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

To: Ramsey Su who wrote (54572)	2/23/2006 1:23:56 PM
From: Travis_Bickle	Read Replies (1) \| Respond to of 110194

I have a friend in town from the Detroit suburbs, he says prices there have already gotten whacked 20% or more and he knows developers facing chapter 11. May not be a bubble area but many starter mansions built there the last ten years.

To: Ramsey Su who wrote (54572)	2/23/2006 2:20:14 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

Table 15 in the First American report tells the tale. And the reports that I've been putting up on my blog, point to much weaker pricing. See springhopemania: xanga.com I think the market may be down 10% from last summer (the basis of the FA report). So if we assume the market is down or soon will be off 10%, here's what the three colors look like in the 2004-2005 cohorts: red (high reset sensitivity) 430.5 billion: no equity: 34% or 146.4 billion neg 5% equity: 25% or 107.5 billion neg 10% equity: 18% or 77.5 billion yellow (medium reset sensitivity) 820.0 billion: no equity: 39% or 319.8 billion neg 5%: 29% or 237.8 billion neg 10%: 21% or 177.2 billion orange (subprime, supposedly small reset sensitivity) 637.5 billion no equity: 49% or 312.4 billion neg 5%: 39% or 248.6 billion neg 10%: 30% or 191.3 billion The FA report just skips over the 2003 cohort but 20% of that group has no equity either. 16-18% of 2000, 2001 and 2002 don't either. But just taking all colors of the 2004 and 2005 with no equity, I come up with $778.6 billion, and $446 billion of those have negative 10% equity. Add the 03's and you're talking about a trillion in loans without equity, and really that's conservative as just leaves out all the earlier years. Think there are plenty of default, short sale and REO candidates to weigh on an already weak market? And we haven't even seen any credit spread widening or "normalization" yet, indeed it's even narrower. Financial commercial paper is being treated as the same risk as T-bills, and two year agencies are only 21 bp above Treasuries, really unbelievable.

To: Ramsey Su who wrote (54572)	2/23/2006 3:36:11 PM
From: ild	Read Replies (2) \| Respond to of 110194

Berson's Monthly fanniemae.com Although the use of ARMs has fallen a bit, the ARM share remains much higher than it historically would have been given the level of FRMs and the spread between FRMs and ARMs. We continue to believe that affordability has been the driving force keeping the ARM share higher than normal. Moreover, the drop in affordability has resulted in a sharp increase in the use of riskier mortgage products as homebuyers attempt to lower their payments in high cost areas. Analysis by Fannie Mae’s Mortgage Market Analysis group indicates that the share of mortgage originations using negatively amortizing products spiked in 2005, especially in the “Alt-A” portion of the market where they climbed to almost a 50 percent share. Most of the rise was in the first half of the year, however, with only modest additional increases later in 2005 – perhaps in response to concerns expressed by regulators.