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  • Wed, Dec 10 2008
  • 10:56 AM » Tycoon's Fall Is a Warning
    Published Wed, Dec 10 2008 10:56 AM by WSJ
    The decline in the fortunes of Spain's Sanahuja family and its real-estate group, Metrovacesa, is a preview of what is in store for Europe's real-estate tycoons.
  • 10:41 AM » Donald Trump Blames Crisis On Divine Intervention
    Published Wed, Dec 10 2008 10:41 AM by ml-implode.com
    Missing in all of this is what our goal is. Is it to just rebuild the financial architecture that already failed, to go back to status quo ante, to put the same bankers and institutions that betrayed their customers and investors back in business? The goal should not be to revive financial markets as they have been but to remake them. As Nobel-winning economist Joe Stiglitz explains, “The failure of our financial system to do what it is supposed to do matches in destructive grandeur the macro-economic failures of the Great Depression.” The flip title of this article is not as silly as you might think. The general attitude amongst the regulators and the financial bigwigs is that the crisis is a totally un-anticipatable, "act of God," and therefore they bear no personal responsibility. As long as this remains the situation (and the public keeps buying it), we won't be able to right the ship.
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 9:40 AM » Ways and Means: How to Revive the Non-Agency Mortgage Market
    Published Wed, Dec 10 2008 9:40 AM by Seeking Alpha
    submits: Press reports detail the continued deterioration of the housing market. Revival will require the participation of more than “just” the government controlled housing agencies - Ginnie Mae, Fannie Mae (FNM), and Freddie Mac (FRE). It will also require the revival of the private label MBS market. Prior to what we quaintly called "the subprime crisis", private label securitizations - of jumbo, subprime, or “AltA” loans - accounted for roughly half the market. New private label MBS issuance is virtually non-existent today, due to lack of investor confidence reflecting their unexpectedly poor credit performance.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:39 AM » Bank of America Extends More Credit to a Bankrupt Enterprise
    Published Wed, Dec 10 2008 9:39 AM by Seeking Alpha
    submits: . (BAC) said it will provide a “limited amount” of additional loans to an Illinois door-and-window factory, just a day after sit-in protests escalated into an intense labor-relations fight that threatened to have financial ramifications for the banking giant.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:38 AM » Fed Ponders Issuing Debt to Finance Its Mushrooming Balance Sheet
    Published Wed, Dec 10 2008 9:38 AM by Google News
    The Wall Street Journal, in a typically anodyne bit of reporting, tells us that the Fed is considering selling its own debt to finance its balance sheet, Its good old buddy, the Treasury Department, which heretofore has been selling bills in part on behalf of the Fed, now has a big enough financing calendar in the offing that it no longer can lend a helping hand. Now the significance of the recent arrangement has largely been ignored, How independent can our central bank be if it depends on the Treasury for dough? With the media regularly making approving noises about how Paulson and Bernanke work together, the idea that the Fed is supposed to be something other than an extension of the Executive Branch seems to have been lost (but then again, maybe we all kidded ourselves about Fed independence. Willem Buiter, even before the Paulson-Bernanke comradeship, said the Fed was one of the least independent central banks, second only to the Bank of Japan). After months of serial bailouts, proliferating new programs, and soaring and swooning markets, the notion of the Fed selling its own debt no doubt sounds like a mere footnote to recent events. But back in April, it for how to circumvent its balance sheet constraints via its preferred outlet, Greg Ip of the Wall Street Journal. Let's look at how this option was regarded back then. From a WSJ Economics Blog post, "": Since the Federal Reserve began rolling out ever more creative steps to unfreeze credit markets, it has sold or pledged a growing portion of its portfolio of Treasurys in order to put loans on its balance sheet to banks and securities dealers backed by mortgage-backed securities and other shunned collateral. This has led some observers to worry that if the Fed continues at such a pace, it could run out of ammunition, forcing it to move to quantitative easing – in essence, buying up assets wholesale and allowing the federal funds rate to fall to zero. Yves here. We are already at that point, and quantitative...
