle with huge budget shortfalls.
    Click Here to Read the Full Article

    Source: Washington Post
  • Thu, Dec 25 2008
  • 7:56 PM » Selling Option Adjustable Rate Mortgages
    Published Thu, Dec 25 2008 7:56 PM by The Big Picture
    An excerpt from a training video produced in 2005 by World Savings Bank. The video demonstrates how brokers were encouraged to sell Option Adjustable Rate Mortgages. World Savings Bank Training Video ( click, than scroll down to video on lower left column ) > Source : Allison Abell Schwartz Bloomberg, Dec. 25 2008 http://www.bloomberg.com/apps/news?pid=20601087&sid=auJbdfD2koc0&
    Click Here to Read the Full Article

    Source: The Big Picture
  • 4:18 PM » A Mortgage Regulator Speaks Out
    Published Thu, Dec 25 2008 4:18 PM by Business Week
    Click Here to Read the Full Article

    Source: Business Week
  • 2:28 PM » Once Trusted Mortgage Pioneers, Now Pariahs
    Published Thu, Dec 25 2008 2:28 PM by ml-implode.com
    At the center of the controversy is an exotic but popular mortgage the Sandlers pioneered that helped generate billions of dollars of revenueat their bank. Known as an option ARM — and named “Pick-A-Pay” by World Savings — it is now seen by an array of housing analysts and regulators as the Typhoid Mary of the mortgage industry. ... The Wachovia Corporation, which bought the Sandlers’ bank two years ago, was so battered by the souring portfolio of World Savings that it began writing off losses now projected at tens of billions of dollars and eventually stopped offering option ARMs. Through it all, the Sandlers have maintained they did nothing wrong beyond misjudging the real estate bubble. “I didn’t mislead anybody, and to the best of my knowledge, our company didn’t, though there may have been an isolated case here and there,” Mr. Sandler said. “If home prices hadn’t declined by 50 percent, nobody would be raising these questions.” Mr. Sandler also finds it incredible that borrowers feel victimized by Pick-A-Pay. “All of a sudden their home is worth half of what it was, and they say they didn’t know.” Yet the Sandlers embraced practices like the use of independent brokers who used questionable methods to reel in borrowers. These and other practices, critics contend, undermined the conservative lending practices that the Sandlers built their reputations upon. What Sandler fails to understand is that good intentions don't transmit through a corporate structure -- the only things that determine the outcome are profitability and competition. The only thing that can stop the excess proliferation of a product like POAs would be rigid qualification criteria -- but as we've seen, even those tend to get eroded in "soft" ways (like intimidating underwriters).
    Click Here to Read the Full Article

    Source: ml-implode.com
  • Wed, Dec 24 2008
  • 8:47 PM » GMAC Approved as Bank Holding Company
    Published Wed, Dec 24 2008 8:47 PM by Calculated Risk Blog
    : Order Approving Formation of Bank Holding Companies and Notice to Engage in Certain Nonbanking Activities. Here is interesting part on ownership: To address concerns that GM could control GMAC and GMAC Bank for purposes of the BHC Act, GM has committed to the Board that before consummation of the proposal, GM will reduce its ownership interest in GMAC to less than 10 percent of the voting and total equity interest of GMAC. GM’s remaining equity interest in GMAC will be transferred to a trust that has a trustee acceptable to the Board and the Department of the Treasury, who will be entirely independent of GM and have sole discretion to vote and dispose of the GMAC equity interests. The trustee must dispose of the equity interests held in the trust within three years of the trust’s creation. ... To ensure that Cerberus’s holdings in GMAC are consistent with the Board’s precedent on noncontrolling investments in banks and bank holding companies, each Cerberus fund that holds interests in GMAC will distribute its equity interests in the company to its respective investors. As a result of this distribution, the aggregate direct and indirect investments controlled by Cerberus and its related parties would not exceed 14.9 percent of the voting shares or 33 percent of the total equity of GMAC LLC. ... In addition, Cerberus employees and consultants would cease providing services to, or otherwise functioning as dual employees of, GMAC, and neither Cerberus nor any affiliated entity will have any advisory relationships with GMAC or any investor regarding the vote or sale of shares or the management or policies of GMAC or GMAC Bank.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:47 PM » Bank of England Allowed ‘Crazy Borrowing’
    Published Wed, Dec 24 2008 8:47 PM by The Big Picture
