IEHI Feed: The Mortgage Lender Implode-o-Meter


    Luster Of First-Time Buyer Credit Is Going To Wear Off
    " Home sales are up this month, but this "good news" is not going to last"

    DR Horton Losses Narrow in FY2009
    "DR Horton posted a net loss of $231.9m, or $0.79 per share, for its fiscal Q409 that ended on Sept. 30, compared to a net loss of $799.9m or $2.53 per share, during the same quarter of fiscal year 2008."

    "Should Come as No Shock to Anyone"

    The big picture is this. There is most probably a second wave of mortgage defaults in the immediate future as a result of Alt-A and Option-ARM resets. Yet our capacity to deal with these losses has already been strained by the first round that largely ended in March...

    Increasingly, the Fed has decided to forgo the idea of repurchase agreements (which require the seller to repurchase the security at a later date), and is instead making outright purchases of the debt of government sponsored enterprises (GSEs such as Fannie Mae and Freddie Mac). Again, the Fed used to purchase only Treasuries outright, but it is purchasing agency securities with the excuse that these securities are implicitly backed by the U.S. government.

    This strikes me as a huge mistake, because it effectively impairs the Fed's ability to get rid of the securities at the price it paid for them, should Congress change its approach toward the GSEs....

    In my view, deeper loan losses are ahead, and if we deal with the next round the same way that we dealt with the last, we will ultimately succeed in debasing the U.S. dollar.



    Single-Family Inventories Remain Oversupplied by 900,000 Units
    ``Inventory of single-family homes fell 60,000 units in October. They remain oversupplied by 908,000 units when compared to the long-run average. ''

    "No Right to Know": A Wall Street Financial Site's Attack on Congress and Ron Paul
    " The primary enforcer of this cartel is the Federal Reserve System. The FED provides the fiat money that in turn provides banks with reserves to lend. It also serves as the lender of last resort -- officially, to the government; operationally, to the banks. This keeps the largest banks from having to face free market competition."

    S&P PE Ratio Reaches 140; Highest Ever. Now Censored By S&P.
    ``Some high-level decision-maker at Standard & Poor's has decided that the public should no longer be allowed easy access to this crucial number: the Price/Earnings ratio of the S&P 500. That number went above 140 on September 30, 2009 -- the highest ever recorded. It had continued upward all year.''

    Why College Could Be a Bad Investment
    "In this environment, opportunity cost trumps tradition. For many undergraduates and parents, the cost of going to college is now far greater than the supposed benefits."

    Cuomo Took Campaign Cash From Lawyers With Matters Before Him
    " Boies Schiller & Flexner LLP, a New York law firm led by David Boies, gave Cuomo $35,000 this year, records show. The firm represents former American International Group Inc. Chief Executive Officer Maurice ?Hank? Greenberg in a civil fraud case the attorney general is pursuing. Lawyers defending Dell Inc., Deutsche Bank AG and a former state political party chief in Cuomo cases also contributed to him, records show."

    AIG Re-brands Asset Management Business
    "American International Group (AIG: 35.22 +0.34%) re-branded its asset management and investment advisory business to PineBridge Investments. The renaming of the business is part of a transition stage into an independent business."

    Jamie Dimon seen as good fit for Treasury
    "Sources tell The Post that a number of policy makers have begun mentioning Dimon as a successor to Geithner, whose standing in Washington has suffered because of the country's high unemployment rate, the weakness of the dollar, the slow pace of the recovery and the government's mounting deficit."

    Owners' 'strategic defaults' on mortgages depend largely on how far underwater they are
    " Research shows that the bigger the difference between what people owe and their home's value, the more likely they are to walk away, even if they can still afford to make mortgage payments."

    Bailout Ben iPhone App
    "Fantastic new iPhone App called Bailout Ben"

    Bills Yielding Zero as Stocks Soar Make 1938 Moment
    "For the first time in seven decades, Treasury bills are paying no interest while stocks continue to appreciate -- a divergence in U.S. financial markets that might be perilous if Federal Reserve Chairman Ben S. Bernanke didn?t know all about 1938."

    MBS Spreads to Widen, Rates to Rise in 2010: Smith Breeden
    "Although demand should keep asset-backed securities (ABS) spreads tight into Q110, wider spreads in mortgage-backed securities (MBS) will follow the Federal Reserve?s exit of a major MBS purchase program in 2010, according to bi-monthly commentary by global asset management firm Smith Breeden Associates."

    U.S. Existing Home Sales Rise 10%, More Than Forecast

    Sales of existing U.S. homes increased more than forecast in October to the highest level since February 2007, spurred in part by a tax credit that lured first-time buyers.

    Purchases rose 10.1 percent to a 6.1 million annual rate from a 5.54 million pace in September, the National Association of Realtors said today in Washington. The median sales price decreased 7.1 percent from October 2008, the smallest decline in more than a year.



    Wave of Debt Payments Facing U.S. Government
    "?The government is on teaser rates,? said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates lower deficits. ?We?re taking out a huge mortgage right now, but we won?t feel the pain until later.?"

    Back in the USSA
    "In European?s eyes, the US populace seems terribly uninformed about most political matters ? and vote accordingly. Europeans seem to be able to debate an issue without the vitriol and rancor that accompanies the rabid partisanship in the US. (One German $1+ Billion dollar fund manager privately remarked that Rupert Murdoch would be prosecuted in much of Europe). The two party system of the US is thought to be utterly corrupt, and is a joke in Parliamentary countries. Europeans recognize the United States as a ?Corporatocracy? ? government for and by Corporations."

    Weaker Data and the "Nascent Recovery"
    "After spending $trillions one would have hoped to see something more than an expected GDP revision of 2.8%. Looking ahead MarketWatch is asking Do weaker data show recovery is stalling?"

    Illegal housing bidding on rise

    When foreclosure homes come up for public auction in Phoenix, a minimum opening bid is set and bidding is open to anyone. At least that is the way it's supposed to work.

    But a Republic investigation into the daily public auctions held on the Maricopa County Courthouse steps and at some local law offices suggests a growing number of homes are sold for less than the posted opening bid.



    Goldman?s Non-Apology
    We want to thank The New York Times for saying about Goldman Sachs what we said months ago.

    Goldman has repaid its initial $10 billion bailout allotment, but that is only a sliver of its taxpayer support. The firm was paid $12.9 billion, for example, in the bailout of American International Group, and a report by the bailout?s inspector general refutes Goldman?s claim that it did not need the money. Perhaps the biggest continuing prop is that the government clearly considers Goldman too big to fail, which means that taxpayers are on the hook if Goldman faces the abyss again.

    Welcome to the party boyz, better late than never.