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Subprime woes, credit concerns drift east - like, Far East
2007-08-16 22:07:39
Well another day another hole in the containment theory. Credit worries and a surge in the Japanese yen prompted a precipitous unraveling of the “yen carry trade” (a major source of global liquidity) which triggered the largest one-day sell-off of Japanese stocks on the Nikkei exchange in seven years. The Nikkei index dropped 5.3% on the day, from Market Watch:
Most Asian indexes dropped Friday as investors continued to downsize their portfolios in the wake of turmoil in the global credit markets and the Japanese yen’s rally against major global currencies. Shares of Japanese firms such as Sony Corp. and Canon Inc. were hit hard on fears their exports earnings will be pressured, while further selling in China-related stocks led to heavy losses in Hong Kong.
For those of you that need a refresher on our Fed Chief Ben Bernanke’s testimony to Congress back on May 18, 2007:
”We believe the effect of the troubles in the subprime sector on the broader hou ...
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The Death of Stated Income Loans”¦
2007-08-16 18:57:18
is quickly drawing nearer and nearer. Put another nail in the coffin; courtesy of IndyMac Bank.
IndyMac released another round of massive product changes that specifically focus on making the “liar loans” stated income and no income loan products completely irrelevant to the majority of lending situations; and especially for anyone firmly planted in the Alt-A camp.
They also eliminate some of the more “affordability” type products including the 40 year amortized loans.
From an IndyMac announcement to brokers:
Guideline Update
In response to recent liquidity issues in the secondary mortgage market, we have found it necessary to make additional revisions to our program limits and guidelines:Alt A Conforming and Non-Conforming First Mortgages:
No Income / No Asset and No Doc Documentation Types - The maximum LTV / CLTV is limited to 80%”?regardless of minimum Decision Credit Score. - The maximum LTV / CLTV is limited to 70% for Decision Cred ...
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A depository run on Countrywide bank (Updated)
2007-08-16 15:43:29
Important Update: It seems the Times simply folded the story in to the larger story covering Countrywide; and it appears that the information is correct - people are pulling out cash in droves. You can read the wider article here, and I’ve reproduced the paragraph in question from that article:
Meanwhile, customers crowded into branches of Countrywide Bank today to withdraw as much as $500,000 at a time because of concerns about the financial problems of the mortgage lender that owns the bank.
ORIGINAL POST:
Check out this oddity. It should raise some eyeballs, to say the least. My initial contact with the LA Times thought that it could be a mean-spirited prank/hoax. Never the less I thought I’d share it here and play in to the hoax if it is found to be phony. If Google’s wrong, I’m wrong.
If you Google News “Countrywide Bank”¯ you get the following as the first entry in the results:
Customers withdrawing from Countrywide Bank Los Angeles ...
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Countrywide Financial Taps in to $11.5 Billion Line of Credit
2007-08-16 10:18:01
Countrywide Financial tapped into an $11.5 billion line of credit Thursday to “weather the storm” and address its looming liquidity crunch. Countrywide Financial is the #1 writer of mortgage loans in the United States.
During the period that Countrywide was securing it's $11.5 billion in financing the Chairman and CEO, Angelo Mozilo, cashed out 672,000 shares of the company he owned netting him just under $13 million. Mozilo still owns almost 500,000 shares of the company directly, and has about 850,000 shares held in trust or his 401(k).
Investors have begun to refuse to buy many loans that are less than “prime”. These include the Alt-A loans, which I've written about here, as well as the subprime loans. With Countrywide and other companies unable to sell these loans they have to keep them in-house. This increases their risk if the borrower defaults. Every default will now come stricky from their bottom line. They ...
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Canadian Real Estate Update Revised
2007-08-16 07:36:13
MLS® home sales break more records in July
MLS® resale housing activity in Canada’s major markets set a fourth consecutive monthly record in July 2007, according to statistics released by The Canadian Real Estate Association (CREA).
Seasonally adjusted sales activity totaled 31,667 units in July 2007 “? an increase of 0.8 per cent from the previous month. The monthly increase was fueled by higher activity in Vancouver, Toronto, and London and St. Thomas. Seasonally adjusted sales activity also set new monthly records in Toronto, London and St. Thomas, and Hamilton-Burlington, and reached the second highest monthly level ever in Ottawa and Montréal.
Year-to-date transactions also set new records in almost all major markets in July. MLS® home sales via Board and Association MLS® systems numbered 235,980 units in Canada’s major markets during the first seven months of 2007, up 10.3 per cent from the same period in 2006.
New listings edged down slightly in July 2007 ...
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New housing market expected to fall
2007-08-16 07:23:01
Less available land and a price gap with resale market is causing new home starts to drop, report finds
Ontario’s new construction market will continue its decline this year and next in the face of higher home prices and increased mortgage costs, says a report by the Canada Mortgage and Housing Corp. The agency predicted housing starts for Ontario will fall to 66,950 in 2007 from 73,417 in 2006. They will drop further to 64,500 in 2008.
