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Toby

3 months ago

in Housing starts up in February and no one knows why on Blown Mortgage
New housing starts are not broken out by location. Some areas acutally do have a shortage of rental housing. There is no way these builders are going to get financing if the area won't support more rental units. I doubt there are many starts in FL, CA, AZ and NV.

4 months ago

in California Home Buyer Tax Credit Signed in to Law on Blown Mortgage
$3,300 per year! What does the average Californian pay in state income tax? If they pay less than $3,300 do they get a check like the Federal program provides?

4 months ago

in Dead Man Walking - Brokers Squeezed by Insurers on Blown Mortgage
Rhonda, see PMI's press room for stats on TPO losses. It is important though to note the difference between defaults and actual MI losses. TPO default rates are not much higher than retail, but the dollar losses are significantly higher. The reason, and this is only my opinion, is that the large majority of lenders that brokers once used are out of business. Hence poorly written loans that the PMI company might have pushed back on the lender (much like FNMA does) are not there. This leaves the solvent lenders (banks) which can absorb the badly written loans that did not meet MI critera in the first place. In short, if brokers can't back up their loans with some deep pockets then they are considered an added risk.

Remember MI companies are in this to make a buck. They don't care where it comes from and certainly are not cowtowing to the big banks. So as soon as the risk profiles change I think we can expect to see more MI programs.

4 months ago

in Dead Man Walking - Brokers Squeezed by Insurers on Blown Mortgage
The fact remains that broker origninated losses are outstripping retail losses three to one. These decisions are based on actuarials. It is a pure business decision. Nothing more. For what it's worth there will likely be some kind of MI available, just not in all markets.

The biggest problem for brokers right now is that lenders are not making much money off of their loans regardless of default rates. This has spurred many to cut back on their programs and cut off low producing (expensive) brokers.
1 reply
morganb's picture
morganb This is a great point Tobby. Until the brokered loans begin performing better lenders will continue to look to reduce volume through the channel.

5 months ago

in Gaming Home Values and Their Consequences on Blown Mortgage
This is very old (mostly) news. The appraisal process today is tight as a drum. And while there are plenty of exceptions, a 2005 FNMA white paper showed that appraised values were in fact lagging the rapidly rising market. The most likely cause being that new contracts for sale were always higher than the available compable properties.

Sham appraisals have always existed, and he market held steady. However, cheap and easy credit, the real culprit in the housing bubble, has never existed for so long in our economic history.
1 reply
morganb's picture
morganb Tobby,

Yeah, wasn't meant as a news piece, just as a reflection looking back on the industry. I'm actually getting to meet Robert Shiller (of Case-Shiller fame) today so I'm going to ask him about the index and the effect of pushed appraisals in home value declines.

7 months ago

in Seniors Going In Reverse on Blown Mortgage
HECMs work in a very narrow window. We are seeing maybe one out of six go through the mandated counseling sessions after an intitial interview, and maybe one out of six of those actually close on a HECM. Many that are coming in are broke and think that this will save them. Most of those don't have enough equity to make it work. They already sucked the equity out in the last few years.

9 months ago

in I hate to say it, but I told you so about Washington Mutual on Blown Mortgage
The only people getting wiped out at WAMU are the shareholders. OK, not completely, they do get a buck and a half or so. The FDIC dodged a bullet on this one. However, there are no more American mega banks like Morgan/Chase to step in and take over.

If the Citigroup-Wachovia merger doesn't go through then we can expect Wacovia to become a division of a Chinese or Dubai bank.

11 months ago

in Chase wholesale eliminates jumbo home loans on Blown Mortgage
This product was eliminated long ago with the pricing. Non-agency rates were ridiculous and they made few to none. No real story here. They are still doing GSE loans which are competetive, but still to high for his market.

