Housing Bubble Bursting?

[Randolph Kinney]

One hedge fund that stumbled - subprime holdings

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BC84873E0%2D3B92%2D4931%2DA56B%2DC30774F8F7F8%7D&siteid=mktw&dist=nwhpm

SAN FRANCISCO (MarketWatch) -- Second Curve Capital, a $500 million hedge-fund firm run by Tiger Management alumnus and former top bank analyst Thomas Brown, has had a tough start to 2007 partly because of trouble in the subprime-lending sector.

The Second Curve Opportunity Fund, a smaller fund that takes more risk, was down 10% in January after jumping 54% last year, Barclay's data show.

Some of Second Curve's largest holdings at the end of 2006 continued to decline in February, suggesting that the hedge-fund firm has suffered more losses this month.

CompuCredit Corp., a subprime lender that specializes in credit cards, auto loans and payday advances, has lost more than 20% so far this year. Declines have been particularly sharp during the past week. CompuCredit was one of Second Curve's largest holdings at the end of 2006, according to a Securities and Exchange Commission filing.

Second Curve also owns shares of New Century Financial Corp. and Accredited Home Lenders Holding Co. two subprime-mortgage lenders that have been hit hard this year. New Century is down 50% in 2007, while Accredited is off 18%.

The stocks are not listed as holdings in the firm's year-end SEC filing. However, another filing on Feb. 9, said that Second Curve owned 8.5% of Accredited. Since that date, shares of Accredited have dropped almost 15%.

 

[Greg Bell]

All the talking heads on MSNBC were laughing at a recession by the end of the year.I think the amount of losses for these so called "experts" will be in the billions.Put you cash in the coffee can , or mattress , if you give your money to those idiots you deserve what you get.One goofball actually said when this sub prime mortgage thing clears up by the middle of the year the economy will surge forward , does he know how long a real estate turnaround takes??here's the latest , a BANK failure..

First bank failure in years happens in Pittsburgh

The streak is over.

After nearly 21/2 years without a bank failure, a small Pennsylvania bank collapsed this month.

Metropolitan Savings Bank of Pittsburgh was closed by its state banking department. About $12 million in deposits were assumed by Allegheny Valley Bank of Pittsburgh.

The Federal Deposit Insurance Corp. said Metropolitan had about $1.2 million in deposits in 70 accounts that could exceed the federal insurance limit.

The last bank failure occurred in June 2004, the longest period without a failure since the FDIC was formed in 1934.

A Miami bank analyst had suggested earlier that bank regulators would strive to save Bradenton's troubled Coast Bank of Florida so it wouldn't break the no-failure streak.

The last bank failure in Florida was Miami's Hamilton Bank in 2002.

The bank, which had a branch in Sarasota, was liquidated by the FDIC, but some large depositors didn't get all their money back.

Hamilton's chairman was sentenced to 30 years in prison for a fraud scheme that falsely inflated the bank's earnings to bolster its stock price.


Sarasota Coastal aligns with Breiter

The Sarasota Coastal Credit Union has aligned with Breiter Capital Management to provide investment services for some members.

Breiter, based on Anna Maria Island, will focus on middle to high net-worth members of the credit union.

President Tom Breiter and vice president Joe Downs each will manage the investment portfolios of clients.

Sarasota Coastal has provided financial advisory services to its middle-income members, but it said demand for investment advice was growing from members approaching retirement and those planning to build nest eggs.

Breiter founded his firm in 1992 and employs the skill-weighted portfolio methodology.

Sarasota Coastal also announced a long-term financial commitment to support the largest of the six theaters at the Lakewood Ranch Cinemas.


Saldana to heard R-G Crown

R-G Crown Bank has appointed Rafael Saldana as president.

Saldana was most recently executive vice president and business development manager at the Casselberry-based thrift, which has branches in Sarasota and Englewood.

He replaces Rolando Rodriguez, who remains CEO of the bank as well as president/CEO of parent company R & G Financial.


BoA looking at Countrywide?

Bank of America is downplaying speculation that it is interested in buying Countrywide Financial Corp., the nation's largest mortgage lender.

London's Financial Times recently reported that Bank of America, the nation's second-largest bank and the biggest in Florida, was in talks with Countrywide about forging an alliance that would create a mortgage lending behemoth.

But CEO Kenneth Lewis said that while the bank wants to sell more mortgages, it isn't attracted to the mortgage industry's business model.

Countrywide is likely to sell, says Florida bank analyst Richard Bove of Punk Ziegel & Co., and may already be accepting offers. He believes B of A might be a bidder.

"The bank continually indicates that it wants to be No. 1 in virtually every aspect of domestic banking," Bove said. "It has clearly indicated that it wants to be No. 1 in the mortgage sector."

