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  • Foreclosures Prove Loan Modification Isn't Working
    I totally agree that banks are impaired from doing thier best to clear out the inventory, but I didn't realize that they needed more cash infusion to do it. This depression could to be long. I don't think it will be as long as Japan's bubble crash because Americans are much more willing to clean up the mess, but if they have little power to do that, we have a lot more trouble ahead.
    May 16 14:05 pm |Rating: 0 0 |Link to Comment |View article
  • Closer Look At The ARMs Reset Problem
    Good observation! I would like to add my 2c about possible prolonged effects that will drag on forever.

    It takes 90 days to go through a typical foreclosure process for a home to be REO. After that, typically, banks hire someone to "clean it up" and list it with a Realtor - which then will sit on a market of over 10 months of supply to move. Most banks probably have too many foreclosures to go through all these stages. What will they do? They have many options, and I believe whatever they might do will end up making the house listed cheaper on the market.

    Then the snowball starts rolling for real. More mortgages will be underwater, making more people walk away.
    Apr 03 15:34 pm |Rating: 0 0 |Link to Comment |View article
  • Closer Look At The ARMs Reset Problem
    I'm not big into litigation and interventions but citigroup needs to pay for trying to scam people.
    Apr 03 15:23 pm |Rating: 0 0 |Link to Comment |View article
  • When Quants Fail
    Amen. Some of the most aggresive trading strategies out there are nearly completely models. It's only been a decade since LTCM and people forgot about how dangerous blind trust in quant models can be.

    Having met some of the fixed income quant people at Citi, I can't say I feel bad for the bunch.
    Apr 02 02:57 am |Rating: 0 0 |Link to Comment |View article
  • Don't Expect a Housing Bottom Until Late 2009
    I have long determined, since early 2007, that I'll start to look around to buy a house by winter 2009. Here's what I figure:

    1. The worse year for reckless lending happened at around spring 2006. But prices already went soft the begining of 2006.

    2. Let's say a speculator buys a house in 1Q 2006. A common teaser term is 2 years. Hence the mortgage payment resets 1Q 2008. The borrower misses payment.

    3. Legally, the bank will give the borrower 3 months to catchup on the payments. Then the loan goes into default.

    4. The bank has to setup auction with a third party trust and advertise it. That takes another 2-3 months. Here we are at 3Q 2008.

    5. The property becomes REO, and the bank hires an agent, board up the house and sell it as-is. Currently, housing inventory is 11 months. which brings us to 3Q 2009.

    So basically, my estimate is that holders of the worst loans(the Motivated Sellers) will finally buck by winter 2009 and drop prices. By then, there will be plenty to choose from.

    And it might be like TraderMark describes here: No body wants a piece of real estate because "all it does it lose money." and young professionals like me will finally be able to get a home of our own.
    Jan 01 14:14 pm |Rating: 0 0 |Link to Comment |View article
  • Market Sinkhole Alert: Look Out Below
    Do you have a good reason to equate the extra liquidity to actual money flowing into the market?
    Aug 09 17:36 pm |Rating: 0 0 |Link to Comment |View article

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