Warning: Josh Rosner is controversial in some circles. He co-authored a simply terrific paper with Joe Mason, “Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions.” If you haven’t read it, do so now. If you don’t have the time, we summarized it here. However, […]
Read more...Another day of nervousness and not-exactly-positive developments on the Fannie and Freddie front. What is remarkable about the situation now is that at least some of the trouble elements were entirely predictable, which suggests that a bit of aforethought might have led to a better plan and less bad outcomes (I’m not such as optimist […]
Read more...The real estate recession has arrived, with a vengeance, in London and environs. While fading prospects for City employment and pay levels is no doubt part of the equation, the proximate cause is the dearth of mortgage finance, which bodes ill for the market’s prospects. Indeed, the headline item reflects a drop in asking prices, […]
Read more...While even moral hazard hawks generally agree that some sort of government intervention would be needed in the event of financial trouble at Fannie and Freddie, the most compelling reason was that the US, chronically dependent on foreign funding, would be ill advised to treat its money sources badly. Of the GSEs’ $5.2 trillion in […]
Read more...Here we go again. Even though equities are theoretically forward-looking (Barry Ritholtz has pointed out that that ain’t as true as most people believe), bonds are more often the canary in the mineshaft, typically going into a funk before stocks do. Even though the credit markets started getting the heebie jeebies in early June and […]
Read more...I must admit to being a bit dense. The UK Times tells us that a large amount of spec office development in London is likely to be mothballed and some may even be cancelled. What has me puzzled is why this shift is happening now. The credit contraction started in early June, went into its […]
Read more...Bloomberg reports that Lehman is in talks with BlackRock to spruce up its balance sheet by disposing of a big chunk of its commercial real estate portfolio. The article indicates that the firm intends to sell slightly less than half of its $40 billion holdings. Ladenburg Thalmann’s analyst Richard Bove anticipates the losses (presumably from […]
Read more...Remember a few months ago a big secret in plain sight was that many banks were awfully slow about foreclosing on deadbeat homeowners. Some of this was arguably not due to gameplaying but a function of overloaded servicing departments that were understaffed and backed up. But in many cases, the belief was that the delays […]
Read more...The Wall Street Journal tells us “Freddie Mac Will Stop Buying New York Subprime Mortgages.” The reason? The state has implemented a new category of subprime mortgages, and, horrors, made them subject to “assignee liability”. In simple terms, if you are in the food chain that sold dodgy paper to an end investor, they can […]
Read more...From the Times Online: Sir James Crosby, former chief executive of HBOS, who is carrying out a review for the Treasury, said that the “shortage of mortgage finance will persist throughout 2008, 2009 and 2010, and I suspect that current forecasts for new mortgage lending during this period will prove optimistic.” As expected, Sir James […]
Read more...It would be nice if Fannie and Freddie would have the good taste to stay out of the spotlight, particularly since bad news is a sign of higher odds that Things Are Not Going Well, Especially for Bagholders Taxpayers. However, it looks like we may not be so lucky. Bloomberg’s Jonathan Weil did some digging […]
Read more...It no doubt seems absurd to question the idea that deleveraging in underway. We’ve had three heroic central bank interventions, starting in August 2007, to reverse seize-ups in the money markets. The asset backed commercial paper market has been almost in run-off mode. Leveraged buyout loans have been scarce to non-existent. Banks have cut home […]
Read more...You simply cannot make this stuff up. Reader Steve pointed us to a HousingWire post, which says that mortgage servicers may too come knocking on the Fed’s window for financial support, thanks to the housing bill just passed by Congress. Now we’ve been told by mortgage counsellors involved in the Hope Now Alliance that servicers […]
Read more...Former regional Fed president William Poole argues forcefully in a New York Times op-ed today that Fannie Mae and Freddie Mac are not only unnecessary but also distort the financial markets and should be wound down. This program would also be consistent with a strategy of minimizing risk and cost to taxpayers. Probably due to […]
Read more...Research by an IMF economist concludes that US residential real estate was overvalued by 14% as of the first quarter of 2008. The paper seeks to define an equilibrium price and also anticipates that the housing market will fall markedly below that level. From Reuters (hat tip Michael Panzner): The downward spiral of U.S. housing […]
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