Lewis also said it's unlikely the Charlotte, N.C.-based bank would buy a smaller rival this year.

The bank already holds 9 percent of U.S. bank deposits. Federal law bars it from holding more than 10 percent.
_____

 

[Randolph Kinney]

Inflation up, market down, warning for carry trade

Commerce Department report showed U.S. core consumer prices rose 0.3% last month.

Market opened down 174 points.

Rodrigo Rato, managing director of the International Monetary Fund, on Thursday reiterated his concerns about the dangers of carry trades. The yen rallied more than 2% on Tuesday as a rise in risk aversion triggered by an almost 10% slump in Chinese shares prompted traders to unwind carry trades.

NEW YORK (MarketWatch) -- Treasurys rose sharply Thursday, sending yields lower, buoyed by safe-haven buying amid another steep decline in the stock market and talk in the market that a major U.S. lender is in trouble.

T. J. Marta, fixed-income strategist at RBC Capital Markets, said "increasing fears that subprime blowups will spread through the financial system are driving markets, and continued soft U.S. data will lead Treasurys higher."

LONDON (MarketWatch) -- U.K. stocks dropped starkly and dramatically on Thursday, with concerns about a rapid rise in the Japanese yen and a warning from a U.S. lender offset well-received earnings from British companies, including banking giant Royal Bank of Scotland.

SunTrust, the U.S. bank, cited for its profit warning a $40 million increase in loan-loss provisions -- not a huge amount, but one that added to recent concerns about lenders, as well those who have purchased loans in securitized transactions.

The British pound dropped 1.5% against the yen, and the U.S. dollar also dropped sharply.

Citigroup gets option to buy ACC's mortgage operations

 

[Randolph Kinney]

Countrywide: 1 in 5 subprime delinquent

http://www.bloomberg.com/apps/news?pid=20601087&sid=aA8HMZYtX_.w&refer=home

Countrywide collected payments on $1.28 trillion in mortgages as of Dec. 31, of which $116.3 billion, or about 9 percent, were below prime. The company is the largest subprime mortgage servicer in the U.S., with a 9.7 percent share, according to newsletter Inside B&C Lending.

 

[Randolph Kinney]

Freddie Mac Sells $6 Billion of Notes, as Agency Premiums Rise

http://www.bloomberg.com/apps/news?pid=20601206&sid=aYk.7x7w2zR0&refer=realestate

Yield premiums on so-called agency debt have widened in the past week as investors seek a haven in risk-free Treasuries amid a global slump in stock markets and other higher risk assets. Agency bonds include debt sold by government-chartered mortgage companies Freddie Mac and Washington-based Fannie Mae, and the Federal Home Loan Bank systems.

 

[Fred]

What do they call you guys?
Desperately Seeking Downtrends?


Here is some more "bad" news for some of you with respect to housing from OFHEO. Someone forgot to tell these folks about the bursting bubble and its attendant economic cataclysm.
--------


U.S. HOUSE PRICE APPRECIATION RATE STEADIES

WASHINGTON, DC - The rate of home price appreciation in the U.S. remained steady in the fourth quarter of 2006, extending a general trend of deceleration begun earlier in the year. Home prices, based on repeat sales and refinancings, were 1.1 percent higher in the fourth quarter than they were in the third quarter of 2006. This is slightly above the revised growth estimate of 1.0 percent from the second to the third quarter. Prices in the fourth quarter of 2006 were 5.9 percent higher than they were in the same quarter in 2005.

Price appreciation in 2006 was substantially smaller than the tremendous price gains of recent years, which ranged from 7.4 percent in 2002 to 13.2 percent in 2005. The figures were released today by OFHEO Director James B. Lockhart, as part of the House Price Index (HPI), a quarterly report analyzing housing price appreciation trends.

"These data show that, on the whole, prices are still rising, albeit at a much slower pace," said Lockhart. "This suggests that house price appreciation is, for now, more in line with historical norms."

 

[Greg Bell]

Wow...they are artists when in comes to cooking the books.Enron mentality.
Do you see a lot of appreciation in your neighborhood???

