Housing Bubble Bursting?

[Terrel L. Shields]

Country wide also had to quell rumors that they were preparing to file bankruptcy:new_blowingup: . They deny that they are not liquid and remain confident that they will not have to file bankruptcy. [now just who was it said they'd be gone soon...i ain't wrong yet. I hope I am for a lot of people's sake, but this does not look good.:new_scatter: ]

North Rock bank, in Britian, is about to go under and a U. S. Investor is trying to buy it up.

 

[Dee Dee]

Countrywide bought my new mortgage last month. If they go belly up does that mean I don't have to pay off the loan?
Yeah, yeah, yeah....wishful thinking.

 

[Scott Kibler]

Countrywide bought my new mortgage last month. If they go belly up does that mean I don't have to pay off the loan?
Yeah, yeah, yeah....wishful thinking.

Call 'em up and tell them you can't make your payments. Maybe they'll cut your rate.

 

[Dee Dee]

Call 'em up and tell them you can't make your payments. Maybe they'll cut your rate.

Now there's an idea worth considering.

 

[moh malekpour]

Freddie Mac’s $4.8bn loss deals fresh blow to US housing market

The credit squeeze is likely to get significantly tighter after Freddie Mac, America’s second-biggest provider of mortgage financing, announced its largest quarterly loss to date on the back of $4.8 billion (£2.3 billion) of bad debts and writedowns in the third quarter.

Freddie Mac’s woes will deal a significant blow to the mortgage market in the United States, where it is a key determinant of liquidity, and will further infect the troubled credit markets, which are closely aligned to America’s housing fortunes.

The damage is expected to be particularly severe because the losses emerged only 11 days after Fannie Mae, America’s biggest provider of mortgage finance, reported that its third-quarter loss had more than doubled, to $1.39 billion.

Freddie Mac May Raise $6 Billion to Stem Capital Drop]

Freddie Mac, the second-largest U.S. mortgage-finance company, may need to raise as much as $6 billion to bolster its capital amid the worst housing slump in at least 16 years.

The government-chartered company yesterday said it would seek more reserves in a ``large transaction,'' after reporting its biggest quarterly loss. The amount may be $5.5 billion to $6 billion, according to Fox-Pitt Kelton analyst Howard Shapiro. Friedman Billings Ramsey analyst Paul Miller and Gary Gordon, an analyst at Portales Partners LLC in New York, predict $5 billion.

Freddie Mac woes may hit Countrywide]

Countrywide Financial Corp. survived the first phase of the mortgage meltdown this summer thanks in part to a $2-billion investment from Bank of America.

But the Calabasas-based lender suffered a major new setback Tuesday when mortgage giant Freddie Mac posted a big loss and said it needed new capital -- which could curb Countrywide's ability to make loans.

When the mortgage crisis began last summer, Countrywide said it would cut back making higher-risk loans to concentrate on the safer loans it could sell to Freddie Mac and Fannie Mae, the government-chartered buyers of home loans

Behind Freddie and Frannie's Free Fall

Like other companies involved in the mortgage business, Freddie Mac (FRE) and Fannie Mae (FNM) have seen their share prices suffer amid the subprime crisis. But that was nothing compared to what happened Nov. 20. Investors punished the shares of the home finance giants after Freddie posted a surprising—and disturbing—third-quarter loss of $2 billion and warned that it was having trouble meeting its regulatory capital requirements and may need to cut its dividend in half to raise capital reserves.

 

[Austin]

If you guys want to hear the best discussion and ideas on our on going crisis you must tune to Fox New's new business channel and Neil Cavuto at 9PM nightly. This is no BS tell it like it is interviews.

Last night was really good. There is talk of doing away with the GSE's. The most significant point was the falling dollar. This is the ultimate case of being between a rock and a hard place.

