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

To: RockyBalboa who wrote (133317)	7/12/2008 10:02:13 AM
From: 10K a day	Read Replies (3) \| Respond to of 306849

It puzzles me that Housing GSE's can create 5 trillion dollars of debt. Pass it along to China or whoever will buy it. and not be accountable for any of it. (Hide behind a corporate veil ect) What a business model if you can get it...

To: RockyBalboa who wrote (133317)	7/12/2008 12:36:13 PM
From: Jim McMannis	Read Replies (4) \| Respond to of 306849

RE:"So whats going on?? Does it mean Golden West and WM have even worse books? " I can tell you this. The FDIC has 90 banks on the collapse watch list. They do not make the list public to prevent a run on those banks. Isn't that a criminal offense?

To: RockyBalboa who wrote (133317)	7/12/2008 3:40:27 PM
From: RockyBalboa	Read Replies (2) \| Respond to of 306849

The stated 60-1 Leverage explains a lot in FNM, FRE why they failed. Add the new subprime alike business which the GSEs have been forced to take on or refi and the mess is perfect. This one applies to FNM too: Message 24678219

To: RockyBalboa who wrote (133317)	7/12/2008 3:58:41 PM
From: RockyBalboa	Respond to of 306849

One of the mortgage specialists, pls: how is ellington doing? ellington.com

To: RockyBalboa who wrote (133317)	7/12/2008 6:37:01 PM
From: The Reaper	Respond to of 306849

So whats going on?? Does it mean Golden West and WM have even worse books? In a word...yes. Check out this Washington Mutual mortgage pool that is just over a year old. globaleconomicanalysis.blogspot.com If you do the math, you'll see that borrowers started missing payments after making only three.

To: RockyBalboa who wrote (133317)	7/13/2008 6:01:28 AM
From: RockyBalboa	Respond to of 306849

here a primer on fnm, fre which explains me a lot and raises new questions. Have they already been looted and forced to buy junk meat? seekingalpha.com Insurance: 50bps p.a. (thats cheap in times with arguably 1.0% NPA) The essential point here is that Fannie and Freddie take on the entire risk of the mortgage defaulting in exchange for an ongoing fee (generally 50 bps per annum). Bond issuance (who buys them in the future?) They buy their own mortgages (ones they have seen securitized) and hedge their massive portfolios. They issue bonds at extremely cheap levels to fund these activities. One former treasury official seems to think that this huge funding advantage seems to have translated into a bit of reckless purchasing on the part of the agencies. ...GSEs help lower the costs of borrowing in the mortgage market, which makes housing more affordable and increases homeownership,... Interesting, then, that their business volume in 2007 had 11% investor properties or second/vacation home. 32% of their business was lending for cash-out refinancings (same table)–those don’t seem to be helping home ownership, and actually reflect a higher risk segment of mortgage loans. So, Fannie and Freddie own a huge amount of their own product, which is notoriously difficult to hedge, have bought a lot of product fore the sake of buying, and seem to have a portfolio composition that is slightly different from it’s purpose… Fannie and Freddie were the largest buyers of sub-prime mortgage bonds ... Freddie owned $100 billion of these sub-prime securities (according to OFHEO, page 43, pdf) where 21% of loans were 60+ days delinquent. phx.corporate-ir.net Theres one more very important figure in FNM aside from risk figures: Their Interest income collapsed because they simply can´t hedge their portfolio. Could be negative in 2008. Subtract derivative losses in 2007 and the interest income is 0. 2005 $ 11,505 1.31% 2006 $ 6,752 0.85% 2007 $ 4,581 0.57% page 61 phx.corporate-ir.net

To: RockyBalboa who wrote (133317)	7/13/2008 8:27:08 AM
From: DebtBomb	Read Replies (4) \| Respond to of 306849