“The new construction market share of total home purchases has been dropping over the last several years,” said Ted Tsiakopoulos, an economist for CMHC.
“One of the reasons is we are running out of land to build on, and if you look at the average price of a new single-detached home, it is clearly outstripping the price of a resale detached home.”
He said the price gap is pushing buyers to the resale market.
Meanwhile, national housing starts are expected to fall from 227,395 in 2006 to 207,200 in 2008.
In Toronto, it ...
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It was 30 years ago today
2007-08-16 07:19:04
In my never ending quest to put Elvis and real estate into the same post, today is the 30th anniversary of Elvis’ death, and I thought what better way to celebrate “Weep Week” than to write about Elvis Real Estate.
Reno Fontana lives in one of two homes owned by Elvis when he died. The first, of course, is Graceland in Memphis. The second is the home in Palm Springs on Chino Canyon Road that Elvis and Priscilla bought on April 14, 1970.
When Reno and then wife Laura were looking for a bigger house, he was thumbing through real estate magazines on a Friday night when he saw the Chino Canyon home listed. He called at 9 a.m. on Saturday. “Is it really Elvis’ house?” he asked. Assured it was, he responded, “I’ll be right there, and I am buying it.” He bought the house sight unseen for $1,275,000.
“When we moved in, within a matter of hours on the first day people were stopping by taking pictures,” Fontana relates. “W ...
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First Magnus - Done Funding (no more question mark)
2007-08-16 07:02:27
UPDATE: Bloomberg confirms that First Magnus has stopped funding.
Apparently First Magnus Financial has shut down funding at its retail arm, Great Southwest Mortgage, the Arizona Daily Star reports. They cite an email from the corporate office sent to branch managers informing them of the company’s decision to cease funding loans effective immediately. From the article:
An e-mail Wednesday evening told branch managers of Great Southwest Mortgage, the retail arm of First Magnus, that the parent company was no longer funding loans. First Magnus ranked 61st in the Star 200 survey of the biggest employers of Southern Arizona, reporting 800 full-time-equivalent local employees.
“We will not be funding loans tomorrow,”¯ wrote Erik Lutz, the president and founder of Great Southwest. A manager with the company, who spoke on condition of anonymity, said he was told Wednesday evening that First Magnus was closing. However, he said Great Southwest hopes to stay in business by ...
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What’s going on with Countrywide?
2007-08-16 05:18:52
Two Important Updates:
Our friend Peter Viles at L.A. Land blog has a terrific time line of events in the Countrywide crisis.
Paper Money has great insight in to what 11.5 billion looks like to Countrywide:
“To put the company’s current predicament into perspective a bit, for the month of July Countrywide reported that it had an average daily loan activity of $2.7 billion, so they have effectively bought themselves 4.25 days of operations at that level.“
In my post a few days ago I asked “Is Countywide the next Titanic?” I didn’t know; and I still don’t know if it is or not. But there has been a flurry of news about Countrywide over the last couple of days. Let’s take a look at some of it and see if we can distill it down at all:
Yesterday Merrill Lynch analysts downgraded the Countrywide stock from a “buy” to a “sell” - that is a huge swing for analysts. They cited bankruptcy and liquidity concerns at the ...
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Florida realty market goes south
2007-08-15 14:06:21
Great deals abound in southwest Florida due to credit crunch
Phone books that were delivered but never opened rot away next to empty driveways and overgrown lawns, telltale signs that once-booming southwest Florida is now the centre of the U.S. housing storm. Until two years ago, middle-class retirees vied with property speculators for houses and apartments in Cape Coral, a town near Fort Myers on Florida’s sun-drenched Gulf Coast. Now almost every other house on some of its streets has a for-sale sign outside.
With a bloated inventory of unsold homes and a growing number of homeowners forced by mortgage delinquencies to sell “? thanks to the subprime crisis and ensuing credit crunch “? southwest Florida’s once-warm clime for property has turned stone-cold.
Linda Setterlund, 61, owns a pristine three-bedroom, two-bath, Cape Coral house that has been on the market for about a year. At a reduced asking price of $183,900 (U.S.), she said, the house had been pric ...
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What does the “A”¯ in NAR really stand for?
2007-08-15 11:43:25
Asinine.
The National Association of Realtors released its latest existing home sales report for the second quarter of 2007 and - if you ignore the 10% year-over-year decline in sales volume and the drop in median prices - guess what? The NAR says things are improving!! Yipee.
Not that they haven’t been saying that, oh, for the last year or so, but finally some signs of life! The report shows that some (even a majority) of marketing areas have seen year-over-year price increases. We’re all saved and the housing market is recovering just on the NAR’s schedule.
Excuse me while I clean the vomit off my shoes … As our good friends over at Housing Wire point out the analysis used to come to the conclusion of an improving market is about as reliable as the analysis pointing to WMD’s in Iraq.
From our PhD friends over at Housing Wire:
I usually try to avoid rants on this blog, but as someone who has studied for a PhD and understands econometric analysis at ...
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