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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 (75120)	12/9/2006 3:34:18 PM
From: russwinter	Respond to of 110194

One of the spins about the Ownit and Sebring shut downs is that they were "struggling with the turndown in originations." That couldn't be further from the truth. These Boyz were pouring out toxic loans right to the end. Sebring did $209 million in 2Q,2006 vs $235 million in 2Q, 2006, and Ownit did a whopping $5.5 billion in first half, 2006, versus $8.4 billion in all of 05. The real reason for this is that the subprime credit market is seizing up. In fact, all of us who have followed this story, no doubt have wondered what took this so long. Remember our private little bets on January, 2006, and February, etc. Well, they ran their string another ten months, and dug an even bigger hole. The attempts to sell Option One's and Ameriquest are dead on arrival. In fact, because they are for sale, I'll bet their loans have been under real strutiny, and the word is getting out how bad the are. All these Pig Men have lines of credit to these outfits.

To: Ramsey Su who wrote (75120)	12/9/2006 3:54:17 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

Keep in mind that several big players had announced they were going jettison MBS, even before the big credit spread blowout this week. The players are hard at work trying to pass off Old Maid Cards. FCBs (Middle Eastern oil?) bought $16.4 billion in US debt securities this week, the biggest ever, umh? Fifth Third MBS Sale Adding to Signs That Banks Bear Watching National Mortgage News 2006-11-27 reiresearch.com By Bonnie Sinnock Fifth Third Bancorp's decision at press time last week to strategically reposition its balance sheet in line with changing market conditions was seen by Wall Street researchers as adding to signs that bank activity in mortgage-backed securities has become increasingly important to focus on. 'Fifth Third Bank has announced they are selling $11.4 billion in securities (all or almost all MBS, mostly short collateralized mortgage obligations, we suspect) before year-end 2006 and [is] taking a loss of approximately $500 million. This is the next move in the bank de-levering arena,' said Alec Crawford, head of agency MBS strategy at RBS Greenwich Capital in a Nov. 21 report. 'Banks bought a lot of MBS over the past few years, and now some of them are realizing they don't have the retail deposits to support such a large securities portfolio. With cheap (transaction) deposit growth slowing at the banks, some have no option but to sell their securities and take a loss, otherwise, suffer through large negative net interest margins,' he said.