Worst of Housing Crisis Is Behind Us -- Really July 10 (Bloomberg) -- The intense pain caused by the bursting of the housing bubble is beginning to ease. Really. That may be hard to believe, given the rapid increase in mortgage foreclosures, big year-over-year declines in home prices and housing starts, and continuing writedowns in the value of mortgage-backed securities. Yet a close look at the recent flow of housing data provides convincing evidence that the worst of the decline is over. Investors who are fleeing financial-institution stocks -- including those of Fannie Mae and Freddie Mac -- ought to think twice about the housing outlook. Take sales of existing homes, which account for about 85 percent of all U.S. housing sales. They peaked at an annual rate of 7.25 million in the fall of 2005 and fell to 4.89 million in January. In May, it was 4.99 million. The recent figures aren't a guarantee that such sales won't decline a bit more in coming months. Still, their relative stability probably indicates that home prices have dropped enough to encourage buyers to re-enter the market. And there's no reason to think the huge drop in sales since 2005 will be repeated. Sales of new homes, like those of existing homes, have also moved sideways in the last couple of months. They might fall again, though probably not by very much. After all, they peaked at a 1.4 million annual rate in the summer of 2005 before dropping to a 512,000 rate in March, so a decline of that magnitude literally couldn't be repeated. In other words, the worst is behind us. Smaller GDP Drag The same is true about the drag of falling home construction on economic growth. While single-family housing starts are still going down, a glance at a graph shows a smooth, flattening trajectory suggestive of a near-term bottoming. They are off 63 percent from a top at more than a 1.8 million rate early in 2006. How much farther can they fall? Shrinking home construction clipped more than a percentage point from the increase in the gross domestic product in the fourth quarter of 2007 and the first quarter of this year. Partly as a result of housing woes, growth was limited to a 0.6 percent annual rate in the fourth quarter and 1 percent in the first. The smaller monthly declines in new home construction point to a housing drag on GDP this spring about half as large as the previous two quarters. That's one reason second-quarter growth may exceed 2 percent. The Bureau of Economic Analysis will release its first estimate of second-quarter GDP on July 31. Problem with Prices Home prices are more problematic. The S&P/Case-Shiller index for 20 metropolitan areas was down 15.3 percent in the year ended in April, a record. Keep in mind, though, that one factor in the price declines is that financial institutions are putting their foreclosed properties on the market at prices low enough to entice buyers. That's an unavoidable part of the process of cleaning up the mess left by a bursting bubble. In the short run, it creates the appearance of more bad news. Almost 2.5 percent of U.S. homes were involved in the foreclosure process in the first quarter of this year, according to the Mortgage Bankers Association. And almost 19 percent of homeowners with subprime mortgages were behind in their payments in the quarter. The delinquency rate for prime mortgages was up to 3.7 percent. `Beginning to Hope' Here's the better news on home prices. The recent Case- Shiller monthly figures -- which are probably more informative right now than year-over-year changes -- show that prices rose in eight of the 20 metropolitan areas in April, and the index's overall April decline was 1.4 percent, compared with 2.2 percent the month before. Karl Case, one of the creators of the index, said in a June 24 interview that there was some positive news in the latest figures. ``I'm beginning to hope that there are going to be some surprises in the next few months that would indicate we are at or near a bottom in probably a third to half the country,'' said Case, an economics professor at Wellesley College in Wellesley, Massachusetts. Even if the damage to the overall economy is diminishing, the pain for individual owners unable to pay their bills or refinance to reduce their payments won't go away soon. Also, while the worst of the impact on the economy may be behind us, there's no reason to expect a rapid rebound in housing. With lending standards very tight and mortgage-interest rates rising, sales are likely to remain soft. Until the inventory of unsold new homes begins to be worked off, housing starts won't climb much either. Still, as the saying goes, if you're in a hole, the first thing to do is stop digging. In the case of housing, we're ready to throw down the shovel. (John M. Berry is a Bloomberg News columnist. The opinions expressed are his own.) bloomberg.com

To: RockyBalboa who wrote (133317)	7/13/2008 1:07:21 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 306849

Oh I forgot. The game has changed: Fannie, Freddie Are in `Sound Situation,' Dodd Says (Correct) By Justin Blum (Corrects spelling of Kyl's name in fourth paragraph.) July 13 (Bloomberg) -- Fannie Mae and Freddie Mac, the largest providers of U.S. mortgage financing, are in a ``sound situation,'' said Senator Christopher Dodd. ``They have more than adequate capital, in fact more than the law requires,'' Dodd, a Connecticut Democrat who is chairman of the Senate Banking Committee, said on CNN's ``Late Edition'' today. ``They have access to capital markets. They're in good shape.'' The two companies' shares reached the lowest level in more than 17 years on July 11, making it tougher for them to raise capital at a time when they account for about 80 percent of mortgages packaged into bonds. A failure of the companies would likely send mortgage rates higher, causing further declines in home sales and prices. The U.S. government during the next few days will be ``exercising a lot of different options that it has available to ensure that they don't get into a financial situation where they can't cover their obligations,'' Senator Jon Kyl, a Republican from Arizona who is a member of the Senate Finance Committee, said on the CNN program. Fannie Mae and Freddie Mac own or guarantee about half the $12 trillion in U.S. home loans outstanding. To contact the reporter on this story: Justin Blum in Washington at jblum4@bloomberg.net. Last Updated: July 13, 2008 12:57 EDT