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Post by jeffolie on Jul 24, 2007 18:22:43 GMT -6
An amazing conference call with Countrywide Financial (CFC), the largest US mortgage underwriter. It was beyond ugly. Here are some notable quotables from Chief Executive Angelo Mozilo: -For a Fed Governor to say that the lending group had this coming is unbelievable. The WTF line that I don't get is this one: "no one saw the deterioration of real estate values coming." Here comes the money shot: "Company is seeing home price depreciation at levels not seen since the Great Depression" -Previously, the company had stated they expected a turnaround in mid-2008; now, they say they are not sure when housing declines will cease. Refuse to rule out house price declines in 2009; -Surprising comment regarding the prime portfolio: so far what they have seen in deliquencies is due to people losing job, losing health, lost marriage, more so than any resets. Stated that the "definition of prime may not be as high as some people think." bigpicture.typepad.com/
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Post by jeffolie on Jul 24, 2007 18:41:47 GMT -6
PRIME home equity loans (not subprime) The company said the charges included $388 million on residual securities collateralized by prime home equity loans... www.mortgageservicingnews.com/plus/#2
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Post by jeffolie on Jul 24, 2007 18:43:48 GMT -6
Additionally, Countrywide had to set aside $293 million for “held for investment” loan losses with $181 million of that related to PRIME loan losses. paper-money.blogspot.com/
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Post by Ken on Jul 24, 2007 18:49:19 GMT -6
I am curious what it takes to steer off foreign dollars. The yield curve the 3 mo and the 10 year reinverted . US officials are negotiating (begging) with the Chinese to dive into the MBS markets and less into treasuries. I am sure they are just thrilled to death to do that.
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Post by Ken on Jul 24, 2007 18:55:45 GMT -6
PRIME home equity loans (not subprime) The company said the charges included $388 million on residual securities collateralized by prime home equity loans... www.mortgageservicingnews.com/plus/#2I guess the prime wasnt so prime after all. That was one of the ugliest conference calls i ever heard. you can still download it if you aent already too depressed. Ive seen worse though. a few years ago i was working at comerica waitin for a conference with a euro based sports outlet and the CFO hung himself in his office prior to the conference. my boss's reaction "I guess they missed"
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Post by judes on Jul 24, 2007 19:11:09 GMT -6
PRIME home equity loans (not subprime) The company said the charges included $388 million on residual securities collateralized by prime home equity loans... www.mortgageservicingnews.com/plus/#2So does that mean recession? Prime loans faulting due mainly to job loss, health care, and divorce. Doesn't look like only subprime is being effected.
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Post by blueneck on Jul 24, 2007 19:53:08 GMT -6
WTF is right - what cave were these guys living in to have not heard this widely publicised situation? ? Another "Duh" moment It could very well mean depression. Just look at all the indicators not seen since the 30's - home defaults, bankrupcies, massive job losses, negative savings, negative foreign investment, trade deficits, auto reposesions, and those not seen since the twenties, inflated markets, rampant speculation, "happy talk" irrational exhuberence, real estate bubbles
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Post by unlawflcombatnt on Jul 24, 2007 23:54:54 GMT -6
From the previous link in an earlier post in this thread Subprime MBS Issuance Dives " The issuance of subprime mortgage-backed securities totaled $25.9 billion in June, down nearly 55% from the level recorded in June 2006, and a Friedman Billings Ramsey researcher says he expects subprime securitizations to remain at the $25 billion-a-month level for the rest of the year...." This implies that approximately $47 billion of subprime mortgage-backed securities were issued in June 2006, and that June 2007's number was $21 billion less. If this monthly decline is multiplied by 12 months, it comes out to $252 billion less per year available in subprime mortgages alone. Which means $252 billion less loan-created money over a 12-month period. At the very least, this means $252 billion less is available to be spent in the economy (And this is not including any multiplier effect). This is the equivalent of roughly 1.8% of our GDP. Couple this with a decline large decline in construction employment, and the aggregate wages lost as a result, and with a decline in home equity extraction decline of at least $100 billion, these factors alone are enough to cause a recession.
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Post by Ken on Jul 26, 2007 9:37:15 GMT -6
what they (the finance industry) is trying to sell now is that the weak dollar will decline enough to offset the housing market by decreasing the trade deficit
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