Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (194)	7/14/2003 1:12:26 PM
From: Ramsey Su	Respond to of 110194

"masses" can include institutions. For example, persistency is probably one of the most important factors effecting future risk. It is at all time lows now. What that means is simple. With so many policies in its early years, the exposure is enormous. We are now a full 10% below that of last year's. The claims are clearly showing the currect state of affairs and should be getting much worse. One of the biggest problem with following this sector is the lack of meaningful indicators. One of the indicators is percentage of equity. It would be a lot more useful if we know what percentage of loans are in the at risk group. For example, home owners with no mortgages are never going to be at risk, regardless of what happens to the market. On the other hand, the VA FHA and the minimum down conforming loans are most at risk, with no equity to cushion any type of a down turn. What percentage of loans today are in that category? This is extremely significant to watch because typically, this group is heavily skewed toward the starter or lower end categories. If this group falters, then the trade up market slows and the chain reaction starts. The BofA report clearly shows that there are plenty of fuel in the pipeline for a big fire. WM reporting tomorrow should confirm that also. MTG report shows that the matches are at hand to light the fire. We shall see. "Cure rate" is what MTG was asked earlier during the CC. I believe it is now down to 25%ish if I remember correctly. As you probably know, MI insures only a portion of the loan and not the whole loan, usually the amount above 80% LTV. When market conditions are good, there are some chances the defaulting property can be sold, or the MI company can buy the property at sale, and then resell the property to recoup part of the claim. When times are bad, MI companies typically write a check for the full claim amount and the cure rate = zero.