Housing Bubble Bursting?

[Workbox]

American Home Mortgage takes a hit.

http://www.marketwatch.com/news/sto...x?guid={03BA5065-9AD3-445D-9064-0EDCD6D55E4B}

 

[Randolph Kinney]

Prime mortgage originator hit by subprime credit crunch

American Home hit by margin calls; halts dividends; shares slump

SAN FRANCISCO (MarketWatch) -- American Home Mortgage Investment Corp. shares came under pressure on Monday after the lender said that recent disruption in credit markets has triggered "significant" margin calls.

American Home's shares fell 39%, to $6.39 in pre-open trading on Monday morning. Trading in the stock on the New York Stock Exchange has since been halted.

Some mortgage originators, including American Home, rely on credit lines from large banks to help them "warehouse" loans they've offered. When they've accumulated enough mortgages, the loans are packaged as mortgage-backed securities and sold on to institutional investors in the asset-backed securities market. Without such lines of credit, these lenders find it tough to keep originating loans.

Credit-market disruptions have caused major write-downs in the value of American Home's portfolio of loans and securities. In the wake of those drops, the company said its lenders issued margin calls, which are demands for more money or collateral to back loans.

American Home's shares are down roughly 70% so far this year. They have been hit hard by turmoil in the subprime mortgage market, although the company doesn't offer those types of home loans.

 

[Mike Garrett RAA]

the sky is falling, the sky is falling! Meanwhile the stock market is making a correction long over due.

 

[Greg Bell]

The reaper knows..Indy is next..

FLASH: American Home Mortgage crashes 35% before trading halted, mortgage meltdown and liquidity crisis spreading

The ratings agencies totally blew it, and now investors in subprime, alt-a liar's loans, jumbo loans and even prime mortgages are getting destroyed.

Why?

Because the system got gamed by corrupt mortgage brokers, appraisers, realtors and builders, and the debt holders got left holding the bag.

Oh, what will IndyMac have to say tomorrow? Should be interesting (yes, short IMB)...

American Home Mortgage Investment Corp (AHM.N: Quote, Profile , Research) shares fell sharply on Monday after the company delayed its quarterly dividend, announced "major" write-downs, and said lenders were demanding it put up more cash.

Shares of American Home were down 39 percent, falling in premarket trading to $6.39 from Friday's close of $10.47. Trading was halted for news pending prior to the market open. The shares on Friday hit their lowest level since April 2003.

Late Friday, Melville, New York-based American Home said it was struggling from "unprecedented" disruption in credit markets. The announcement fed investor worries that bad loans are extending beyond "subprime" lenders to providers of home loans to borrowers considered to be good credit risks.

American Home specializes in prime and near-prime loans. It has, however, made many loans that allow borrowers to produce little documentation of income or assets.

"Bankruptcy is not out of the question," said Matt Howlett, an analyst at Fox-Pitt Kelton. "It's clear now we're in a liquidity crisis. Any loans that aren't pure prime are falling in value."

 

[Randolph Kinney]

Foreclosures continue to surge, past historic levels

Mortgage Foreclosures Rise 58 Percent in First Half

July 30 (Bloomberg) -- U.S. foreclosures rose 58 percent in the first half of 2007 from a year earlier, led by California and Florida, as more homeowners fell behind on their monthly mortgage payments, RealtyTrac Inc. said.


Lenders sent notices of default, scheduled auctions or repossessions to 573,397 properties in the January to June period, the Irvine, California-based seller of foreclosure data said in a report today. California foreclosures surged 170 percent to 104,572, the highest in the nation, and Florida gained 77 percent to 64,250.


Homeowners with adjustable-rate loans who are seeing their payments jump are finding it harder to avoid foreclosure by selling or refinancing their properties as the U.S. housing slump worsens. The inventory of homes for sale, measured in the time it would take to sell them all, was 8.8 months in June, matching the prior month as the highest since 1992, the National Association of Realtors said last week.


``Foreclosure activity shows no sign of slowing down,'' James Saccacio, RealtyTrac's chief executive, said in the report.

 

[Randolph Kinney]

Deutsche Bank Payday Burgeons With Trading Bets Against Subprime Mortgages

Deutsche Bank AG analyst Eugene Xu recognized a financial train wreck in the making two years ago when he predicted ``quite probable'' losses from the least creditworthy home loans in America's runaway property market.

 

[Randolph Kinney]

Citadel Takes Over Hedge Fund Sowood's Credit Holdings After Bond Losses

Citadel Investment Group LLC bought most of the assets of Sowood Capital Management LP after the Boston-based firm's two hedge funds plunged more than 50 percent amid the rout in credit markets.

 

[Randolph Kinney]

MGIC May Write Off Stake in Subprime Joint Venture, Costing $516 Million

MGIC Investment Corp. and Radian Group Inc. said turmoil in the subprime mortgage market may require the companies to write off their combined $1.03 billion stake in a venture that invests in subprime mortgages. Shares of MGIC fell as much as 9.8 percent in after-hours trading. Radian dropped as much 3.6 percent.

 

[Terrel L. Shields]

American Home specializes in prime and near-prime loans. It has, however, made many loans that allow borrowers to produce little documentation of income or assets.

No doc loans are insane and invite fraud, exactly what they got.

Deutsche Bank AG analyst Eugene Xu recognized a financial train wreck in the making two years ago when he predicted ``quite probable'' losses

I just appraised a small house that sold for $45,000 in 2002. Deutshce was carrying the note at $80,000....so how bright are they to keep lending on thin air? The property, foreclosed, sold for $52,000...Deutsche got to eat $28,000 plus legal expenses.

My nephew and I was discussing a bankruptcy and I noted the doublewide the applicant lived in was carried at $70,000 on the petition, a DW I appraised about 6 yr. ago for $44,000. Nef snorted, "They didn't loan money on that. They bought it."...so true. The bank that got the loan was so proud of themselves for capturing this guy from a competitor 3 blocks down....and that bank was so proud of them for ridding them of a pest.

 

[Greg Bell]

Wow..the stock market will take off today , God bless the average American that doesn't mind a Debt. of 40K for a spiffy SUV.Please keep on buying those
over priced homes and stay in debt , just like the ever knowing Government.
See you in Bankruptcy court (Do they allow Bankruptcy anymore)

General Motors Corp. (GM) on Tuesday reported second-quarter net earnings of $ 891 million, or $1.56 per share, compared with a loss of $3.4 billion, or $5.98 a share, in the same period a year ago.:new_multi: