Wednesday, March 14, 2007

"Those who can't DO, TEACH...."

"....and those who can't teach move to South America and blog mindless conspiracy theories all day."

I swiped this from another blogger's (if you aren't already a bear, read this for an evening or two and you'll be going into a 12 year hibernation on housing.)

From MarketWatch. “Losses on so-called Alt-A home loans are accelerating and could hit the value of lower-rated portions of some mortgage-backed securities, according to a study released on Tuesday.”

“These loans, known as Alt-A ARM IOs, have seen a four-fold increase delinquencies of at least 60 days, four times the level of similar loans originated in 2003 and 2004, according to the study by David Liu, head of mortgage credit research at UBS.”

“This ‘alarming’ deterioration could have dire consequences for some investors in the BBB- rated parts of mortgage-backed securities that contain these types of loans, but the market hasn’t priced these risks in yet, Liu warned.”

“Losses ‘could potentially wipe out most of the credit support on BBB- rated bonds backed by Alt-A hybrids,’ Liu wrote. ‘And yet we have not seen any spread movements that suggest investors are taking this into consideration.’”

“Liu’s study, which used LoanPerformance data from the end of January, is based on the housing market remaining relatively flat over the next few years. ‘If house prices fall over the next few years, everything in this scenario will be much worst,’ he said.”

“‘There is a 34% probability that the entire BBB- tranche might get wiped out,’ he wrote. ‘Similarly, there is a 17% probability that cumulative losses reach 300 basis points, which could make BBB bonds appear on the endangered species list.’”

“The percentage of mortgages that started the foreclosure process in the final quarter of last year rose to 0.54 percent, a record high. The previous high, 0.50 percent, occurred in the second quarter of 2002 as the economy was recovering from the blows of the 2001 recession.”

“Delinquency and foreclosure rates were considerably higher for higher-risk subprime borrowers, especially those with adjustable-rate mortgages. The late-payment rate for all subprime loans jumped to 13.33 percent in the fourth quarter, up from 12.56 percent in the prior period and the highest in four years. The delinquency rate for subprime borrowers with adjustable-rate mortgages was even higher; 14.44 percent, also the highest in four years.”

“‘Unfortunately, it appears delinquency rates will likely worsen before they improve,’ said Gina Martin, economist at Wachovia Corp. Economics Group.”

I'm shocked, SHOCKED (!) that problems could spread beyond subprime mortgages into higher rated tranches of credit. Wow, somehow that sounds familiar though (?) The mainstream media is all over this like white on rice at this point I guess.

I guess my 15 minutes is up. :) Parroting other extremists is cool, but it's hard to keep up that whole "fringe personality cache" when Lesley Stahl is saying the same thing on 60 minutes.

I guess it's time for an extremist like fuBarrio to move on to his next now?

Anyone want to hear about Uruguay???

ciao for now,


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