The possible downgrade of Fannie’s and Freddie’s subordinated debt involves only a small amount of the GSEs’ total debt, but the symbolism is more important than the dollar amounts. It validates some of the critics’ worries about Fannie and Freddie but also signals the possibility that not only shareowners could be wiped out, but even […]
Read more...Bond maven Bill Gross has raised his estimate of losses from the credit crunch to $1 trillion. One has to note that his firm is a large holder of Freddie and Fannie debt and he issued this pronouncement the day after the GSE rescue bill passed the House and looks certain to become law. Note […]
Read more...The latest housing news is not pretty. The decline, however, was only slightly below the expected annualized level of 4.94 million units. From Bloomberg: Sales of previously owned U.S. homes fell in June to the lowest level in a decade, signaling tumbling real-estate prices and consumer confidence are hurting demand. Resales dropped 2.6 percent to […]
Read more...This program to assist overextended homeowners has only just begun, so it is way to early to say whether it will succeed, but it is an improved version of Dean Baker’s “own to rent” idea. Note that one of the elements, having a new bank buy the original lender out at the 70% of mortgage […]
Read more...From Reuters (hat tip reader Saboor): Citigroup chairman Win Bischoff has warned that house prices in Britain and the United States are likely to keep falling for another two years. The chairman of one of the world’s most powerful banks told the BBC in an interview that he expects it will take two years for […]
Read more...It’s truly remarkable what a short squeeze and the threat of tighter governmental oversight can do. According to the Wall Street Journal, Freddie Mac is now considering raising $10 billion of equity to keep a government rescue at bay, or at least contained. But what are we to make of this attempt at stagecraft? The […]
Read more...This sad tale comes courtesy Katie Porter in “The REALLY Sad State of Mortgage Servicing” at Credit Slips: A customer legally tape-recorded his conversation with his mortgage servicer, one of the nation’s largest financial institutions (and no, it’s not Countrywide!) His attorney shared it with me, and I’m posting some excerpts…. Bob I was wondering […]
Read more...I got this far in the Wall Street Journal article, “Capitol Hill Storm Envelops Fannie-Freddie Rescue” and started seeing red: The Congressional Budget Office is expected to estimate the cost of Treasury’s proposals to the federal government to be in the tens of billions of dollars, according to people familiar with the matter. That estimate […]
Read more...The boarding house faded from the American landscape over two generations ago. But mortgage payment stress is leading to a modern variant: more homeowners renting out part of their residence. This New York Times story is anecdotal, but if trend grows, we may see attempts to quantify it, particularly since agencies frequently vet prospective tenants. […]
Read more...The link is here. Main elements: Common and preferred equity wiped out Subordinated debt swapped for equity warrants Current senior unsecured debtholders get per each dollar of face 90 cents face amount of new debt and 10 cents face amount of new equity Equity holders can put common to Feds at face value for first […]
Read more...So much for the notion that the not-quite-a-rescue-plan for Fannie and Freddie would calm troubled markets. Equities gave a raspberry yesterday and overnight, the TED spread widened 11 basis points to 133 basis points (a sign interbank funding trouble may be nigh) and today the currency markets, which initially seemed to take the news in […]
Read more...The FDIC announced earlier that it will halt foreclosures in IndyMac’s $15 billion loan portfolio. But I found this bit of the Wall Street Journal’s article “IndyMac Reopens, Halts Foreclosures on Its Loans“: In its effort to halt foreclosures, the FDIC has much more flexibility to intervene with the roughly $15 billion of loans that […]
Read more...The UK real estate market started its decline after the US , and some anticipate the eventual downside could be even worse. Consumer debt to income there is at an even higher level than here, which means plummeting real estate values can lead to cascading debt defaults, potentially to a greater degree than in the […]
Read more...As both cynics and boosters anticipated, the Freddie Mac $3 billion sale of short term debt went off well this morning. As of this hours, the stocks of the GSEs have fared less well, as the Wall Street Journal notes: Shares of Freddie were up about 20% soon after the market opened Monday but reversed […]
Read more...I received an e-mail that contains the text of a letter allegedly sent to Freddie Mac employees this evening (hat tip reader Jeff). On the one hand, I cannot verify its authenticity. On the other hand, it reads like the real deal. Note particularly the claim that the measures proposed by the Treasury are merely […]
Read more...