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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (72015)	2/12/2007 5:48:02 PM
From: CalculatedRisk	Respond to of 306849

Banks That Took Greenspan's Advice Pay the Price: Caroline Baum bloomberg.com It was bound to happen sooner or later, an out-of-the-blue reminder that the froth or the boom or the disconnect between prices and fundamentals in the housing market would have a financial after-shock. HSBC Holdings Plc, Europe's biggest bank, dropped a small bomb last week when it announced that it was setting aside more money as a cushion against the accelerating pace of loan delinquencies. Yes, Virginia, subprime mortgages -- home loans to folks with a spotty credit history -- do carry some risk after all. In addition to making those loans, HSBC bought packages of subprime and second-lien loans from other mortgage originators. It seems the best models HSBC's quants could design didn't adequately reflect the inherent risk in lending to deadbeats when house prices stop soaring. Before folks could say, ``sell,'' New Century Financial Corp., the No. 2 subprime lender in the U.S., delivered its bad news, saying it would have to restate 2006 earnings because of an increase in loan-loss provisions. The stock lost 40 percent of its value. Isolated examples? Probably not. Confined to the subprime market? Doubtful. <MORE>

To: Les H who wrote (72015)	2/12/2007 5:51:41 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 306849

Moody's: U.S. homeowners with good credit may be defaulting more often. yahoo.reuters.com The report by Moody's Investors Service about "prime" loans came amid mounting concern about "subprime" borrowers, who have weaker credit histories. Investors worry that as home price appreciation slows, people will have more difficulty refinancing adjustable-rate loans as rates reset higher. ... Moody's said delinquencies of 60 days or more on securitized prime "jumbo" mortgage loans rose to 0.323 percent in November, the highest in 2006. <MORE>