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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (4842)1/12/2004 11:30:10 AM
From: Ramsey Su  Read Replies (1) of 110194
 
ild,

just finished listening to the mtg cc, what a love fest.

I think concensus believe that 2004 would be the peak for delinquencies and they will have smooth sailing forward.

If that is true, I would agree. However, there are two basic reasons for a claim. The borrower has to default and the underlying property has not appreciated enough to offset the claim. These two are obviously related events. If a property has appreciated in the same manner as they had in Southern California in the last few years, any borrower in trouble can simply refi, take out seconds or sell, before they have to default. 1/3 of MTG's claims now come from Indiana and some other midwest state.

Based on the tone, I expect a bunch of upgrades from this crop of analysts, which may support the stock.

My opinion is this is still a neutral quarter. Delinquencies did go up but is somewhat in line with the companies expectations. I am "disappointed" that the quarter did not give me any indications as to how the real estate industry is doing. However, I think this could be a great setup for next quarter. The bar now has been set so high it will take the best effort from Sergey Bubka to clear.
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