    “We need to develop some new instruments, which sit somewhere between interest rates, which affect the whole economy… and individual supervision and regulation of individual banks. We need to develop something which bridges that gap and directly addresses the financial cycle and prevents the financial cycle and the credit cycle getting out of hand.” > This appears to be a theme: The Bank of England was warned that “crazy borrowing” was taking place during the boom years — but did nothing about it. Partly due to politicas, partly due to their failure to understand the severity of the problem. They did not understand how much the banks had abdicated lending standards, and how that led to a financial crisis. Sir John Gieve said the Bank’s policy-makers were well aware that dramatic rises in the price of houses and other assets were unsustainable, but still underestimated the danger this posed to the long-term health of the economy. In a television interview Sir John, who sits on the interest rate-setting Monetary Policy Committee, said that rate changes were a “blunt instrument” and admitted that the Bank’s power to alter them was not enough to control the economy. Sir John, who is charged with ensuring financial stability and was heavily criticised last year by the Treasury Select Committee for apparently failing to control the Northern Rock crisis, admitted that taxpayers may not get all their money back from the bail-out of the bank and other institutions. He said: “There are some books - Northern Rock, Bradford & Bingley - which the taxpayer’s now holding, which clearly have a level of defaults in them, [I'm] not quite sure how that will balance out against the residual of the capital. “As for the more mainstream banks, yes I think they’ve got a commercial future and I’m sure that in time they will … revive and start building and growing as commercial entities again.” Funny, there is no Fannie Mae, Freddie Mac, or CRA in the UK. However can we explain mtheir...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:47 PM » Preparing for the shortest honeymoon ever
    Published Wed, Dec 24 2008 8:47 PM by themessthatgreenspanmade.blogspot.com
    From the current issue of :
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 10:35 AM » Video Interview: Roubini preaches more gloom
    Published Wed, Dec 24 2008 10:35 AM by The Big Picture
    , professor at Stern School of Business at New York University and chairman of RGE Monitor, is renowned for having foreseen the current economic malaise a number of years ago. He was scorned at the time by mainstream economists for being a crank, but the same people are now lauding him for his foresight and paying top price for the consulting services of . Aline van Duyn, US Markets Editor of the Financial Times, has just conducted a three-part video interview with Roubini on topics ranging from the likely duration of the recession to regulation, the demise of more hedge funds and the outlook for stocks, commodities, currencies and bonds. In Part 1 of the interview, Roubini expects 2009 to be a year of economic stagflation and recession. Whether or not it persists into 2010 will depend on how aggressive and effective policy actions are: monetary and fiscal policy and efforts to recapitalize financial institutions in the US and elsewhere. He believes there could be a return to positive economic growth by 2010. The European Central Bank should follow the Federal Reserve and cut interest rates further. The US needs a plan to reduce the debt burden to US households. The remedies will cost taxpayers a lot of money. Click or on the image below to view the first part of the interview. In Part 2 , Roubini blames the Federal Reserve, regulators, the greed and arrogance of Wall Street and credit rating agencies for fueling a global asset bubble. The financial system has already changed radically. The times of self-regulation – which means no regulation – are gone. There is always a question of who regulates the regulators. A significant amount of fiscal resources should be devoted to appropriate regulation. The system needs more regulators and more auditors. This is not the end of capitalism or the end of market economies, but there has to be an appropriate role for governments to make sure the financial system and the real economy are working the way they should. Click for Part...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 6:57 AM » Sheila Bair Needs to Get Over This Loan Mod Thing
    Published Wed, Dec 24 2008 6:57 AM by Seeking Alpha
    submits: Sheila Bair warns of a “backlash” against MBS investors who’ve challenged loan modifications in court, lenders have “an obligation to modify, not to foreclose.” Oh, really? An obligation to whom, exactly? There’s no shortage of duties in the money management business, but this sounds like a new one. Those MBS holders who have Bair so exercised, for example, do have a duty to act in the best interests of the investors who’ve entrusted them capital. It’s basic. Suing lenders and servicers to prevent an unnecessary reduction in value of the loans those investors own strikes me as precisely what the bondholders should be doing. If the head of the FDIC knows of something that trumps bondholders’ fiduciary duty, I’d love to hear what it is.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Tue, Dec 23 2008
  • 11:39 PM » Fannie, Freddie Cut Deal With Cuomo on Appraisals
    Published Tue, Dec 23 2008 11:39 PM by Washington Post
    Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, reached a new agreement with New York Attorney General Andrew Cuomo to ensure independent home appraisals, dropping a requirement that would have prohibited lenders from using in-house staff to value houses.
