Comments on: Credit Market Woes Du Jour: Ambac Losses, 95% Fall in Earnings at BofA http://www.nakedcapitalism.com/2008/01/credit-market-woes-du-jour-ambac-losses.html Sun, 22 Nov 2009 06:06:33 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/01/credit-market-woes-du-jour-ambac-losses.html#comment-3231 Anonymous Wed, 23 Jan 2008 05:50:00 +0000 http://www.nakedcapitalism.com/2008/01/credit-market-woes-du-jour-ambac-losses-95-fall-in-earnings-at-bofa/#comment-3231 Interesting background on underwriting: <br/><br/>Delegated Underwriting and GSE Automated Underwriting Approvals.<br/><br/> Delegated<br/>underwriting is a program under which approved lenders are allowed to commit<br/>MGIC to insure loans originated through the flow channel utilizing their own<br/>underwriting guidelines and underwriting evaluation. Some major lenders having<br/>delegated underwriting authority use their own proprietary automated<br/>underwriting services to apply their underwriting guidelines to loans. In<br/>addition, since 2000, loans approved by the automated underwriting services of<br/>the GSEs have been automatically approved for MGIC mortgage insurance.<br/><br/><br/><br/>During 2003, a substantial majority of the loans insured by MGIC through<br/>the flow channel were approved as a result of loan approvals by the automated<br/>underwriting services of the GSEs or though delegated underwriting programs,<br/>including those utilizing proprietary underwriting services. MGIC expects the<br/>portion of its flow business that is approved in this manner to continue to<br/>increase. The loan approval criteria of automated underwriting services are<br/>within the risk management discretion and control of the GSEs or the lender<br/>operating the service. As a result of accepting the loan approval decisions of<br/>these services, MGIC does not have the ability to control in advance the risk<br/>characteristics of such loans. MGIC's risk management approach to such flow<br/>business has been to monitor periodically the credit quality of the loans it has<br/>recently insured in this manner. If as a result of such review MGIC perceives<br/>certain loans insured in this manner have an unacceptably higher risk of claim,<br/>MGIC can continue to insure loans with such characteristics that are thereafter<br/>submitted to it at A- rates. In addition, in the case of loans approved other<br/>than through the automated underwriting systems of the GSEs, MGIC can decline to<br/>continue to insure loans having such characteristics. Interesting background on underwriting:

Delegated Underwriting and GSE Automated Underwriting Approvals.

Delegated
underwriting is a program under which approved lenders are allowed to commit
MGIC to insure loans originated through the flow channel utilizing their own
underwriting guidelines and underwriting evaluation. Some major lenders having
delegated underwriting authority use their own proprietary automated
underwriting services to apply their underwriting guidelines to loans. In
addition, since 2000, loans approved by the automated underwriting services of
the GSEs have been automatically approved for MGIC mortgage insurance.

During 2003, a substantial majority of the loans insured by MGIC through
the flow channel were approved as a result of loan approvals by the automated
underwriting services of the GSEs or though delegated underwriting programs,
including those utilizing proprietary underwriting services. MGIC expects the
portion of its flow business that is approved in this manner to continue to
increase. The loan approval criteria of automated underwriting services are
within the risk management discretion and control of the GSEs or the lender
operating the service. As a result of accepting the loan approval decisions of
these services, MGIC does not have the ability to control in advance the risk
characteristics of such loans. MGIC’s risk management approach to such flow
business has been to monitor periodically the credit quality of the loans it has
recently insured in this manner. If as a result of such review MGIC perceives
certain loans insured in this manner have an unacceptably higher risk of claim,
MGIC can continue to insure loans with such characteristics that are thereafter
submitted to it at A- rates. In addition, in the case of loans approved other
than through the automated underwriting systems of the GSEs, MGIC can decline to
continue to insure loans having such characteristics.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/01/credit-market-woes-du-jour-ambac-losses.html#comment-3222 Anonymous Tue, 22 Jan 2008 19:28:00 +0000 http://www.nakedcapitalism.com/2008/01/credit-market-woes-du-jour-ambac-losses-95-fall-in-earnings-at-bofa/#comment-3222 Check this out in terms of why The Fed is not putting out the economic implosion: <br/><br/> http://en.wikipedia.org/wiki/Oil_well_fire<br/><br/>This fire has been burning out of control for 8 years and the Iraq war continues to consume GDP wealth, but the Fed is faced with allocation of resources (supply and demand) relating to less cash flow and thus an inability to fight multiple battles in the form of multiple interconnected economic bubbles -- like a housing crash, inflationary increases, stock value declines, and dynamic variables that are impacting the resources available for them to put out any of these related fires.<br/><br/>I think we have had years of un-precedented financial collusion where synthetic derivatives were packaged into a tsunami of un-precedented dis-proportional easy global credit allowances which were universally abused, resulting in the current financial chaos and systemic crisis -- which I think is symbolic of an out of control fire. The fire needs time to burn out, the market needs to correct and the more casino/lotto theories embarked upon by government intervention will only add more fuel for this fire!<br/><br/>I feel better now, Yah! Check this out in terms of why The Fed is not putting out the economic implosion:

