Housing Bubble Bursting?

[Randolph Kinney]

IndyMac Bancorp's net slides 57%

BOSTON (MarketWatch) -- Savings and loan IndyMac Bancorp Inc. said Tuesday its second-quarter profit slipped 57% from the year-earlier period and that it wouldn't be providing an outlook due an uncertain outlook for the housing and mortgage markets.

Total mortgage-loan production volume fell 12% from the first quarter to $22.5 billion.

"Conditions in the secondary markets, which had stabilized throughout the second quarter, have worsened in recent weeks due in large part to widely publicized issues with subprime-related hedge funds and other secondary market participants, including rating agencies," said John Olinski, executive vice president, in a statement.


"We anticipate that the second half of 2007 and 2008 will continue to be challenging for the mortgage and housing markets and for Indymac," said Chief Executive Michael Perry.


"Given the significant current uncertainties in the housing and mortgage markets and, in particular, in the secondary market, we feel it is prudent to temporarily refrain from our normal practice of providing quantitative guidance," he added.

 

[Randolph Kinney]

More Lenders Feeling Pain From Defaults

Problems in the mortgage market spread deeper and ****her afield yesterday.

Trading in the shares of a large mortgage company was suspended yesterday, and the nation’s largest insurer of home loans said its stake in a business that underwrites and invests in mortgage securities may be worthless. Earlier, a German bank acknowledged that its investments in American loans have deteriorated.

The developments are the latest indications that the housing slump will affect a broader segment of the mortgage industry and that the problems will last longer than many officials had suggested earlier this year. Just last week, the nation’s biggest home lender, Countrywide Financial, acknowledged that defaults on second mortgages to prime borrowers were rising quickly.

The New York Stock Exchange never opened trading in shares of American Home Mortgage yesterday after the company said late Friday that it would suspend its dividend and was facing “significant margin calls” from its banks.
Already down 70 percent for the year, shares in A.H.M. fell 39 percent in premarket trading, to $6.39.

Later in the evening, the Mortgage Guaranty Insurance Corporation, or M.G.I.C., said it would write down its $516 million investment in Credit-Based Asset Servicing and Securitization, or C-Bass, possibly to zero. The Radian Group, which has a $518 million stake in C-Bass, also said it might have to write off its investment completely. The rest of C-Bass is owned by its management.

 

[Randolph Kinney]

Here comes more of the same; housing prices declining

Home Prices in U.S. Fall 2.8 Percent, Most in Six Years, Case-Shiller Says

Home values in 20 U.S. cities fell the most in at least six years as a glut of unsold properties, mounting defaults and higher mortgage rates suggest the housing recession has yet to touch bottom.

S&P/Case-Shiller's 10-city composite index, which has a longer history, declined 3.4 percent in May from a year earlier, the biggest decline since 1991.

``We are experiencing home-price depreciation almost like never before, with the exception of the Great Depression,'' Angelo Mozilo, chief executive officer of Countrywide Financial Corp., said last week on a conference call after the biggest U.S. mortgage lender reported a 33 percent decline in second-quarter net income due to late loan payments.

 

[Randolph Kinney]

IndyMac hit hard by defaults; forced loan buybacks

IndyMac Bancorp Inc. - more borrowers fell behind on payments and earnings from loan sales dropped.

Assets that have stopped paying interest more than quadrupled to $516 million from a year earlier, IndyMac said. Revenue fell 21 percent to $297.8 million.

IndyMac earned $101 million in the quarter from loan sales to investors, half the $202 million it realized a year earlier. The company's provision for loan losses increased to $17.2 million from $2.2 million. It was forced to repurchase $219 million of loans from investors because borrowers missed payments, up from $48 million a year ago.

 

[moh malekpour]

U.S. S&P/Case-Shiller Home Price Index Declines 2.8%

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJC3.ZxJYmyc&refer=home

 

[moh malekpour]

IndyMac Bancorp Inc. - more borrowers fell behind on payments and earnings from loan sales dropped.

According to Morningstar, IndyMac second quarter of 2007 compare to its second quarter of 2006 is 57 percent decrease in net earnings and a 60 percent decrease in earnings per share

 

[Randolph Kinney]

According to Morningstar, IndyMac second quarter of 2007 compare to its second quarter of 2006 is 57 percent decrease in net earnings and a 60 percent decrease in earnings per share

Looking at the information from Bloomberg and Marketwatch, loans that have defaulted more than quadrupled to $516 million from a year earlier and IndyMac was forced to repurchase $219 million of loans from investors because borrowers missed payments, up from $48 million a year ago.

Strange, IndyMac only increased its reserves for bad loans to $17.2 million from $2.2 million.

IndyMac's total mortgage-loan production volume fell 12% from the first quarter to $22.5 billion.

The secondary markets are tightening their requirements for loans as well as raising the interest rates to cover the rising default rate they see. That squeezes the margin for IndyMac less they can pass the increase in rate through to the borrower, if they can. If the secondary markets are unfavorable to sell the loan, IndyMac portfolios the loan. If it can't turn the loan back into cash, their ability to make new loans has been diminished.

If one looks at the result from Countrywide, prime borrowers were defaulting at an alarming rate. September through December 2007 is going to see 100's of billions of ARM resets. I can only imagine the foreclosure statistics going forward.

 

[Brad Ellis]

Yep- we must be going down the tubes!

EPD repurchase demands are down 58% in Q2 07

Total Credit Reserves (the actual way banks calculate this) are $947 million or 38% of Tier 1 capital

IMB Alt-A losses (what is actually lost) is 1/6 of the industry average and 1/12 of industry subprime losses.

I sure hope Bell shorted the stock- it is only up $1.50 +/- as I post this.

On average we are beating the industry by orders of magnitude in just about every category one can think of.

Those interested might actually want to read the report instead of relying on reporters who cannot name the last 2 Presidents!

I'm buying calls......

Brad

 

[Terrel L. Shields]

I'm buying calls......

Do tell us the results. That's risky in the best of times. In volatile markets, a long straddle would be better risk, stop the down risk, unlimited up potential. Best in a wildly fluctuating market.

 

[Randolph Kinney]

Treasurys sprint higher on news of troubled lender

NEW YORK (MarketWatch) -- Treasury prices closed higher Tuesday, pushing yields lower, after the stock market turned negative in response to the near wipe-out of the stock of troubled home lender American Home Mortgage Investment Corp. The Treasury market in recent sessions has been trading inversely to a volatile stock market that has been weakened by worries about sour home mortgage loans and a shaky credit market.