  • 9:38 AM » AIG Up to Its Old Tricks, Yet Another $10 Billion in Losses
    Published Wed, Dec 10 2008 9:38 AM by Google News
    The Wall Street Journal reports in a story frustratingly sketchy on key details that AIG has sprung another leak, or more accurately, had an ongoing leak that has just now come to light. The amount at issue, $10 billion, seems small compared to the $150 billion the insurer has already managed to extort secure from the government. But now it gets interesting. First, the $10 billion is outside the $150 billion in various facilities on offer, begging the question of how AIG will come up with the dough. Second, the losses resulted from "speculative trades,' not customer business gone bad, which is what the insurer previously said caused its losses. And these trades took place within the now-notorious credit-default-swaps-writing financial products group. The risk controls on the financial products team were apparently non-existent. The size of the profits it was reporting should have lead to heavy scrutiny. That sort of result is generally the result of considerable risk-taking, either market risk or reputation risk (i.e., you are fleecing your customers and they might wake up and come after you, as they did with Bankers' Trust, putting the bank on a terminal slide). From the : American International Group Inc. owes Wall Street's biggest firms about $10 billion for speculative trades that have soured... The details of the trades go beyond what AIG has explained to investors...AIG has said that its trades involved helping financial institutions and counterparties insure their securities holdings. The speculative trades, engineered by the insurer's financial-products unit, represent the first sign that AIG may have been gambling with its own capital.... AIG's financial-products unit, operating more like a Wall Street trading firm than a conservative insurer selling protection against defaults on seemingly low-risk securities, put billions of dollars of the company's money at risk through speculative bets on the direction of pools of mortgage assets...
  • 9:38 AM » AIG owes Wall Street $10B - report
    Published Wed, Dec 10 2008 9:38 AM by CNN
    Struggling insurance giant America International Group owes Wall Street firms $10 billion from trades that went sour, according to sources cited by The Wall Street Journal.
  • Tue, Dec 9 2008
  • 10:12 PM » Ex-HUD Secretaries Call for New Housing Oversight Agency
    Published Tue, Dec 09 2008 10:12 PM by Washington Post
    Asserting that a lack of government oversight led to the current housing crisis, two former Housing and Urban Development Secretaries joined civil rights groups today in calling for a new government agency to check predatory lending and housing discrimination.
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:56 PM » Subprime Lending Volume Over the Years
    Published Tue, Dec 09 2008 9:56 PM by www.thetruthaboutmortgage.com
    As I’ve mentioned numerous times before, there were a number of problems that led up to the current mortgage crisis. One was the explosion of subprime lending, which saw production spike during the end of the housing boom between 2005 and 2007, before ultimately coming to a standstill. As illustrated by the graph above (data courtesy National [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 3:56 PM » Former GSE chiefs scolded for careless lending
    Published Tue, Dec 09 2008 3:56 PM by Washington Post
    WASHINGTON (Reuters) - Four men who led failed mortgage finance giants Fannie Mae and <FNM.P> Freddie Mac <FRE.P> were called before a U.S. House of Representatives panel on Tuesday and chided for making risky loans that fueled a housing crisis and helped push the economy into recession.
    Click Here to Read the Full Article

    Source: Washington Post
  • 3:26 PM » The CRE Bust: Quick Overview
    Published Tue, Dec 09 2008 3:26 PM by Calculated Risk Blog
    This post is a summary of recent commercial real estate (CRE) data suggesting that investment in non-residential real estate will decline sharply over the next several quarters. Note: There is another problem with CRE too (not discussed here) - many existing properties were recently purchased at prices that were based on overly optimistic pro forma income projections. These loans typically included reserves to pay interest until rents increased (like a negatively amortizing option ARM), and it is likely that many of these deals will blow up when the interest reserve is depleted - probably in the 2009-2010 period. Historically investment in non-residential structures investment in residential by 5 to 8 quarters. The reasons are pretty clear - the commercial builders (for malls, offices, lodging, etc.) usually build after they "see the rooftops", i.e. the residential is in place. It appears the Commercial Real Estate (CRE) bust has started. Here is a summary of recent data: the American Institute of Architects: Click on graph for larger image in new window. On the heels of a six-point drop in September, the Architecture Billings Index (ABI) plummeted to its lowest level since the survey began in 1995. As a leading economic indicator of construction activity, the ABI shows an approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI rating was 36.2, down significantly from the 41.4 mark in September (any score above 50 indicates an increase in billings). The inquiries for new projects score was 39.9, also a historic low point. emphasis added The key here is that the index fell off a cliff in early 2008, and that there is "an approximate nine to twelve month lag time between architecture billings and construction spending". We should expect weaker non-residential structure investment for the foreseeable future (at least through 2009). From the...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:25 PM » Fannie and Freddie Ignored Risk to Stay Competitive
    Published Tue, Dec 09 2008 3:25 PM by www.thetruthaboutmortgage.com
    Despite pleas from both its chief risk officers, Fannie Mae and Freddie Mac engaged in risky lending to stay relevant in the mortgage market, according to documents obtained by the Washington Post. In one memo to former Freddie chief Richard Syron, former chief enterprise risk officer David Andrukonis warned the company was buying mortgages that “target [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 3:24 PM » The #1 Reason Why Loan Modifications Are Not Working: Mortgage Servicers Suck!
