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Housing Bubble Bursting?
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Denis??moh malekpour
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No hard feeling, no personal attack, no censor
Denis and Roger
I do respect Brad too personally and I like to be continued. I also respect his opinion and ideas and if he takes these posts personally which are articles from the press and are public information and have nothing to do with him because there is no personal comments or opinion about them, I apologize to him. I am sure you know that these articles are in the Internet and might be right or wrong and anyone can challenge them or confront their writers but censoring these articles because they are not in favor of a company or a person is a little too much in my opinion. I give Brad a credit for which he is quick to correct if something is wrong but sometimes he goes over board. He called me a liar on his earlier post because I made a comment on my post about an article in a reference to his post. I misplaced Al-A with sub-prime and he jumped on me and called me a liar for that. how would you like to be called a liar in a public forum? I also asked him for help on a listing that I am using as a comp and he didn’t want to help because of his responsibility and I agree with him. But regarding the posted articles, they are not intended to attack anyone personally. No body has made any personal comment on thodr posts and as I said, they are public information and could help appraisers to understand what kinds of loans are out there and who is making them. For example I didn’t know what liars loans were and who were making them and how do they do them. When I read the article about it, I thought there are some appraisers out there who don’t know what is liar loan or if they use appraisal or AVM for those loans. Did you know in details about them? May be Roger knew about them but I didn’t know them.
We often criticize USPAP. Should it be offensive to USPAP instructors and be censored?
We often post critical articles about the Fannie Mae. Should it be offensive to fannie mae lenders and be censored?
I don’t know how a critical article about a company should be offensive to a person who works for that company?
Denis and Roger
I do respect Brad too personally and I like to be continued. I also respect his opinion and ideas and if he takes these posts personally which are articles from the press and are public information and have nothing to do with him because there is no personal comments or opinion about them, I apologize to him. I am sure you know that these articles are in the Internet and might be right or wrong and anyone can challenge them or confront their writers but censoring these articles because they are not in favor of a company or a person is a little too much in my opinion. I give Brad a credit for which he is quick to correct if something is wrong but sometimes he goes over board. He called me a liar on his earlier post because I made a comment on my post about an article in a reference to his post. I misplaced Al-A with sub-prime and he jumped on me and called me a liar for that. how would you like to be called a liar in a public forum? I also asked him for help on a listing that I am using as a comp and he didn’t want to help because of his responsibility and I agree with him. But regarding the posted articles, they are not intended to attack anyone personally. No body has made any personal comment on thodr posts and as I said, they are public information and could help appraisers to understand what kinds of loans are out there and who is making them. For example I didn’t know what liars loans were and who were making them and how do they do them. When I read the article about it, I thought there are some appraisers out there who don’t know what is liar loan or if they use appraisal or AVM for those loans. Did you know in details about them? May be Roger knew about them but I didn’t know them.
We often criticize USPAP. Should it be offensive to USPAP instructors and be censored?
We often post critical articles about the Fannie Mae. Should it be offensive to fannie mae lenders and be censored?
I don’t know how a critical article about a company should be offensive to a person who works for that company?
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Hailing from Pima County, Arizona.....where things are "slower" than year or so ago....but that just means, back to "normal" ! Arizona and the "baby boomers" keep a steady market
Randolph Kinney
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Subprime-related short interest jumps
http://www.marketwatch.com/news/sto...4B-450D-B011-BFE1B08127A5}&dist=TQP_Mod_mktwN
http://www.marketwatch.com/news/sto...4B-450D-B011-BFE1B08127A5}&dist=TQP_Mod_mktwN
Scott Kibler
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Brad's a big boy and he is certainly contributing his insight on a volunteer basis. He has made his employment with a big time playa no secret in the past and now that they are in the news it is reasonable for us to get his spin.
Interesting that Indymac is making such a big noise to separate themselves from "subprime" something I predicted the so-called alt-A guys would do many pages ago in this thread. They probably even believe they're different themselves but they are kidding themselves, they suffer from a similar set of assumptions regarding the loans they produce.
Brad: you never addressed my inquiry regarding prepay speeds from 03/13/07:
Interesting that Indymac is making such a big noise to separate themselves from "subprime" something I predicted the so-called alt-A guys would do many pages ago in this thread. They probably even believe they're different themselves but they are kidding themselves, they suffer from a similar set of assumptions regarding the loans they produce.