http://en.wikipedia.org/wiki/Oil_well_fire

This fire has been burning out of control for 8 years and the Iraq war continues to consume GDP wealth, but the Fed is faced with allocation of resources (supply and demand) relating to less cash flow and thus an inability to fight multiple battles in the form of multiple interconnected economic bubbles — like a housing crash, inflationary increases, stock value declines, and dynamic variables that are impacting the resources available for them to put out any of these related fires.

I think we have had years of un-precedented financial collusion where synthetic derivatives were packaged into a tsunami of un-precedented dis-proportional easy global credit allowances which were universally abused, resulting in the current financial chaos and systemic crisis — which I think is symbolic of an out of control fire. The fire needs time to burn out, the market needs to correct and the more casino/lotto theories embarked upon by government intervention will only add more fuel for this fire!

I feel better now, Yah!

]]> By: Anonymous http://www.nakedcapitalism.com/2008/01/credit-market-woes-du-jour-ambac-losses.html#comment-3217 Anonymous Tue, 22 Jan 2008 17:16:00 +0000 http://www.nakedcapitalism.com/2008/01/credit-market-woes-du-jour-ambac-losses-95-fall-in-earnings-at-bofa/#comment-3217 What amazes me is the casino-like insanity where the US market just has to be gamed and made out to look like its a great deal or a great value and that this is an opportunity. This is an opprtunity for daytrader fools, but the stories we read about like this one of Ambac & BOA are profound and the core fundamentals of this financial system are very suspect and with a massive rate cut sent in to help banking friends from banking friends is fraud squared, it is the gas on the BBQ and the denial here is amazing, all the name of getting the casino back up and running within days, as if $15 Trillion in global decay within a few months is not something to consider! Some may not like my comment, but this is retarded and iy seems like we have a mafia in place that has no other vision than to window dress a casino that has almost burned to the ground.<br/><br/>The market is still overvalued in my opinion and I think this "business cycle" of corrupt collusion needs to dramatically slow down and then take a year to consolidate and then be re-built with more regulation and people that will demand collateral and evidence to make our financial system stronger, not weaker! What is a rate cut going to do or a few hundred bucks, this is stupid!<br/><br/>S&P 500 Index. $SPX (INDEX) 1,325.19 <br/><br/>change:-8.06 -0.60%<br/><br/>http://www.marketwatch.com/quotes/$spx<br/><br/>S&P 500 P/E: = 16.83 E/P = 5.94176%<br/><br/>10 year Treasury @ 3.648%<br/><br/>http://finance.yahoo.com/q/bc?s=%5ETNX&t=5y<br/><br/>S&P 500 Overvalued by 2.29376% (for fair value)<br/><br/>S&P 500 Fair Value for Tuesday = 1294 What amazes me is the casino-like insanity where the US market just has to be gamed and made out to look like its a great deal or a great value and that this is an opportunity. This is an opprtunity for daytrader fools, but the stories we read about like this one of Ambac & BOA are profound and the core fundamentals of this financial system are very suspect and with a massive rate cut sent in to help banking friends from banking friends is fraud squared, it is the gas on the BBQ and the denial here is amazing, all the name of getting the casino back up and running within days, as if $15 Trillion in global decay within a few months is not something to consider! Some may not like my comment, but this is retarded and iy seems like we have a mafia in place that has no other vision than to window dress a casino that has almost burned to the ground.

The market is still overvalued in my opinion and I think this “business cycle” of corrupt collusion needs to dramatically slow down and then take a year to consolidate and then be re-built with more regulation and people that will demand collateral and evidence to make our financial system stronger, not weaker! What is a rate cut going to do or a few hundred bucks, this is stupid!

S&P 500 Index. $SPX (INDEX) 1,325.19

change:-8.06 -0.60%

http://www.marketwatch.com/quotes/$spx

S&P 500 P/E: = 16.83 E/P = 5.94176%

10 year Treasury @ 3.648%

http://finance.yahoo.com/q/bc?s=%5ETNX&t=5y

S&P 500 Overvalued by 2.29376% (for fair value)

S&P 500 Fair Value for Tuesday = 1294

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