Stage Coach Has Record 3rd Qrt Earnings

[Elliott]

Its good to not have much competition:

"Wells Fargo, the fourth-largest U.S. bank by assets, earned $3.3 billion, or 60 cents a share, in part because the bank released $650 million of its reserves for loan losses into its earnings.

"The bank earned nearly $2 billion from originating mortgages in the third quarter and said it has pending applications for $101 billion in mortgages at the end of the quarter.

(WSJ 10/20/10)

 

[kevco]

Its good to not have much competition:

"Wells Fargo, the fourth-largest U.S. bank by assets, earned $3.3 billion, or 60 cents a share, in part because the bank released $650 million of its reserves for loan losses into its earnings.

"The bank earned nearly $2 billion from originating mortgages in the third quarter and said it has pending applications for $101 billion in mortgages at the end of the quarter.

(WSJ 10/20/10)

It would be intersting to know how much of that was appraisal fees.

 

[John Hassler]

If there wasn't a government buyer for these loans the big lenders would be in dire straits. Fannie and Freddie are effectively subsidizing the lending industry. This helps the big lenders on two fronts:

1) It allows the churning of loans to create new origination fees.

2) It allows lenders to sell their non-performing assets easier and for a high selling price.



Once the effective demand for refinancing is over and the big lenders have shed most of their worst assets, expect interest rates to increase significantly as the current rate is artificial.

At that point one of two things will happen to Fannie and Freddie's subsidized loans. They will either be discounted to be salable in the secondary market, or F & F will sit on a pile of 4.5%± 30-year notes and say they are profitable while the Fed borrows at market rate (presumably much higher than 4.5%).

The current artificially low interest rates are primarily a subsidy for the big lenders and, secondarily, for some borrowers too.

 

[Elliott]

So who is subsidizing the low rates? A 1 year CD is 1%, a 5 year CD is at 2.3%.
Unemployment is 10%. And almost any corporation or institution with money is
holding about 1/3 cash.

When that dam breaks, it will interesting.

 

[Laughing Heir]

It would be intersting to know how much of that was appraisal fees.

A lot, no doubt about it.

 

[John Hassler]

So who is subsidizing the low rates?

The Fed via Fannie and Freddie. There is effectively no secondary market for 4.5% 30-year loans at par.

When that dam breaks, it will interesting.

Yes it will. Another reason not to build ones business around conventional lending work (or get paid handsomely if you do).

 

[Terrel L. Shields]

You should invest in anyone that crooked...they have to make money