Brad: you never addressed my inquiry regarding prepay speeds from 03/13/07:
Quote:
Originally Posted by Brad Ellis
Someone brought up Countrywide. Now that is a good example I think. They did 2.6B in sub-prime last month- down from 2.8B- right? So, let's put this in perspective.
If we assume they do that volume every month it is $30B. Last year they did a total of over $600B. So, we are talking aobut 5% of the portfolio (up to 6 if we assume their annual volume will go down 20%). So, we have 19% of these going into default- note I said default because the majority of these do cure.
Now, let's further say that 50% will cure- and that is a very low percentage. Let's also assume ultimate losses of 50% of the loan balance (not atypical). So now you have about $6-700 million in actual losses- or about 1/10 of 1%.
Even if every one ended up in foreclosure they would still be at 2% or less. That might not make for a profitable year but it will not close them down. Adn, given that virtually all lenders have greatly restricted their guidelines today, it is not likely to continue for long. And CW's current volume is done under their new tighter guidelines.
What is the average life of the portfolio under which you base these assumptions? Is that based on recent prepay speeds? Subprime loans tended to prepay pretty darn fast in recent years. What do you suppose would be the default rate should the average life double, or triple?
Brad Ellis
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Guys,
For the record I have no problem with anyone posting an actual article mentioning my firm or any other one. What I ask is that no one just jump to the conclusion that a particular article refers to my firm if it does not mention my firm. For example, Randolph's last post included Indymac and it appears to be factual that the stock is down whatever percentage it is- that is no secret.
Now Moh came back and used incorrect information again by citing our Alt-A component at 90% when I specifically- today- told this forum it was 70%. That is the kind of stuff that bugs me.
Further, I have stated that I believe that much of this is Wall St. hype that is clearly intended to drive down the price of either a particular stock or a sector. Looks spot on to me.
BTW, watch for a major announcement on someone buying up yet another subprime shop- probably by end next week.
Brad
For the record I have no problem with anyone posting an actual article mentioning my firm or any other one. What I ask is that no one just jump to the conclusion that a particular article refers to my firm if it does not mention my firm. For example, Randolph's last post included Indymac and it appears to be factual that the stock is down whatever percentage it is- that is no secret.
Now Moh came back and used incorrect information again by citing our Alt-A component at 90% when I specifically- today- told this forum it was 70%. That is the kind of stuff that bugs me.
Further, I have stated that I believe that much of this is Wall St. hype that is clearly intended to drive down the price of either a particular stock or a sector. Looks spot on to me.
BTW, watch for a major announcement on someone buying up yet another subprime shop- probably by end next week.
Brad
Randolph Kinney
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For the record Brad, that article is not saying Indymac stock price is down, which it is that too.
That article is saying that investors, arbitrageurs and speculators have shorted Indymac stock. Shorted stock means you borrow stock you don't own and you sell it in the open market thereby creating a short position or an obligation to replace that stock. If the stock price goes down, you buy the stock back, replacing the borrowed shares. You keep the difference in price. If the stock goes up from the price you shorted at, and you are forced to buy it back (margin call), you lose the difference in price.
Shorted stock is another way people with money, vote. When a stock is shorted, it is a vote of no confidence with the expectation the stock price will continue to go down once other investors realize there is a problem or reason to sell their shares.
Please note Brad, 18.7% of the total outstanding shares of Indymac stock available for trading have been sold short, almost 1 in 5. That is a big bet or vote of no confidence.
Yes Brad, you are right for the wrong reason.
Brad Ellis
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Moh,
Now if you were an expert on the mortgage business some comments might not get my goat so much, but...
You now pick up the phrase "liar loans" to characterize Alt-A, but you apparently do not know what Alt-A is.
Please tell me what you would call it if the partner in a major LA law firm did a stated income loan in which he stated he made $20,000 a month in salary, or an 82 year old guy who buys a house with no money down using an interest only loan fixed for 5 years, or a restaurant owner who says he makes $5,000 a month but will only provide copies of his checking account statements?
