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 : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: blankmind who wrote (25901)	2/1/2007 8:53:43 PM
From: Paul Senior	Respond to of 78627

Blankmind, here are three mortgage reits that I'm holding: finance.yahoo.com AHM's my favorite of the three: I like the reputations of some of the institutional holders. Fwiw, I am a recent buyer of PCC. It's a reit, and part of its business is mortgage related, primarily with commercial real estate. These things seem risky to me --- as well as to most folks, I presume. That may (or may not) make some of them bargains. Apparently lots of people who've had NEW and stayed with it are doing very well in total return. I've always been too fearful to be a buyer.

To: blankmind who wrote (25901)	2/2/2007 12:50:40 PM
From: MCsweet	Respond to of 78627

Blankmind, With subprime defaults continuing to rise (and associated horror stories about fraud and lax lending standards), these two mortgage reits are quite risky. They are levered and own/originate subpar collateral. I think they could make or lose you a lot of money. I don't know which, but they are too risky for my blood. Good luck, MC

To: blankmind who wrote (25901)	2/8/2007 12:07:08 PM
From: a128	Read Replies (2) \| Respond to of 78627

New Century shares plummet on warning NEW YORK Shares of New Century Financial Corp. plunged to a new 52-week low Thursday a day after the mortgage lender said it didn't properly account for some of the home loans it had to buy back. The Irvine, Calif.-based mortgage bank, which lends money to home buyers with blemished or limited credit histories, said late Wednesday it expects to report a loss for the fourth quarter. Because of accounting errors, the company also must restate results for the first three quarters of 2006. It hopes to have that done by March 1. Like many mortgage lenders, New Century doesn't keep its loans; it sells the loans to banks and investors. The deals normally have clauses allowing investors to force New Century to buy back a loan if the borrower misses an early payment. Loan repurchases are bad for mortgage lenders because few investors would sell back a loan unless it lost value. Piper Jaffray analyst Robert Napoli said a repurchased loan has typically lost 15 percent to 20 percent of its value. New Century made two accounting mistakes: It didn't assume more investors would sell back loans, even as loan repurchases surged throughout 2006 amid payment defaults. And, New Century didn't assume the repurchased loans would be less valuable. Many analysts think the subprime mortgage market is in trouble. During the housing boom, a number of mortgage banks lent money to home buyers who couldn't afford the loans. Now, with the housing market sagging, more borrowers are missing payments and many lenders are going out of business or putting themselves up for sale. New Century said it needs to set aside money anticipating more loan repurchases, reflecting the lower value of those repurchased loans. The lender also said new loans this year will fall 20 percent as the company becomes more selective about which borrowers it lends to. Three analysts downgraded New Century's stock. Friedman Billings Ramsey analyst Scott Valentin ratcheted the shares down to "Underperform" from "Market Perform." Jefferies analyst Richard Shane Jr. cut the stock to "Hold" from "Buy," and Merrill Lynch analyst Kenneth Bruce downgraded the stock to "Sell" from "Neutral." Shares of New Century Financial plummeted $8.31, or 27.5 percent, to $21.85 in morning trading on the New York Stock Exchange.