6/4 Mr Mortgage – News Picks of the Day!

Posted on June 4th, 2008 in Mr Mortgage - News Picks of the Day!

FASB Says ‘Bring Those Special Purpose Vehicles Back on the Books!’ – American Banker . This could get interesting. We have forgotten all about the SIV’s, VIE’s and host of other off-balance sheet acronyms banks have used for years to hide the slim-shady. Perhaps, now HR Block will pay for their Option One nightmare, which to date they have skated on. Here is a free-bee for ya. Option One is #7 on the REO list of all lenders in the nation for CA properties coming back to them in 2008 year to date.

Mortgage Applications Fall 15.3% Last Week – Bloomberg. So what. This is just how it has been for years leading up to the big bubble pop. During the ‘good times’ from 2004-2007 whenever the economy would show signs of weakening, bond yields would take a run and rates would fall with the 30-year fixed going into the mid 5%’s, and refi’s would pick up dramatically for a couple of months. Then as people got their loans, many would cash out, the economy would mysteriously show signs of improvement, bond yields would rise, rates would follow and shoot over 6% and all refi business would dry up. In the mortgage business in latter years of ‘the big boom,’ mortgage players would make most of their money in 4 months of the year. Now, what has happened in the past few weeks? Rates popped back above 6% and refi’s have gone away. Same pattern different year. But it still goes to show how people have no use for rates above 6%.

Wachovia Bank CEO’s Story – Yahoo News. I will sum it up for you. How stupid do you have to be to pay $26 billion to enter the Pay Option ARM market at the height of the housing bubble and inherit $120 Billion in Pay Option along with it! Enough said.

Einhorn Vs. Lehman’s Callan – NY Times. This is a goodie.

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5 Responses to “6/4 Mr Mortgage – News Picks of the Day!”

  1. Mr.Mortgage,

    Awesome site. Just awesome!

    It’s in the news, althought maybe not “new” news, that ABK and MBIA are close to losing their AAA rating (again?…). Could you elaborate briefly on what this may mean?

    A lot of people are saying that this is priced into the market since it has been known for some time that ABK and MBIA would eventually lose their AAA, and that it is well known that they can’t cover their losses.

    Do you agree?

  2. With ABK and MBIA, isn’t the real question whether the derating will force an automatic derating of the bond issues insured by them? For any mutual fund or pension holding these ‘insured’ bonds, will they need to liquidate, or simply utilize other rating mechanisms? Seems like that could cause an overnight crash of the muni-bond market, or at least a shift into other AAA safe havens.

  3. Sorry but this will not be happening. Just guess what will happen ? Just guess ? It’s called the taxpayer at the rescue again and again and again. It’s like the S & L crisis under Reagan, but on a daily basis. “Too big to fail” again and again. The “gobernment” will step in and say. OK we will pay. If the US government has the luxury to pay for a 3000 billion Irak war, he can fork a couple of billions to insure bonds. And if can’t and doesn’t, watch out.

  4. It means you as a taxpayer will be paying.
    It’s seems cristal clear.

  5. This 5 trillion “off balance sheet” banking will stay as it is. I really do not believe that they will force banks to recognize this fact. The damage would be spectacular indeed. FASB is dreaming if they think they will force banks and politicians to change these things quick. If it changes, it will take many years. Everybody is in “buying time” mode. Special purposes vehicles are here to stay. Remove them suddenly and you will kill the patient. Withdrawal will be made very slowly. The junkies at Lehman Brothers need them.

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