Friday, August 03, 2007

Back from vacation. Update!

Here is a great update on the current state of the mortage market. This is getting ugly:

From National Mortage News:

I'll put it bluntly: if you operate a non-depository mortgage firm (lender or servicer) and don't have a deep-pocketed parent or hedge fund as a sugar daddy you're likely to be out of business by year-end, probably sooner. In the 20-plus years that I've been covering residential finance I haven't seen a financial meltdown this swift since the S&L crisis of the mid-to-late 1980s. One subprime executive who closed his shop a few months ago told me, "This is a liquidity crunch the likes I have never seen." Meanwhile, the mudslide is rolling downhill from Wall Street to mortgage bankers, to loan brokers, and then the consumer. Nomura Securities is winding down its mortgage conduit and three major Wall Street firms are preparing to slash their mortgage desks and or conduits…

And consider this: On Friday, Wells Fargo had hiked its jumbo loan rate to 8%. (This is the same Wells Fargo that up until a few months ago was overstating its subprime correspondent purchases so it could garner bragging rights to being No. 1 in subprime.) Meanwhile, Countrywide Financial Corp., considered a bedrock of the industry, is tightening up requirements on warehouse credit doled out to its correspondents.

6 comments:

Tyrone said...

Welcom back!

And Cramer (Jack-a$$) says...
http://tinyurl.com/3bblm2

beebs said...

We're in a credit crunch not seen since they raised the prime in the early 80's. I don't own any bonds thank goodness.

SLO Bear said...

Welcome back Crispy-

This week has been historical indeed, and sadly, Joe Sixpack has no idea that anything is wrong - just rich Wall Street types losing money in investments he's never heard of.

This is this first time I have actually felt nervous about the impending shockwave that will be felt across the world. I just can't think of any situation that wouldn't end in a Depression for the US.

Bakersfield Bubble said...

Thanks!!!

I followed the news from the foreign newspapers where I was at, however, I did not bring my laptop, so I missed some of the details.

The world (outside the US) is nervous about this credit crunch also. Germany had to bail out a bank to stave off what they were calling "the worst credit crisis since the 1930's". I have been long the stock market, however, I am starting to worry this will spread even more than most of us thought...


Thanks for the Cramer link - As usual he is WAY behind the curve.

Lone Ranger said...

"This is this first time I have actually felt nervous about the impending shockwave that will be felt across the world. I just can't think of any situation that wouldn't end in a Depression for the US."

We are all completely screwed. Long before the coming recession can be worked out of the system, we'll be hit hard by peak oil. There's really nowhere to go but down from here.

Helecopter Ben will likely bow to pressure from the money changers, and lower interest rates late this year. Say goodbye to the remaining value of the USD.

Can you say Stagflation?

Raynor said...

Jim Cramer is a nut, true enough, but I have to wonder about his interest rate reduction rant. It doesn't make sense to me for these financial institutions to knee jerk RAISE rates now that they have a problem with bad loans (which they helped create) and just excaerbate the REO situation!

I don't know that knee jerk LOWERING of the rates would be the panacea that Cramer thinks either but RAISING them certainly can't help (anyone but the banks in the short term that is)!