|
Post by jeffolie on Jun 30, 2007 15:30:15 GMT -6
The $Trillion reset in ARMs over the next six months will roil the foreclosures and delinquencies. Since it can take six more months for the banks to actually take possession and then start to sell the homes, that pushes the day of diaster to about a year from now.
Why diaster, because by a year from now the rating agencies will be forced to declare the CDOs as junk. That’s Trillions in leveraged and borrowed funds collaterialized, squared and synthetic complex financial instruments marked down to 50% or less.
|
|
|
Post by unlawflcombatnt on Jun 30, 2007 23:04:42 GMT -6
There's certainly going to be a meltdown, no doubt about that. It seems like we might start sinking a lot sooner, especially if any more "honesty" accidentally slips out from the financial media.
|
|
|
Post by jeffolie on Jul 7, 2007 17:22:12 GMT -6
It is a long, slow, tricky, expensive process from the first missed mortgage payment to when the Bank sells the house. More lenders taking homes FORECLOSURE AUCTIONS MAY DRAW NO BIDDERS By Sue McAllister Mercury News In May, $2.8 billion worth of California real estate went up for sale in foreclosure auctions, according to ForeclosureRadar.com, a Discovery Bay company that sells foreclosure information to subscribers. Of that amount, about $2.6 billion worth failed to find buyers, and so became bank-owned. The figures represent the total value of the outstanding loans that went up for auction. The REO listing agent typically finds an attorney to handle the eviction of the previous owners or tenants, if they're still in the home. Often, residents are offered "cash for keys," an incentive to move out quickly, saving the lender the costly hassle of evicting them. Cash-for-keys is always the better deal for owners, O'Toole said, because an eviction appears on a person's credit record as a court judgment against them. When the home is vacant, the agent takes care of cleaning and repairing the place (after the lender has approved the cost estimates). The agent provides an estimate of the home's worth; the lender also gets a separate appraisal. "Sometimes it takes two weeks, sometimes it takes two months," to get a bank-owned home listed once she lets the lender know her contractors have cleaned it up, said Vanegas as she walked through the Silver Creek home's parched, overgrown back yard in late June. All mortgage servicers are buried in this issue right now," she said. Trustees - the entities that have assumed ownership of the properties, be they the original lender or a mortgage servicing company - are still trying to get a handle on the increased number of REO properties they are managing, and on how much leeway they have to discount home prices without encountering resistance from investors in the mortgage-backed securities . www.mercurynews.com/breakingnews/ci_6320572?nclick_check=1
|
|
|
Post by jeffolie on Jul 10, 2007 11:32:05 GMT -6
|
|
|
Post by jeffolie on Jul 10, 2007 12:22:50 GMT -6
ARMageddon : Judgment Day is Coming for Millions of Mortgage Borrowers
|
|
|
Post by unlawflcombatnt on Jul 10, 2007 13:13:41 GMT -6
ARMageddon : Judgment Day is Coming for Millions of Mortgage Borrowers Yes, indeed. And, to a lesser extent, to a lot of others that have used subprimes directly or indirectly, like auto buyers and even credit card lines. An economy cannot be sustained indefinitely on debt-financed spending. We're going to find this out the hard way in the not-so-distant future.
|
|
|
Post by rjfliberal07 on Jul 11, 2007 0:19:41 GMT -6
And we will find a way out the hard way. At least maybe people will then appreciate the smaller things in life and appreciate their fellow man instead of try and trample them over stupid I-Phones, Tickle Me Elmos or X-Box's.
|
|
|
Post by jeffolie on Jul 11, 2007 12:51:16 GMT -6
The risk to the financial system was not merely that some large brokerage firms may have been forced to write down a couple of hundred million dollars – they may still have to do that. But had the fire sale gone through, market values would have been available to the securities sold.
This in turn would have forced other lenders to revalue the collateral they hold; and as the collateral is worth less, the brokers will lend less money. That would have triggered further margin calls, further forced liquidations.
When hedge funds implode, they tend to sell off more liquid assets first; at the end of the sale, the prices of the liquid assets are depressed, yet the fund may still be left holding illiquid securities.
To illustrate this, take the example (this is not the Bear Sterns fund) of a hedge fund that may make bets on CDOs and, say, the price of oil. As such a fund needs to raise cash, it would close out the more liquid oil positions, causing a spike (or drop – depending on which way the unwinding works) in the price of oil.
The resulting volatility in the markets would be most painful for leveraged investors in the oil market, although the crisis originated in the CDO market.
Too many leveraged investors have become complacent because the low volatility we enjoyed in recent years. Aside from the short-term volatility, the high leverage employed by many hedge funds would need to be reduced permanently. As speculators pare down their leverage, they sell off assets to raise cash.
|
|
|
Post by jeffolie on Jul 13, 2007 18:51:08 GMT -6
Jeffrey Kirsch of American Residential Equities, a company specialising in buying delinquent loans, says foreclosing a property can take more than three years. He doubts the housing market will bottom out until the first quarter of 2009.
|
|