Housing Bubble Bursting?

[Randolph Kinney]

ALT-A casualties

Impac Mortgage Stops Alt-A Lending

IRVINE, Calif. - Impac Mortgage Holdings Inc. said Tuesday it will stop originating alt-A mortgages and is cutting staff in the wake of the deteriorating mortgage market, but added it has been able to meet all margin calls to date.

Impac, which was almost wholly an alt-A lender, will continue to originate prime mortgages through wholesale and retail channels. Alt-A loans are given to customers with minor credit problems or who cannot fully document income like traditional, prime borrowers.

 

[Greg Bell]

Aug. 7, 2007, 10:33AM
Mortgage problems hit Houston market


By PURVA PATEL and NANCY SARNOFF
Copyright 2007 Houston Chronicle

TOOLS
Email Get section feed
Print Subscribe NOW
Comments Recommend (2)
One of the nation's largest mortgage lenders, Houston-based Aegis Mortgage Corp., stopped taking new loans Monday, amid a day of news that signaled tougher days ahead for lenders and homebuyers.

"It's a bloodbath out there," said Mark Cady, senior vice president of Market Street Mortgage in Houston.

The announcement came on the same day New York-based American Home Mortgage Investment Corp. filed for bankruptcy protection.

Falling home prices nationwide and a rise in foreclosures have scared investors away from buying securities backed by home loans.

That, in turn, has led to tougher lending standards and higher interest rates.

For example, late last week, Wells Fargo upped its interest rate for large 30-year fixed rate home loans made through mortgage brokers to 8 percent from 6.875 percent.

Tighter lending practices have led to a housing crunch nationwide as prices skyrocketed and then began to fall, making it harder for people in financial straits to sell their homes.

While Houston home prices have not experienced wild increases, the drop-off in subprime loans has already begun affecting home sales, as buyers with bad credit or little money for a down payment can't get loans.

"It's kind of like doing a time out during a Super Bowl," said Ted C. Jones, senior vice president and chief economist for Stewart Title Guaranty Co., referring to the recent lending cutbacks.

The turmoil in the subprime mortgage market is affecting buyers and sellers of commercial real estate, as well.

Underwriting guidelines are getting tighter, and "borrowers' costs have gone up," said Rusty Tamlyn, a senior managing director in Houston for Holliday Fenoglio Fowler, a commercial mortgage banking firm.

 

[Austin]

Admittedly residential appraising is not my forte. After reading all these posts, one can only draw the conclusion that the only money available for residential financing is coming from the GSE's.
The city that I work in has had serious economic problems for the last five years. The unemployment rate has been the highest in the state hovering around 10%. The population of the city has dropped 6000 in the last six years. There was a story in the Sunday paper on the front page in which Realtors were interviewed concerning the housing market in this area. According to them times have never been better. One Realtor reported having 25 pending sales. The average price house in this area is approximately $90,000. I just did a check of the city tax assessor in the last four months and the price range of $75-$125,000, have been 40 sales.
Can someone explain to me how this can be? I have had approximately 5 calls per week from mortgage companies within the last three or four weeks. So where is the money coming from.? Can someone explain? How can't this much credit be taken out off the system and the bottom not be falling out? Does anyone see logical disconnect here?
http://www.registerbee.com/servlet/Satellite?pagename=DRB/MGArticle/DRB_BasicArticle&c=MGArticle&cid=1173352272624&path=a

 

[moh malekpour]

Can someone explain to me how this can be? I have had approximately 5 calls per week from mortgage companies within the last three or four weeks. So where is the money coming from.? Can someone explain? How can't this much credit be taken out off the system and the bottom not be falling out? Does anyone see logical disconnect here?
http://www.registerbee.com/servlet/Satellite?pagename=DRB/MGArticle/DRB_BasicArticle&c=MGArticle&cid=1173352272624&path=a

I guess, it is coming from H.R. 2895, the National Affordable Housing Trust Fund Act of 2007

 

[Randolph Kinney]

ALT-A gets hammered again

Alt-A mortgage-backed securities in firing line

SAN FRANCISCO (MarketWatch) -- So-called Alt-A mortgages, which were considered higher quality than subprime home loans, are also suffering from rising delinquencies and the harsh scrutiny of rating agencies such as Standard & Poor's and Moody's Investors Service.

Alt-A loans are considered less risky than subprime mortgages, but usually have lower credit quality than "prime" loans. Companies such as IndyMac Bancorp, American Home Mortgage, Impac Mortgage Holdings and Countrywide Financial have offered them.

However, delinquencies on Alt-A loans have risen this year, prompting action from rating agencies. Investors have become a lot less willing to buy such loans in the secondary mortgage market.

Standard & Poor's said on Tuesday that it may downgrade 207 classes of Alt-A residential mortgage-backed securities because of rising delinquencies on the underlying home loans. The 207 classes, which represent so-called Alt-A mortgages with an original total balance of approximately $913.9 million, were put on CreditWatch Negative, S&P said.

This is the biggest move on Alt-A so far this year by S&P.

"The collateral underlying the Alt-A transactions has been experiencing high levels of severe delinquencies that have not abated," S&P said.

Indeed, IndyMac Chief Executive Mike Perry said late last week that the secondary market for loans that don't conform to the standards of government sponsors enterprises like Fannie Mae and Freddie Mac has frozen up. In response, IndyMac is offering more conforming loans.

Other lenders, such as Impac, have stopped dealing in Alt-A loans completely and others such as American Home have filed for bankruptcy.

That's making such mortgages much harder to come by. One mortgage broker estimated on Friday that 90% of home loans that don't conform to Fannie and Freddie standards had disappeared in recent days.

 

[Randolph Kinney]

News flash! Non-subprime loan worries spread

American Home bankruptcy shows subprime pain spreading: lawyer

BOSTON (MarketWatch) -- American Home Mortgage Investment Corp.'s rapid slide into Chapter 11 is a stark reminder that instability in the subprime-mortgage market is rippling into higher-quality loans, an attorney specializing in bankruptcy restructuring said Tuesday.

"American Home Mortgage is going down and it's not a subprime originator, so it looks like it's a step up the ladder in terms of turmoil in the mortgage market," said Vincent Slusher, a partner at Beirne, Maynard & Parsons LLC in a telephone interview.

"If it continues up the chain, it's tough to say what might happen," he said.

 

[Austin]

HERE COMES THE KNOCKOUT PUNCH! RIGHT ON QUE

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml

China threatens 'nuclear option' of dollar sales


By Ambrose Evans-Pritchard
Last Updated: 9:54am BST 08/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

http://blogs.telegraph.co.uk/business/ambrosevanspritchard/july07/willtheusdollarcollapse.htm

 

[Dee Dee]

HERE COMES THE KNOCKOUT PUNCH! RIGHT ON QUE

Yet another piece of the perfect storm that's falling into place.

I can't say that I'm surprised.

 

[Terrel L. Shields]

Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon

i hope they understand it is a suicide pact when they do..

 

[Randolph Kinney]

i hope they understand it is a suicide pact when they do..

Absolutely! It will destroy their ability to trade with the U.S. After all, the only thing we can trade with is the U.S. dollar.