    Click Here to Read the Full Article

    Source: Washington Post
  • 10:53 PM » Frontier Investment to close - Rainland unknown
    Published Tue, Dec 23 2008 10:53 PM by ml-implode.com
    We'd been watching for news about Rainland Mortgage Company when the Register-Guard newspaper reported: "Frontier -- a fully-owned subsidiary of Selco Community Credit Union -- told its investors that it will file dissolution papers with the Oregon Secretary of State by Dec. 31..."
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 4:21 PM » AmEx: We're getting TARP, too
    Published Tue, Dec 23 2008 4:21 PM by CNN
    American Express Co. announced Tuesday that it had received preliminary approval for a $3.9 billion government bailout investment.
  • 1:44 PM » Pay Option ARMs - The Implosion Is Still Coming Despite Low Rates
    Published Tue, Dec 23 2008 1:44 PM by mrmortgage.ml-implode.com
    There is some serious Pay Option ARM (POA) misinformation going around. Everywhere you look there are stories about how the low index value on the LIBOR will automatically ‘fix’ Pay Option ARMs and drop borrower’s payments to almost nothing. Sorry folks, no cigar. Like the failed mortgage modification efforts and foreclosure moratoria you read about almost daily, this will be a non-starter for most. The POA was a favorite across all borrower types especially the middle to upper-end home owner in the bubble states. The broad failure of this loan type will have severe consequences on already depressed CA real estate and on the middle to upper-end home owners in particular. Monthly Payments / Neg-Am Set-up / Recasts / Qualifying / Negative-Equity Pay Option ARMs have four or five monthly payment choices. The majority pay the minimum monthly fixed payment rate, known as the ‘teaser’ rate. The percentage of borrowers who opt for the lowest payment has increased as values have fallen. The minimum monthly payment increases 7.5% per year regardless of what happens to the underlying index value. Therefore, this recent drop in rates means nothing for most POA home owner’s monthly mortgage-related outgo. With the low underlying index values borrowers won’t accrue as much negative amortization but at the end of the first 5-years, most will still see their payment jump sharply. If the underlying indices stay low for years into the future it will make for lower adjustments upward several years from now on subsequent resets, which may be helpful for some. But this drop in rates does little for those who have had their loan for a few years in the near-term. These borrowers accrued large amounts of negative-amortization as the indices soared from mid-2004 to 2007 and this has to be factored into the first reset. Past Underwriting Indiscretions — for much of the time that POA’s were in existence many banks qualified the borrowers at the minimum monthly payment rate or based upon interest...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 1:12 PM » the "D" word (depression) will start to become more widely accepted
    Published Tue, Dec 23 2008 1:12 PM by ml-implode.com
    Okay, so 3 trillion is a lot of money. But it doesn't appear to be working. It just gets sucked up by the balance sheets of banks who hold hundreds of billions worth in derivative contracts that now, apparently, have little or no value. Don't fear. There has been an additional 5 trillion earmarked for the same purpose. Most believe that eventually banks will start lending again and people will start borrowing again, and the game will start all over. To me it is clear that this will never work. My reasons are that psychology has already been impaired and will not be repaired until two preconditions have been met: 1) Enough time has elapsed for people to forget about the crazy speculation of the past 2) Asset prices fall by a large enough degree that they reflect the average person's ability to purchase them with the fruits of their labour We also get a shout-out in this article. Much thanks (though the link is wrong).
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 1:12 PM » Just Say No to Commercial Real Estate Beggers
    Published Tue, Dec 23 2008 1:12 PM by Seeking Alpha
    Tom Lindmark submits: If you read this earlier and are just now scraping yourself off of the ceiling, I apologize making you go ballistic once more. The WSJ and others reported that the new beggar at the Treasury’s bailout window is the commercial real estate industry. A recent letter sent to Treasury Secretary Henry Paulson, and signed by a dozen real-estate trade groups, painted a bleak scenario: “Right now, we believe there is insufficient systemic capacity to refinance expiring, performing commercial real-estate loans,” said the letter. “For many borrowers, [credit] simply is not available,” the letter noted.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 11:13 AM » New Home Sales in November
    Published Tue, Dec 23 2008 11:13 AM by Calculated Risk Blog
