I know NEW is a favorite of yours <g> but I actually read their report today and discovered something that made me rethink them.
Have you looked at their loan data? Their average loan - in fact the vast majority - are conforming if I'm reading things right. They average 80% LTV, which surprised the hell out of me.
Could it be that NEW and many of these other lenders are actually direct beneficiaries of whoever the hell is lapping up the toxic 20% loans that make the down payments for their 80% loans? Think about it - the builders are clearly beneficiaries of this market pricing error, maybe these guys are, too.
The morons here are the idiots stupid enough to lend the first 20% for down payments so that home buyers can get conforming loans for the remainder. I've heard rumblings that the hedge funds are buying that toxic crap (now there's a comforting thought for systemic stability). So the foolishness of hedge funds may be a boon for not only the builders, but the financiers that make the 80% first mortgages.
Data on NEW loan origination:
Credit Quality of Mortgage Loan Production
Three Months Ended June 30, 2005
Wtd. Avg.
Production LTV(1) FICO
Risk Grades (in thousands) % Ratio Score
AA $10,902,082 81.1% 82.7% 643
A+ 1,235,948 9.2% 79.6% 599
A- 621,433 4.6% 76.3% 574
B 339,176 2.5% 73.9% 563
C/C- 284,857 2.1% 67.5% 556
Subtotal $13,383,496 99.5% 81.5% 632
Commercial 60,674 0.5% N/A N/A
Private label prime - 0.0% N/A N/A
Total $13,444,170 100.0% 81.5% 632
BC |
