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

To: ild who wrote (71479)	10/9/2006 11:00:38 AM
From: ild	Read Replies (1) \| Respond to of 110194

Via Barron's (print ed) comes this fascinating survey by RBC Capital. They asked over 1,000 U.S. Homeowners numerous questions. Here are some of the more interesting answers: 75.6%: see their home's value climbing over the next few years 46%: expect a gain of 5% or more annually 30%: foresee a rise of 10% to 15% a year 70%: said their home's value has risen 10% or more in the past 3 years 6% think their home's value will sink in the next few years 7.8%: worry that their mortgage might exceed the value of their home Any similarities between home owners and equity investors circa 2000 is strictly intentional: Source: Review & Preview Barron's, page 14 October 9, 2006

To: ild who wrote (71479)	10/9/2006 11:41:33 AM
From: Ramsey Su	Respond to of 110194

Moody's upgraded Wilshire, the subprime servicer of Merrill Lynch. This is kind of interesting because it provided a watermark for the foreclosure process. Moody's apparently has little understanding that all the servicers pretty much use the same network of subcontractors for the foreclosure process. Any change is likely due to market conditions that the servicers have little control over. Any future change in rating, therefore, may shed some light on changing market conditions. U.S. Residential Mortgage Servicer Rating Actions New York, October 03, 2006 -- Moody's Investors Service has upgraded Wilshire Credit Corporation ("Wilshire") to an SQ1- as a Primary Servicer of subprime mortgage loans and affirmed the company's ratings of SQ1- as a Special Servicer and as a Primary Servicer of second lien mortgage loans. Moody's subprime rating is based on strong collection abilities, strong loss mitigation results, strong foreclosure and REO timeline management and above average servicing stability. Moody's second lien rating is based on strong collection abilities, strong loss mitigation results and above average servicing stability. Wilshire is an indirect subsidiary of Merrill Lynch & Co. Inc, rated Aa3 for senior unsecured debt. Wilshire's loan servicing portfolio consists primarily of first lien subprime and second lien mortgage loans. As of June 30, 2006 the overall servicing portfolio totaled 256,096 loans for an unpaid balance of approximately $27.7 billion. Wilshire's servicing operations are located in Beaverton and Salem, Oregon. Since Moody's last review, Wilshire has developed a second, redundant servicing site in Salem, Oregon, staffed with customer service and early-stage collections personnel. The company has also implemented a new dialer, IVR and ACD system with additional functionality including 24/7 call recording. Analysis of a 12-month static pool of subprime loans and second liens revealed that Wilshire's collections abilities and loss mitigation results are strong. Of the subprime loans that began the static pool period as current, 9% rolled to a worse stage of delinquency. Forty-four percent (44.1%) of subprime loans that began the static pool analysis as 90+ days delinquent (excluding REO and bankruptcy) were either cured or became cash flowing. Of the second lien loans that began the static pool period as current, 5.9% rolled to a worse stage of delinquency. Fifty-two percent (52.5%) of second lien loans that began the static pool analysis as 90+ days delinquent (excluding REO and bankruptcy) were either cured or became cash flowing. Moody's views Wilshire's foreclosure and REO timeline management as strong. On average, loans, both first and second lien, were referred to foreclosure at the 158th day of delinquency. Foreclosure was completed 32 days beyond the Freddie Mac Timeline Assuming No Delays. Forty-three percent (43%) of the loans included within the static pool period experienced delays beyond the servicer's control. Lastly, REO was liquidated in 176 days, on average. Moody's SQ ratings represent its view of a servicer's ability to prevent or mitigate asset pool losses across changing markets. The rating scale ranges from SQ1 (strong) to SQ5 (weak). Where appropriate, a "+" or "-" modifier will be appended to the relevant rating to indicate a servicer's relative servicing quality within a particular category. Moody's servicer ratings are differentiated in the marketplace by focusing on performance measurement. SQ ratings for U.S. residential mortgage servicers incorporate assessments of delinquency transition rates, foreclosure timeline management, loan cure rates, recoveries, loan resolution outcomes, and REO management - all critical indicators of a servicer's ability to maximize returns from mortgage portfolios. Moody's servicer ratings also consider the company's ability to maintain its focus on high quality servicing in an economic downturn. Servicing operations can be stressed by increasing the number of delinquent loans while at the same time increasing the need for liquidity. The SQ rating reflects our expectation of the impact that the servicing will have on the on-going credit performance of the portfolio. For this reason, Moody's monitors SQ ratings based on periodic information provided by servicers and conducts a formal re-evaluation of its servicer ratings annually.