    Published Tue, Dec 09 2008 3:24 PM by loanworkout.org
    Many people in the media and our government are trying to figure out why loan modifications are not working and it is really quite simple to figure out. Yet, here we are almost two years into this foreclosure mess and it’s as if we are all stuck on stupid. One doesn’t have to look further than [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 3:24 PM » SunTrust: Economy has turned "decidedly bleaker" over last month
    Published Tue, Dec 09 2008 3:24 PM by Calculated Risk Blog
    From the Atlanta Business Chronicle: "[T]he economic situation is decidedly bleaker than was the case when we announced our initial, partial regulatory capital transaction under the Treasury program," said James M. Wells III, SunTrust chairman and CEO, in a news release. "Given the increasingly uncertain economic outlook, we have concluded that further augmenting our capital at this point is a prudent step, especially if the current recession proves to be longer and more severe than previously expected." SunTrust for the previous $3.5 billion on Oct 27th, and received the funds on Nov 17th - less than a month ago! Here was the CEO comment then: "Our participation in the Capital Purchase Program enhances SunTrust's already solid capital position and will permit us to further expand our business and take advantage of growth opportunities. In addition, we are pleased to support the Treasury in its ongoing effort to address dislocations in financial markets and spur the market stabilization that is in the public interest." At the end of October, SunTrust was "supporting the Treasury" and "expanding" their business. Now the situation is "decidedly bleaker".
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:24 PM » Credit Suisse Forecast: 8.1 million foreclosures by 2012
    Published Tue, Dec 09 2008 3:24 PM by Calculated Risk Blog
    In a research note titled "Foreclosure Update: over 8 million foreclosures expected" (no link, hat tip Frank) updated last week, Credit Suisse analysts are now forecasting 8.1 million homes will be in foreclosure by the end of 2012, representing 16% of all households with mortgages. The analysts projected this could be as low as 6.3 million in a mild recession, with a somewhat successful loan modification program (re-default rates at around 40%), and as high as 10.2 million in a more severe recession. Note: the Comptroller of the Currency John C. Dugan this morning that re-defaults rates appear to be well in excess of 50% for recent mods, much higher than the hoped for 40%. What really stood out in the forecast was the shift from mostly subprime foreclosures to non-subprime (Alt-A and Prime) foreclosures. This fits with some of the we've been discussing - that foreclosures will now be moving up the price chain. Click on graph for larger image in a new window. This graph shows the Credit Suisse estimate of loans in Foreclosure and REO as of Sept 2008 (in blue) and their base forecast for new foreclosures by the end of 2012, for both subprime and other mortgages (Alt-A and Prime). Credit Suisse believes 2008 will be the peak year for subprime foreclosures, although subprime foreclosures will remain elevated over the next few years. However they are forecasting a significant increase in foreclosures over the next couple of year for non-subprime loans. When I spoke at the Inman Real Estate conference in July 2008, I suggested that real estate agents should expect increasing foreclosures in high end areas. As I've previously , my comments were greeted with incredulity. I wonder if views have changed? We're all subprime now!
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:45 AM » FOMC Revolt ?