Apparently you'd call them "liar loans" even if not one of them told a lie at all. Well, actually, both the lawyer and the restaurant owner probably did lie- only on the low side.
I asked around about Alt-B and not one of my long experienced folks had ever heard that term before last week. You see, WE call that subprime, BUT, unless someone can make subprime connect to Alt-A they will not be able to convince anyone that these loans are a problem- so they now try to call them Alt-B.
We have been making these type of loans for nearly 15 years. We know how to do them. We cannot control Wall St. nor can we control anyone who chooses to believe everything they read or only what they choose to believe.
But, I think perhaps you ought to keep this up. Maybe some national press will pick up your comments and there will be the self-fulfilling prophecy and all the lenders will go out of business.
Then the only work you will have is for that lawyer who said he earned $20K/month, only you will have to pray that he really was not telling a LIE!
Brad
Now if you were an expert on the mortgage business some comments might not get my goat so much, but...
You now pick up the phrase "liar loans" to characterize Alt-A, but you apparently do not know what Alt-A is.
Please tell me what you would call it if the partner in a major LA law firm did a stated income loan in which he stated he made $20,000 a month in salary, or an 82 year old guy who buys a house with no money down using an interest only loan fixed for 5 years, or a restaurant owner who says he makes $5,000 a month but will only provide copies of his checking account statements?
Apparently you'd call them "liar loans" even if not one of them told a lie at all. Well, actually, both the lawyer and the restaurant owner probably did lie- only on the low side.
I asked around about Alt-B and not one of my long experienced folks had ever heard that term before last week. You see, WE call that subprime, BUT, unless someone can make subprime connect to Alt-A they will not be able to convince anyone that these loans are a problem- so they now try to call them Alt-B.
We have been making these type of loans for nearly 15 years. We know how to do them. We cannot control Wall St. nor can we control anyone who chooses to believe everything they read or only what they choose to believe.
But, I think perhaps you ought to keep this up. Maybe some national press will pick up your comments and there will be the self-fulfilling prophecy and all the lenders will go out of business.
Then the only work you will have is for that lawyer who said he earned $20K/month, only you will have to pray that he really was not telling a LIE!
Brad
Brad Ellis
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Randolph,
From a prior post you asked me if I expected default rates and foreclosures to continue to increase.
Answer: Yes, but not at the rate that some of these chicken littles expect.
Yes across all loan types, but again prime and Alt-A not by very much. More for ARMs and less for fixed.
And finally, bad underwriting does not create defaults; they are caused by the borrower either deciding not to pay or being unable to pay. And, if I may be so bold, most of these properties will have a market value about as high as when the loan was made- or higher- unless it was overvalued by an appraiser.
Brad
From a prior post you asked me if I expected default rates and foreclosures to continue to increase.
Answer: Yes, but not at the rate that some of these chicken littles expect.
Yes across all loan types, but again prime and Alt-A not by very much. More for ARMs and less for fixed.
And finally, bad underwriting does not create defaults; they are caused by the borrower either deciding not to pay or being unable to pay. And, if I may be so bold, most of these properties will have a market value about as high as when the loan was made- or higher- unless it was overvalued by an appraiser.
Brad
Randolph Kinney
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Brad, happy to say you and I agree. Defaults will continue to rise across the spectrum of loan quality. How high? That depends to a large extent on the economy. Bernake said monetary policy is still aimed at combating inflation even though risks to economic growth are multiplying. I will post that link for you.
As for house values being the same as when the loan was made, that depends on what neighborhood you are talking about and how long ago. If, for example, that house is located in San Diego and you bought two years ago, you might just find that is not true. Or, as I just learned today, Irvine has a 17% decline in value just from last year. That Irvine statistic is in the article about subprime lender headquarters eviscerated.
Let us just hope most banks or lenders have loan that are outside of California where your statement might be true.
As for house values being the same as when the loan was made, that depends on what neighborhood you are talking about and how long ago. If, for example, that house is located in San Diego and you bought two years ago, you might just find that is not true. Or, as I just learned today, Irvine has a 17% decline in value just from last year. That Irvine statistic is in the article about subprime lender headquarters eviscerated.
Let us just hope most banks or lenders have loan that are outside of California where your statement might be true.
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