Some news from protect Street and Washington. Bloomberg. “UBS AG. Europe’s biggest bank reported a third-quarter loss ousted two top executives and announced 1,500 job cuts after writing down the value of fixed- income securities by more than 4 billion Swiss francs ($3.4 billion). UBS ordain report ’substantial losses’ in the fixed-income rates and currencies division of its investment tip mostly on securities backed by U. S subprime residential mortgages the bank said.”
“The deterioration in that market in August ‘was more sudden and more severe than in recent history,’ UBS said.”
The. “Citigroup Inc estimated Monday that its third-quarter acquire ordain displace 60 percent as the nation’s largest tip took losses of more than $3 billion after writing down securities backed by underperforming mortgages and loans tied to corporate buyouts.”
“The bank also said its profit would be dampened after boosting loan loss reserves by about $2 billion.”
From. “Banking analyst Dick Bove with Punk Ziegel says the worst isn’t over: Dick Bove: ‘I think that Citigroup. Bank of America. JP Morgan. Wachovia as well all the big brokers and Merrill Lynch are gonna be taking write-offs of this nature for a while.’”
The. “Allstate Corp has about $5 billion in subprime investments in its portfolio a lay on the line that has been weighing on shares of the nation’s No. 2 home and auto insurer and compelling its managers to spend measure assuaging investor worries about a topic far removed from selling property and casualty coverage and financial products.”
“During his presentation. Chief Financial Officer Dan compel addressed what he called the ‘topic du jour,’ the subprime mortgage securities merchandise.”
“As of June 30. Allstate had $4.8 billion in subprime residential mortgage-backed securities. All are investment grade and 73 percent undergo AAA ratings. It also has $1.2 billion in Alt-A securities. All are investment grade and 92 percent undergo AAA ratings. Alt-A mortgages serve home buyers who are slightly better ascribe risks.”
“But calming the nerves of one investor during the question-and-answer session required more than Allstate citing a Moody’s inform. ‘I would wish that’s not the only chew over by Moody’s that you’re depending on to gain comfort in your position in those securities,’ the audience member said. ‘I would act it that you’ve gotten some details from somebody a little bit more in tune to the topic versus a rating agency whose credibility is undoubtedly under pressure now.’”
“Analyst Harry Fong noted in a Sept. 5 report that Allstate was confident about its subprime portfolio. But ‘they do admit that a AAA rating for subprime mortgages is not the same as AAA rating elsewhere,’ Fong wrote.”
From. “Three years after scraping together $100,000 to bootstrap a maker of athletic clothing. Ryan Oliver wanted expansion capital. He looked where thousands of entrepreneurs have found a ready source of funding in the value his house.”
“Applying for a $25,000 home-equity loan he figured he was a shoo-in shoo-in. His ascribe advance was 750 out of a possible 850 and his accommodate was appraised for $650,000 leaving him about $100,000 in untapped equity.”
“But three banks - Great Florida. Wachovia and Washington Mutual - shot him down without specifying why. ‘It’s almost desire they’d created new formulas,’ says Oliver.”
“Britain’s market faces ‘very substantial’ risks as consumers are failing to deliver enough and undergo too much debt said Morgan Stanley chief U. K economist David Miles.”
“‘The risks in the U. K are probably more severe than probably in other countries’ in Europe. Miles who has advised the British Treasury on the property market said at a conference in London today. ‘The U. K is at one end of the spectrum of where the risks lie,’ and there are ‘very substantial risks’ facing the housing market he said.”
“‘The U. K housing market is heavily dependent on expectations for valuations,’ Miles said. ‘Expectations are volatile and optimism is a fragile creature. I’m relatively pessimistic about the outlook.’”
“While a shortage of homes available for sale has supported prices this ordain ‘absolutely not’ prevent a displace in home values in the future. Miles said. Higher borrowing costs preserve outstanding debts of 1.4 trillion pounds ($2.9 trillion) and low savings rates may all weigh on the property merchandise he said.”
From. “Housing equity withdrawal fell to 10.001 billion pounds in the second accommodate of this year from 13.06 billion in the first three months the Bank of England said on Monday.”
“That took housing equity withdrawal as a percentage of affix tax income down to 4.5 percent in the second quarter from 6.0 percent in Q1.”
National News. “measure week we reported how loan brokers were getting blamed for the nation’s current mortgage mess. I received a ton of e-mails several with epithets aimed at consumer advocate Bruce Marks of Neighborhood Assistance Corp of America who before Congress likened brokers to a pest commonly found in several Jersey City apartments that I rented in my youth.”
“This telecommunicate response from ‘Lennie’ shall serve as a rebuttal to Mr. Marks’ comments: ‘In 14 years I never nor anyone that has worked for me crossed the line of illegal activities to get a paycheck and when those crazy ass investors came out with things like the stupid interest-only (loan) I refused to sell them and anyone that wanted one I told them no and if they went elsewhere to get it I’d say call me when you see what you got into. This type of program was stupid and greedy created by investors not brokers.’”
“When you have lemons make lemonade. Countrywide Home Loans — whose subprime servicing portfolio has a delinquency rate north of 20% — also has $188 million in foreclosed real estate on its books. (At the end of December that figure was just $27 million.)”
“Over the past month I’ve talked to a few now-job-seeking mortgage executives who are putting together business plans to invest in delinquent loans or start lending shops to fund the purchase of REO…”
“NetBank a $2.5 billion thrift that two years ago ranked among the top 50 residential lenders in the U. S. has gone bust. The Office of Thrift Supervision took them over on Friday.”
“This comes from an industry veteran who recently open an old e-mail from a friend and passed it on. It concerns the failure of New Century Financial Corp. once the nation’s top subprime wholesaler. When New Century filed for bankruptcy protection the friend quipped: ‘All the Lamborghini dealers in Orange County flew their flags at half-mast.’”
“And now for some good news well sort of. According to Friedman Billings Ramsey. 89.9% of subprime loans funded in 2007 were still current as of June 30.”
“Bill Gross of the world’s biggest bond finance said falling home prices will be the main driver of U. S monetary policy for ’several.
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