    Published Tue, Dec 09 2008 11:45 AM by The Big Picture
    Interesting FOMC fight developing over the powers of the Chairman versus the governors: “Federal Reserve’s interest-rate target is getting close to zero, and so is the power of the Fed’s regional bank presidents. The district chiefs’ authority over borrowing costs has been marginalized in the past two months as Chairman Ben S. Bernanke and the Fed Board of Governors in Washington made their own decisions on emergency measures to flood the economy with cash. “The Board has usurped authority,” said William Poole, former president of the St. Louis Fed and now a senior fellow at the Cato Institute in Washington. “This dramatic change in policy direction has not been announced or even acknowledged.” Bernanke must now try to bring the Federal Open Market Committee, which includes district presidents and Fed governors, along as he turns to more radical strategies, such as buying Treasuries to drive down long-term rates. A lack of consensus at next week’s FOMC meeting could result in muddled communication that confuses investors and undermines confidence.” You may not know this, but Greenspan had his wings clipped in the early 1990s when his Board revolted against his inter-meeting rate cuts: “Chairman Greenspan found himself hobbled by a near open revolt of FOMC governors. The Fed “curtailed the authority of its chairman, Alan Greenspan, to reduce rates on his own” in between meetings. Greenspan cut rates half a point just a few days prior to the February FOMC meeting, despite some signs of economic recovery. This upset the FOMC Board of Governors. Why would a Fed chair risk the ire and support of his board – and only a few days before the next FOMC meeting? One cannot help but notice how unusual this action was: A half point cut, made by a Fed chair acting alone, mere days before the next FOMC meeting and with the Dow already in rally mode. While one can never know exactly what another person is thinking, Greenspan’s actions certainly have the appearance of attempting to ...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:37 AM » Pelosi: Stimulus bill ready soon
    Published Tue, Dec 09 2008 8:37 AM by CNN
    Read full story for latest details.
  • 8:36 AM » Former Fannie Mae, Freddie Mac execs to testify
    Published Tue, Dec 09 2008 8:36 AM by Washington Post
    WASHINGTON -- Lawmakers are poised to trade barbs Tuesday about who deserves most of the blame for the collapse and government takeover of mortgage finance titans Fannie Mae and Freddie Mac.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:36 AM » Internal Warnings Sounded on Loans At Fannie, Freddie
    Published Tue, Dec 09 2008 8:36 AM by Washington Post
    Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm, hurt borrowers and generate more risky loans throughout the industry.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:36 AM » Foreclosure Reduction Effort Yielding Mixed Results, Report Says
    Published Tue, Dec 09 2008 8:36 AM by Washington Post
    A new government report released yesterday underscored the limited success of industry efforts to reduce foreclosures by modifying mortgage loans, offering fuel for both sides in the debate over whether modification efforts should be redoubled or abandoned.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:21 AM » AIG Fesses Up to Handing Out More Non-Bonus Bonuses
    Published Tue, Dec 09 2008 8:21 AM by Google News
    By way of background, we posted on November 27: How can you give cash compensation to an executive, yet claim it is not a salary or bonus? You call it a "retention bonus," No, I am not making this up. Note that AIG chose to make this disclosure the day before Thanksgiving, selecting a time when it would attract the least notice. Not that it really matters. The talk about restricting executive compensation to bailout recipients has been just that, talk. It turns out that AIG was less than forthcoming in its pre-holiday revelation, and is now having to admit to more bonus payments during a busier news period. Did AIG really not have a good count two weeks ago, or did it think it could get cute and not admit to the full scope of executive largess? Or perhaps it decided, not having gotten as much flack as it feared, to expand the program. From : American International Group Inc., the insurer whose bonuses and perks are under fire from U.S. lawmakers, offered cash awards to another 38 executives in a retention program with payments of as much as $4 million. The incentives range from $92,500 to $4 million for employees earning salaries between $160,000 and $1 million, Chief Executive Officer Edward Liddy said in a letter dated Dec. 5 to Representative Elijah Cummings. The New York-based insurer had previously disclosed that 130 managers would get the awards and that one executive would get $3 million. “I remain concerned, as do many American taxpayers, that these retention payments are simply bonuses by another name,” Cummings said in letter responding to Liddy. AIG, which received a U.S. rescue package of more than $152 billion, has been criticized for saying it will eliminate bonuses for senior executives while still planning to hand out “cash awards” that double or triple the salaries of some managers. The payments are designed to keep top employees at AIG while Liddy seeks to sell units and pay back the federal government, which owns 79.9 percent of AIG........