    The Census Bureau , New Home Sales in November were at a seasonally adjusted annual rate of 407 thousand. This is the lowest sales rate since 1982. Click on graph for larger image in new window. The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted). Notice the Red columns for 2008. This is the lowest sales for November since 1981. (NSA, 28 thousand new homes were sold in November 2008, 27 thousand were sold in November 1981). As the graph indicates, sales in 2008 are substantially worse than the previous years. The second graph shows New Home Sales vs. recessions for the last 45 years. New Home sales have fallen off a cliff. Sales of new one-family houses in November 2008 were at a seasonally adjusted annual rate of 407,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.9 percent below the revised October of 419,000 and is 35.3 percent below the November 2007 estimate of 629,000. And one more long term graph - this one for New Home Months of Supply. "Months of supply" is at 11.5 months. The months of supply for October was revised up to 11.8 months - the ALL TIME RECORD! For new homes, both sales and inventory are falling quickly. And on inventory: The seasonally adjusted estimate of new houses for sale at the end of November was 374,000. This represents a supply of 11.5 months at the current sales rate. Inventory numbers from the Census Bureau do not include cancellations and cancellations are falling, but are still near record levels. Note that new home inventory does not include many condos (especially high rise condos), and areas with significant condo construction will have much higher inventory levels. This is a another very weak report. I'll have some charts on existing home sales and more on new home sales later today ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:12 AM » Mortgage Modification Can Be Trying, Chaotic
    Published Tue, Dec 23 2008 11:12 AM by loanworkout.org
    Hope Now, the mortgage industry’s alliance intended to help struggling homeowners, announced Monday it’s helped almost one-million home-owners get loan modifications this year. But, advocates for homeowners say the group is inflating its success. Homeowners who’ve tried, say it can be trying - and time consuming - to get a bank to agree to change the [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 11:11 AM » This is Why California Has 8 of the 10 of the Worst Real Estate Markets in the US
    Published Tue, Dec 23 2008 11:11 AM by loanworkout.org
    I have always said that lenders targeted homeowners in the Golden State of California. The reason that lenders made more loan here is simple, more money per unit. Why set up operations in Alaska or New Mexico, when you can open up several mortgage chop shops in Cali, place your street level dealers on every [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 11:10 AM » Homeowner Aid May Double Under Bush Loan Initiative
    Published Tue, Dec 23 2008 11:10 AM by loanworkout.org
    Voluntary modifications by mortgage lenders are “too little, too late,” said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts. As mounting job losses cause foreclosure rates to rise, “we clearly need a more activist government intervention,” he said. Hope Now projects 950,000 loan modifications for 2008, including 208,000 for [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 11:09 AM » Miracle on 34th Street and Commercial REITs
    Published Tue, Dec 23 2008 11:09 AM by Seeking Alpha
    submits: You have to love family movie night. Last night we watched the John Hughes version of Miracle on 34th Street . In the not too distant past, I distinctly remember going into the colossal department stores as a kid, sitting on Santa Claus' lap, getting a picture with Santa and taking a ride down the slide back to mom and dad. Big Cleveland Department stores like May Company, Hallie's, and The Bing Company stood as icons of a thriving 1970s era retail with big train displays, Winter Wonderland villages, and even a few elves. One scene from the movie which really caught my eye was the flood of people coming in these stores to visit Santa Claus. Cole's had the best Santa Claus, and everybody else was jealous. We went out to see the real Santa Claus the other night. This required a track to Great Northern Mall on the west side of Cleveland. All that I could think of was a 40 minute drive, and another hour wait to see Santa. However, much to my chagrin, we were met with a 10 minute wait. And this guy is supposed to be the best Santa in Cleveland. According to the photographers, business was down approximately 30% from last year. That would suggest that 30% less people found themselves in the mall thus far during Christmas and Hanukkah shopping.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 11:08 AM » When mortgage rescues go bad
    Published Tue, Dec 23 2008 11:08 AM by CNN
    That lenders are ramping up their attempts to help troubled home borrowers is the good news.
  • 11:08 AM » CIT to receive $2.33B from government program
    Published Tue, Dec 23 2008 11:08 AM by ml-implode.com
    "Commercial financial firm CIT Group Inc. said Tuesday it received preliminary approval to obtain $2.33 billion as part of the government's $700 billion bank investment program. . . . CIT recently announced it was raising $300 million through a public stock offer and bolstering its capital through a debt exchange offer as it worked to win approval to become a bank holding company."
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 8:34 AM » Check out these 2010 real estate prices
    Published Tue, Dec 23 2008 8:34 AM by themessthatgreenspanmade.blogspot.com
    It is not clear how they came up with these housing price forecasts over the next couple years in this Forbes on the the nation's ten worst real estate markets. It should be quite clear, however, that if these numbers are anywhere close to being accurate, things will be much, much worse in California before long.
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 8:34 AM » Americans think Madoff's behavior is common - poll
    Published Tue, Dec 23 2008 8:34 AM by CNN
    Most Americans believe that investment fraud like the recently revealed Ponzi scheme run by Bernard Madoff happens regularly on Wall Street, according to a recent survey.
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