 

[Austin]

Sanity Check: You guys think things are bad, listen to this. I am working on a proposed four unit first of a two phase project consisting of 4 proposed town house units with 4 to follow. The developer assembled the land and the building to land ratio resulting from the assembly is minimal and far better than any of the competition meaning got a good deal on the land.
Reported development cost of 1st four units including total land cost $315,000 estimated market rent at $600 per month.
Just finished level B market analysis on apartment property in the city. General and household populating is declining. According to the market analysis based on ESRI data we have a -2,400 year supply of apartment and rental housing. Based on the developer’s estimated rent, which is about $75 above market, the estimate value by the income and sales comparison approach is $216,000 not counting excess land whose value in my mind is a ? Am I missing something here? This is the second apartment project I have done this year and none of the data includes new units completed recently.
Where did I go wrong? If I keep doing Markey analyses I will be out of business. I think I will just do a level A market analysis and play dumb. When I took the AI class a few years ago, Fanning the instructor gave us this rule of thumb: “When a level A analysis conflicts with a Level B analysis, always go with the Level A analysis.” Meaning I assume if the world is going to hell don’t rock the boat. The only sense I can make out of this is maybe a new market segment is developing for this type property but still the rent rate won't make it float.:new_all_coholic:

 

[Randolph Kinney]

More bad news for subprime lenders

http://www.marketwatch.com/news/story/fremont-results-delay-sparks-subprime/story.aspx?guid=%7B98C4AB7C%2DD27C%2D47F1%2D8201%2D783B99A4478D%7D

Fremont results delay sparks subprime concern


Fitch downgrades lender's debt rating, fearing big loan repurchases

SAN FRANCISCO (MarketWatch) - Fremont General Corp.'s decision to delay its fourth-quarter results and annual filing with the Securities and Exchange Commission this week has sparked concern about the company's subprime mortgage business and triggered downgrades from Fitch Ratings.

"There's speculation that Fremont, like other subprime originators, has been hit with lots of loan repurchase requests from early loan defaults," Arscott said.

IndyMac Bancorp, which specializes in a type of mortgage called Alt-A loans, said Thursday it sees tough conditions ahead for loan originations and credit, and warned earnings in 2007 will be lower than 2006. The stock fell 3.7% to $33.07, leaving it down more than 25% this year.

 

[moh malekpour]

What do they call you guys?
Desperately Seeking Downtrends?


Here is some more "bad" news for some of you with respect to housing from OFHEO. Someone forgot to tell these folks about the bursting bubble and its attendant economic cataclysm.
--------


U.S. HOUSE PRICE APPRECIATION RATE STEADIES

WASHINGTON, DC - The rate of home price appreciation in the U.S. remained steady in the fourth quarter of 2006, extending a general trend of deceleration begun earlier in the year. Home prices, based on repeat sales and refinancings, were 1.1 percent higher in the fourth quarter than they were in the third quarter of 2006. This is slightly above the revised growth estimate of 1.0 percent from the second to the third quarter. Prices in the fourth quarter of 2006 were 5.9 percent higher than they were in the same quarter in 2005.

Price appreciation in 2006 was substantially smaller than the tremendous price gains of recent years, which ranged from 7.4 percent in 2002 to 13.2 percent in 2005. The figures were released today by OFHEO Director James B. Lockhart, as part of the House Price Index (HPI), a quarterly report analyzing housing price appreciation trends.

"These data show that, on the whole, prices are still rising, albeit at a much slower pace," said Lockhart. "This suggests that house price appreciation is, for now, more in line with historical norms."

Nice try Steven but you either didn't see the following problem with HPI with regarad to housing market indicators or you ignored them:
1- OFHEO index data includes only single family homes? All condos, manufacture homes, and small income properties are excluded from that index. That is 50% of US housing market and everyone knows that the condo sales are the most declined properties and are included in the housing market indication.
2-HPI data includes both purchase and refinance data for their idnex but one of the conditions of market value is a willing buyer negotiating with willing seller. Refinancing is only willing borrower negotiating with willing loan officer and then there is a willing appraiser who may skew the value without anyone noticing it. I wonder why there is less priced appreciation in purchase data than refinance data. The HPI data which includes both purchase and refinance data shows 1.1 percent appreciation but purchase alone data shows only 0.5 percent apprecaition. Do you know why? This is the quote from HPI which explains it

An index using only purchase price data indicates less price appreciation for U.S. houses than the HPI. A purchase-only index increased 4.1 percent between the fourth quarter of 2005 and the fourth quarter of 2006, compared with 5.9 percent for the HPI.
The purchase-only index increased 0.5 percent (seasonally-adjusted) between the third
and fourth quarters of 2006, compared with 1.1 percent for the HPI. The difference
between the two appreciation measures may reflect differences in the types of homes
refinanced versus those purchased or changing biases in the appraisal valuations and
different proportions of appraisal and sales price data.

3- HPI is always one quarter behind. They just got the 4th quarter of 2006 while we are in the 2nd half of 1st quarter of 2007. The market is rapidly changing.

4- HPI nationwide index is very general and doesn't say much about the real estate market which is a local market. I look at the regional or large cities index for my local market trend analysis but not the national index.