  • 8:21 AM » Barron's: Laing's Mortgage Relief Plan Could Actually Work
    Published Tue, Dec 09 2008 8:21 AM by Seeking Alpha
    submits: Three cheers for Jonathan Laing for this weekend for how to solve the mortgage crisis. Laing’s entire article is definitely worth reading. In a nutshell, though, his plan boils down to four basic actions. Laing says the federal government should: Offer to refinance every U.S. homeowner’s mortgage at a 4.5% fixed rate. Make similar mortgages available to home buyers (just as the Treasury is said to have considered this week). Use Fannie Mae (FNM) and Freddie Mac (FRE) to repackage all new loans as safe securities for investors. Modify the $500 billion of subprime and Alt-A loans in arrears. Extend their maturities to 40 years; in certain cases, pay down principal, as well. Laing’s plan would provide three huge benefits. First, it would help delinquent borrowers who want to stay in their homes by substantially reducing their monthly payments. Second, risk of moral hazard would be reduced since all borrowers, not just delinquent ones, would be eligible for rate relief. Lastly, the entire economy would get a needed jolt, as borrowers’ reduced monthly payments would cause disposable income to soar.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Mon, Dec 8 2008
  • 4:53 PM » Chinese Trolling Streets of US for Bargains
    Published Mon, Dec 08 2008 4:53 PM by www.thetruthaboutmortgage.com
    As U.S. housing prices continue to plummet, wealthy Chinese citizens are cruising the streets of America in Hummers and Lincoln Navigators looking for cheap real estate, according to a report in the LA Times. Per the publication, “home-buying trips to America” are becoming a more sought after tour package for the Chinese, thanks to an easing [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 4:53 PM » Barney Frank takes on Bush over bailout money
    Published Mon, Dec 08 2008 4:53 PM by Washington Post
    WASHINGTON -- A top House Democrat threatened Monday to tie up the remaining half of the $700 billion financial industry rescue money unless the Bush administration provides some of it for borrowers facing foreclosure.
    Click Here to Read the Full Article

    Source: Washington Post
  • 3:34 PM » Small banks want their bailout
    Published Mon, Dec 08 2008 3:34 PM by CNN
    The Treasury Department better order some new checkbooks.
  • 3:34 PM » Half of modified mortgages in default again
    Published Mon, Dec 08 2008 3:34 PM by CNN
    Read full story for latest details.
  • 2:47 PM » New Jersey Gov Wants Foreclosure Freeze
    Published Mon, Dec 08 2008 2:47 PM by www.thetruthaboutmortgage.com
    New Jersey Governor Jon Corzine today called for a three-to-six month foreclosure moratorium to give borrowers more time to modify their existing mortgages. While speaking at a housing conference hosted by the Office of Thrift Supervision in Washington, Corzine also pleaded that TARP funds should “absolutely” be used for loan modifications. His sentiment supports a recent plan [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 2:47 PM » Cuomo: Merrill CEO bonus is 'shocking'
    Published Mon, Dec 08 2008 2:47 PM by CNN
    New York Attorney General Andrew Cuomo said Monday that the $10 million bonus reportedly being considered for Merrill Lynch's chief executive John Thain is "nothing less than shocking."
  • 10:19 AM » Banking Regulator Played Advocate Over Enforcer
    Published Mon, Dec 08 2008 10:19 AM by ml-implode.com
    When Countrywide Financial felt pressured by federal agencies charged with overseeing it, executives at the giant mortgage lender simply switched regulators in the spring of 2007. The benefits were clear: Countrywide's new regulator, the Office of Thrift Supervision, promised more flexible oversight of issues related to the bank's mortgage lending. For OTS, which depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, Countrywide was a lucrative catch. But OTS was not an effective regulator. This year, the government has seized three of the largest institutions regulated by OTS, including IndyMac Bancorp, Washington Mutual -- the largest bank in U.S. history to go bust -- and on Friday evening, Downey Savings and Loan Association. The total assets of the OTS thrifts to fail this year: $355.7 billion. Three others were forced to sell to avoid failure, including Countrywide. In the parade of regulators that missed signals or made decisions they came to regret on the road to the current financial crisis, the Office of Thrift Supervision stands out. This article is striking in how it illustrates the effect of bad direction and permissiveness from nominal regulators: OTS did not force the company to address the problem with reserves, though agency examiners worked full-time inside Washington Mutual's Seattle headquarters. Polakoff said OTS closely monitored the company's allowance for loan losses and considered it sufficient. "They had good models in place calculating expected losses on the loan portfolio," he said. But the agency did not fix a basic problem with how Washington Mutual predicted future losses. According to a confidential internal review in September 2005, the company had not adjusted its prediction of future losses to reflect the larger risks associated with option ARM loans. The review described those loans as "a major and growing risk factor in our portfolio."...
