Subprime Problems

Subprime Delinquencies Stay Brisk

Hansen — Mon, 25 Aug 2008 23:34:56 +0000

Subprime delinquencies continue to increase, according to S&P. Last month subprime delinquencies rose 7%. Jumbo loans continued to outpace all mortgage delinquencies, which should keep a tight lid on new jumbo originations as well as the strong premium paid for those mortgages. Signs are also growing that the subprime payment plans offered to troubled borrowers are also beginning to fail.

Subprime Still Strong: Hits Fannie and Freddie

Hansen — Fri, 11 Jul 2008 22:58:54 +0000

Subprime mortgage problems still have some significant legs as the share price of Fannie Mae and Freddie Mac showed today. At one point today, shares dropped as much as 50% on the NYSE. It does seem as if the companies will be protected from failure and completely insolvency by the US government. However, it is unclear whether or not the shareholders will be carried along for the bailout or left with nothing.

Subprime Problems May Last Into 2009

Hansen — Fri, 13 Jun 2008 17:52:38 +0000

2007 and 2008 may not be the only years with massive subprime mortgage delinquencies. It seems as if subprime delinquencies may continue to rise into 2009. At least this is the opinion of the National Association of Realtors. At present, the delinquency rate on subprime loans is around 20%. Some believe that this forecast could rise by as much as 50%, putting delinquency rates going forward at 30%. For the NARs part, it sees a 25% increase, boosting the delinquency rate on subprime mortgages to 25%.

Schwab (NASDAQ: SCHW) May Settle Subprime Claims

Hansen — Tue, 10 Jun 2008 12:26:50 +0000

Bloomberg is reporting that Charles Schwab (NASDAQ: SCHW) may pay $260 million or about 6 weeks profit (1/2 quarter) to settle investors’ claims surrounding one of their bond portfolios with exposure to subprime securities. The claim involves the Charles Schwab mutual fund prospectus which labelled its the fund “marginally” riskier than cash. Ooops sorry about that Grandma, by marginally we meant dramatically risker than cash.

AIG (NYSE: AIG) Faces SEC Probe

Hansen — Fri, 06 Jun 2008 15:08:12 +0000

AIG will face a SEC probe over accounting practices related to their subprime mortgage exposure. It seems as if it will be investigated as to whether or not the firm inflated the value of their contracts linked to subprime mortgages. As much of the subprime fallout hit, Wall St. pundits remained impressed with AIG’s ability to remain insulated from write-downs and their seemingly low exposure. It isn’t even two years after AIG settled another accounting scandal which cost the firm $1.6 billion.

Subprime Write-Offs - 80/20

Hansen — Wed, 14 May 2008 18:48:01 +0000

Fitch announced today that it believed that further write offs of subprime backed securities could come, but that 80% of write downs are now over. It does not see any material ratings changes to be made because of the subprime mess. It also said that it estimated that banks proper hold around 50% of the nearly $1.5 trillion subprime mortgage market.

FASB: We warned you about subprime

Hansen — Fri, 02 May 2008 17:13:32 +0000

Financial Accounting Standards Board (FASB) chairman Robert Herz reminded everyone that it put out a ‘reminder’ in December 2005 warning about the risks of subprime mortgage backed assets. Okay, you really have to wonder if anyone actually took this seriously or read the memo. Clearly FASB did not see the true extent of the problem and if they did, why were they simply putting out a 6-page ‘unusual reminder.’ Still, maybe the CFOs, investors, banks, foreign governments all should begin paying more attention to the origanization that builds so-called generally accepted accounting principles.

Editorial Calls For India’s Public Banks To ‘Come Clean’

Hansen — Fri, 25 Apr 2008 13:51:17 +0000

It is time for India’s public banks to come clean about their subprime mortgage exposure, or so says a recent article in the Economic Times from India. Many had held out hope that the public banks were somewhat wiser in limiting their exposure to the currently distressed subprime assets, but it seems their exposure to them is not marginal. We may not get full details on the Indian public banks until their announce their full report early next month. Estimates vary widely as to the exact amount of the exposure, so really they are borderline useless. Just another example on how the subprime mortgage problems ripple effect continues to roll.

Subprime Fun in Japan

Hansen — Fri, 11 Apr 2008 18:57:11 +0000

News from Japan on this lovely Friday is that the country faces around a 1.2 trillion loss because of losses on subprime mortgages. The subprime mortgage asset loss of ¥1.2 trillion is from 2007 alone. It seems as if Mizuho will be the hardest hit sustaining over half of the entire country’s losses on subprime mortgages itself. This news comes when earlier this week the IMF believed the US losses were likely to top $1 trillion (that’s dollars not yen).

IMF: Credit Crisis to Cost Near $1 Trillion

Hansen — Tue, 08 Apr 2008 13:21:37 +0000

The International Monetary Fund is reporting today that the credit crisis may cost an aggregate of $1 trillion to the United States. The credit crisis emerged in the second half of 2007 due to a variety of consequences. The credit crisis stemmed, primarily, from the housing market and problems surrounding subprime mortgages. The total losses for the housing market were pegged at near $550 million.