China, along with a lot of other foreign countries, are sitting waiting for the US to do something about the dollar situation. They can't understand why the US won't move and take corrective action to turn the dollar around. What are the options to turn the dollar around? There is only one-raise interest rates. But if you raise interest rates that further knock the props out from under the mortgage crisis so we can't do that the man said. But something has to be done to stop the drop of the dollar and that only something is to raise interest rates.The bottom line is to save the US economy the mortgage industry must be thrown overboard. That is my summary of all this. I don't care what the FED does with their interest rates, when money is in high demand and their is a huge credit crunch, interest rates are going up because when good deals come along someone is going to pay whatever it takes to buy them which just adds to deflation.

Monday night Cavuto interrupted an interview to report that the planed merger of Chrysler had to be put on hold because they could not get the credit for the deal. Then he reported that the bank of China has cut off all lending because they have used up their quota for the year. The biggest purchaser of US real estate is the Chinese so now that demand element has been removed.

 

[moh malekpour]

Ignoring root causes of Freddie Mac fiasco won't fix anything

The markets did their best to treat Freddie Mac as an isolated incident yesterday. It isn't. Freddie Mac is just the latest turn in the expanding spiral of trouble for financial markets, one that won't go away just because investors stuck their heads in the sand for a day.

Freddie Mac is a publicly traded company created by U.S. Congress to provide funds to mortgage lenders. It does so by buying existing mortgages from these lenders and repackaging them to investors as mortgage-backed securities, guaranteed by Freddie Mac itself. In the current environment, that's the business equivalent of playing road hockey on a freeway.

Freddie Mac yesterday reported that it lost $2-billion (U.S.) in the third quarter, took a $1.2-billion provision for credit losses and absorbed $3.6-billion in mark-to-market losses. Now it is threatening to cut its dividend in half and is seeking other sources of financing, just to keep its capital levels above mandated minimums.

 

[moh malekpour]

ACA Capital May Get `Thrown to Wolves' By S&P, JPMorgan Says

ACA Capital Holdings Inc. will likely be the first bond insurer to have its credit rating cut, forcing banks to take on as much as $60 billion of collateralized debt obligations, JPMorgan Chase & Co. analyst Andrew Wessel said.

``ACA is a likely candidate to get thrown to the wolves first,'' Wessel said in an interview today. Standard & Poor's on Nov. 9 placed its A rating on ACA's guaranty business under review for a downgrade, following a $1.04 billion third-quarter loss.

A downgrade of at least two levels to below A- would force New York-based ACA to post collateral against some of the debt it insures to avoid default, the company said in a filing this week. Banks would likely then be forced to bring their $60 billion of ACA-guaranteed CDOS back onto their books, Wessel said.

 

[Randolph Kinney]

ACA Capital May Get `Thrown to Wolves' By S&P, JPMorgan Says

This company guarantees many of the CDOs that are outstanding. It does not have the capital to make good on those guarantees. When the day comes to ante-up, pay-up, or shut-up, ACA will declare bankruptcy.

What about all those CDOs carrying A-ratings because they are insured by ACA? They will lose their A rating, they will be marked to market and sold creating huge losses for those that hold them. Citigroup is said to have a significant stash that will go En Fuego.

 

[Randolph Kinney]

China, along with a lot of other foreign countries, are sitting waiting for the US to do something about the dollar situation. They can't understand why the US won't move and take corrective action to turn the dollar around.

Austin,

These countries wanting the US to do something about the fall of dollar have no real power. They do not vote in our political elections.

There are those countries that have enjoyed a favorable trade surplus with the US enriching themselves by happily receiving those same dollars. They are using currency sterilization to keep their own currencies from appreciating thereby continuing the favorable trade surplus.

Europe, which has the Euro and has strengthen the most, is being hurt the most.

This becomes a game of chicken and who blinks first. The US, for political reasons, can't raise interest rates or change tax policies that will strengthen the dollar. It use to be that the US could use import duties that would raise prices on imported goods and dampen the trade deficit with a given country. Not anymore, it's call free trade. Raising interest rates will exacerbate the dollar's falling value. Countries that have higher economic growth with out significant inflation have higher value currencies, if they do not cheat to keep the currency fixed to the dollar.

The train wreck has to happen to solve the international problem of the dollar's value. The exchange rate game is crooked. Those that are cheating are holding lots of dollars and assets denominated in dollars. They can't pull the trigger simply because they have the most to lose.