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 10:18 AM » The Next Foreclosure Wave: Large Percentage of Small Business Owners Have Toxic Mortgages
    Published Mon, Dec 08 2008 10:18 AM by loanworkout.org
    “While Wall Street firms can comfortably borrow billions at 2.28 percent of interest, their smaller counterparts have no such arrangement. Tens of thousands of small businesses will fail this year due to government inaction and lack of credit availability. With 60 percent of national jobs to its credit, small business industry is clearly an economic [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 10:17 AM » Merrill's Thain seeking 2008 bonus of $10 million: report
    Published Mon, Dec 08 2008 10:17 AM by Reuters
    (Reuters) - Merrill Lynch & Co Chief Executive John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered company's compensation committee is resisting his request, the Wall Street Journal said, citing people familiar with the situation.
  • 10:17 AM » Former CEO Raines Says Fannie's Woes Not of His Making
    Published Mon, Dec 08 2008 10:17 AM by Washington Post
    A few months ago, Franklin D. Raines was traveling in Italy when he received an e-mail saying that Republicans were trying to tie Barack Obama to him in the presidential campaign. Raines had left the helm of Fannie Mae in 2004 amid controversy, and now Fannie was faltering, taken over by the government and blamed by some critics as a cause of the financial crisis. A McCain campaign ad featured Obama and Raines side by side and suggested Raines had instigated a financial fraud at Fannie.
    Click Here to Read the Full Article

    Source: Washington Post
  • 10:17 AM » HSBC to double mortgage lending
    Published Mon, Dec 08 2008 10:17 AM by www.ft.com
    The bank announces plans to increase loans to UK homeowners next year, bucking the trend of its rivals to continue pulling back from the shrinking mortgage market
  • 10:02 AM » Two Mortgage Markets Emerging From the Crisis
    Published Mon, Dec 08 2008 10:02 AM by Seeking Alpha
    Hundreds of mortgage lenders have disappeared, and banks are leery of taking their traditional place again as mortgage lenders. Many homebuilders and banks have noted a marked increase in FHA or government loans taking the place of traditional mortgage lenders for buyers with lower credit scores. High end builder Toll Brothers (TOL) has seen a rise in FHA-backed loans, but says it won’t really be impacting its business in the future. Likely because they don't really have lower end buyers. Perhaps two mortgage markets are emerging from this crisis. Private lenders such as life insurance companies and the finance arms of homebuilders that will only take a chance and lend on the highest FICO score borrowers. In particular, those who are willing, at least in practice, to put 30% down to buy a house. And then there's the government—the only lender who will take a chance on the lower end buyer.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:02 AM » The Banker Magazine: World's Best Banks of 2008
    Published Mon, Dec 08 2008 10:02 AM by Seeking Alpha
    submits: One of the worst performing sectors in the current bear market is the financial sector. Many bank stocks are down over 50%. The financials sector in the S&P 500 Index is down 56.3% year-to-date. On the international level, many well known banks have had to raise capital to stay in business. Others have been gobbled up by their competitors. In this scenario, magazine presented its Ninth Bank of the Year Awards for 2008.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Sun, Dec 7 2008
  • 9:29 PM » Ohio: One in Eight In Foreclosure
    Published Sun, Dec 07 2008 9:29 PM by ml-implode.com
    Nearly one of eight homeowners in Ohio with mortgages were behind on their payments or in foreclosure at the end of the third quarter. That's worse than the national rate of more than 10 percent, according to the Mortgage Bankers Association, which released its quarterly delinquency survey Friday.
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 9:29 PM » Closing on Mortgage by Dec. 31 Could Earn Big Deductions
    Published Sun, Dec 07 2008 9:29 PM by Washington Post
    Weak housing prices are a seller's nightmare, but a boon for buyers able to scoop up a bargain. Although most expenses connected with buying a home are not deductible, there's a big exception when it comes to points paid to get a mortgage. Each point is 1 percent of the mortgage amount. So if you pay two points on a $200,000 mortgage, that's $4,000.