1 year ago

in Case Shiller Index down 15.3% on Blown Mortgage
Analysis is correct. The data table is WRONG. See the link you provided to S&P CS.
1 reply
morganb's picture
morganb Actually I made a mistake saying "month" when I meant "year" from the PDF:

"One possible bright side to the annual figures is that three MSAs – Chicago, Cleveland and Denver – while still negative, showed some improvement in their annual figures over those reported last month. Looking at the monthly statistics, eight areas were positive for the April-over-March reading."

1 year ago

in Don’t think gas prices are a problem? Ask Hummer. on Blown Mortgage
The Hummer is the apex of social gluttony. It has no useful "utility" due to its small cabin size. No one uses these for commercial purposes. Vans were all the rage in the 1970's when the first oil shocks hit. Their sales plummeted too, as many were used for "recreation" and not utility.
1 reply
morganb's picture
morganb I agree. The interior is tiny. And most people that own them don't use them
for anything, break over speed bumps, and regard off roading as parking on a
dirt lot near a softball field.

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1 year ago

in Fannie Eliminates Declining Markets LTV Restrictions on Blown Mortgage
DK, you are correct. The M/I companies are the new 800 pound gorillas, and it is they who are tightening the screws. Also, most lenders are unlikely to finance this high of an LTV in declining markets due to the much stricter reps and warrants that they must now make on each loan. This was a free-feel good policy change by FNMA.

1 year ago

in Chase Wholesale Eliminates 2nd Mortgages on Blown Mortgage
Nothing wrong with seconds. It's the LTV that matters!
1 reply
morganb's picture
morganb But in a declining (free-fall) market like CA or FL it's tough to know what
your "true" LTV is...

1 year ago

in Moody’s Warns on Bond Insurers’ Ratings on Blown Mortgage
The top 20% (actually about 18..5%) of any insured loan is effectively unsecured on the day the loan papers are signed. The average payout on a foreclosure is about 18.5% (before 2006 - near 20% now)) as this is the typical discount on a foreclosure. Sometimes the M/I company will take possession of a house and market it themselves (1 out of 34 before 2005), but none do that now. The problem with morgage insurance is that there are now too many claims and not enough premium. Its as if six times the number of people that normally get in a car wreck crashed their cars. No insurance model will work for very long without an increase in premiums.

The point is that the M/I model has always relied on a predictable number of claims. That predicition never considered a deep national drop in housing values.
1 reply
morganb's picture
morganb Toby - great point. In addition to a broken model, the companies didn't
respond fast enough to the change and continued making bets at premium
spreads that were out of touch with market realities.

1 year ago

in Fifth Third Says ‘No Way’ to Alt-A on Blown Mortgage
One must define Alt-A. 5/3 was always fairly conservative with their Alt-A anyway. With higher GSE limits (essentially what was Alt-A jumbo) and other programs things have not changed a whole lot. They really just got rid of some odd-ball programs. Bottom line: they are tightening up like everyone else. Many of these lenders will not even do some FNMA programs because the warrants are so restrictive now. FNMA is the 800 pound gorilla.

1 year ago

in Wells: More Liquidity Issues in the Secondary Market on Blown Mortgage
Looks like Wells struck today the 28th. 3%!
1 reply
morganb's picture
morganb well it's nice to not look like a total jack-ass! :)

1 year ago

in Wells: More Liquidity Issues in the Secondary Market on Blown Mortgage
Wells is being up front with what it sees coming down the pike in the next few weeks. All the lenders will be affected by the same conditions. M/I companies will likely cut back (May 1?) and FNMA/FHLMC have been slowly tightening the warrants and restrictions on their product lines. Add to this the liquidity issues and rising rates, and you can see why the memo was a friendly "heads up" to brokers. Note: I rearely deal with Wells, but other lenders are saying the same thing informally.

1 year ago

in Avoid Foreclosure with these 7 alternatives on Blown Mortgage
These are all well and good, but in my experience the lenders and servicers have been grossly understaffed to deal effectively with these strategies. In the squeeky wheel gets the grease philosophy the lenders only seem to want to deal with people when they are at the cusp of foreclosure, often when it is too late.
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