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:14 PM » Countrywide Class Action: What’s a Good Sale?
    Published Sun, Dec 07 2008 9:14 PM by The Big Picture
    Just catching up on some other things that need attention. Over the past year or more we have been writing about the Countywide Financial saga and the refusal of Bank of America (NYSE:BAC) to do the right thing and explicitly state that the Countrywide bonds were money good. See a couple of comments: After a couple of lawsuits and a lot more behind-the-scenes communication, it looks like most of the bond holders are whole or holding an explicit representation from BAC on that count. But the story continues. A few months ago, CFC, then controlled by BAC but prior to the close, negotiated a settlement with a number of states attorneys general for various alleged violations of law. Unfortunately for holders of the pass throughs, the company formerly traded under the ticker CFC agreed to stick the $8.4 billion cost of the settlement to them via a haircut on all pass throughs. Now two units of BAC have been sued by a group of bold holders seeking to essentially undo the settlement, with potentially destabilizing effects on what remains of CFC, a direct sub of BAC which still, in turn, owns Countrywide Bank FSB. We long speculated that CFC might be pushed into a liquidation, even after the close with BAC, and the litigation seemed the wild card. But this development is certainly a novel example of corporate debtor litigation. “To settle allegations of widespread predatory lending made against it by the Attorneys General of at least 15 States, Countrywide Financial Corporation has agreed to reduce payments due on hundreds of thousands of mortgage loans by a total of up to $8.4 billion,” states the class action lawsuit filed against BAC by Greenwich Financial Services et al in the southern district of NY. What is remarkable about this litigation is two things. First, the Plaintiffs are bondholders suing directly and seeking class status in New York Supreme Court (the Court of Appeals is the highest court in NY State), without either obtaining or compelling action by the indenture...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:13 PM » How credit cards become asset-backed bonds
    Published Sun, Dec 07 2008 9:13 PM by The Big Picture
    from on . Mortgages aren’t the only financial instruments that get turned into securities. In this video, Marketplace Senior Editor Paddy Hirsch explains how companies make money by buying credit card debt and bundling it. All of “The Marketplace Whiteboard” videos can be accessed at www.marketplace.org and are part of “Fallout: America’s Financial Crisis,” Marketplace’s comprehensive coverage of the current financial crisis. hat tip
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:26 PM » Getting Mortgage Fraud Down to an Art
    Published Sun, Dec 07 2008 8:26 PM by The Big Picture
    Astounding: Orson Benn, once a vice president at the nation’s largest subprime lender, spent three years during the height of the housing boom tutoring Florida mortgage brokers in the art of fraud. From his office in New York, he taught them how to doctor credit reports, coached them to inflate income on loan applications, and helped them invent phantom jobs for borrowers. While prosecutors looked at roughly $100 million in loans written by Benn and a cadre of co-workers, that represents just a portion of the loans they approved during his aggressive expansion into Florida. The Miami Herald found that Benn’s network approved more than $550 million in home loans from Tampa to West Palm Beach to Miami, according to an analysis of court records. In Miami-Dade County alone, Benn’s office approved more than $349 million in loans on 1,913 homes — more than one in three have since fallen into foreclosure, the analysis shows. Valdes brokered at least 100 of those loans worth $22 million — nearly all based on false and misleading financial information, the newspaper found How did they doctor loan apps? Simple mortgage broker fraud: “non-existent employers, grossly inflated salaries and sudden, drastic increases in the borrower’s net worth.” There apparently was an art to falsifying the documentation, and Benn taught his brokers precisely how, falsifying income and employment data: He taught one of those brokers, Scott Almeida, a convicted cocaine trafficker, to prepare phony income statements and doctor credit reports. A few months later, Almeida introduced Benn to Tampa brokers David Tuggle and Eric Steinhauser. After Benn taught them to prepare phony documents, they began to write millions of dollars in loans. The accompanying is a must see, and the entire article definitely worth reading. Nothing on predatory borrowers, though . . . > Previously: (January 2008) http://www.ritholtz.com/blog/2008/01/tyler-cowen-predatory-borrowing-the-bigger-problem/ Source: JACK DOLAN, MATTHEW...
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    Source: The Big Picture
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