He must be talking about loss of "equity" ppl thought they had from ridiculous price inflation.
Originally posted by: smack Down
Doesn't the borrower come out ahead when foreclosed on. If the borrower is being foreclosed on it is because the house is worthless then the note, otherwise they would have sold the property instead of being foreclosed on. They also get to take anything that is not bolted down and sell that
Originally posted by: Vic
Scum.Originally posted by: senseamp
I have a big position in SRS, the Ultra-Short Real Estate ETF. People are still in denial about the extent of what is coming.
You don't have to buy a house (no one cares, really), but to profit directly and intentionally from the misfortune of others is disgusting, and shows exactly what your ethics are. In that regard, the only denial is yours. You are literally betting on foreclosures, the burden of which will fall mostly on the working classes.
Originally posted by: TheSlamma
This is what the people wanted.. they asked to be able to buy a 3000sq ft house with a $35,000 a year salary.. the banks answered.
Now everything is inflated, people got ARM loans galore... but hey they got space to store all their Wal-Mart crap atleast until the forclose is final.
Rationalize it all you want, all you're doing is demonstrating that all your grandiose political talk is just that. Nothing but words. When the opportunity comes for you to personally get involved in screwing the working poor, then jump right into it, "nothing personal, strictly business."Originally posted by: senseamp
Originally posted by: Vic
Scum.Originally posted by: senseamp
I have a big position in SRS, the Ultra-Short Real Estate ETF. People are still in denial about the extent of what is coming.
You don't have to buy a house (no one cares, really), but to profit directly and intentionally from the misfortune of others is disgusting, and shows exactly what your ethics are. In that regard, the only denial is yours. You are literally betting on foreclosures, the burden of which will fall mostly on the working classes.
Aside from the personal attack, and your otherwise emotional approach to investment, do you really think the current real estate prices are good for the middle class? As a member of the middle class who is considering buying a house in the not too distant future, I disagree. I see tonnes of people, many with families, who are making decent wages, but are priced out of owning a home by people and real estate investment trusts who are flipping second houses for profit. So what we have now is that responsible middle class members, those who take fixed rate mortgages with down payments, cannot afford to buy a house while irresponsible flippers who take advantage of creative mortgages and easy credit drive up prices. The only people who are going to be foreclosing are those who bought up houses or took interest rate risks they could not afford, and who will be better off in foreclosure than living destitute to pay off a mortgage they can't afford. So you may call it profiting off the misfortune of others, but what about those who were profiting from the misfortune of people who had to take out enormous mortgages simply to provide middle class life for their family? SRS shorts real estate investment trusts, yep, the groups of people who were buying up properties to flip them to the middle class you love so much. Their investors took a calculated risk, hoping they would squeeze more money out of another home buyer later, just like I am now taking a calculated risk that they won't. If they are right, they make money, if they are wrong, I make money, and get to buy my middle class house for less money in the future to boot. It's nothing personal, strictly business.
Originally posted by: Trianon
Originally posted by: smack Down
Doesn't the borrower come out ahead when foreclosed on. If the borrower is being foreclosed on it is because the house is worthless then the note, otherwise they would have sold the property instead of being foreclosed on. They also get to take anything that is not bolted down and sell that
He must be talking about loss of "equity" ppl thought they had from ridiculous price inflation.
Originally posted by: Vic
Rationalize it all you want, all you're doing is demonstrating that all your grandiose political talk is just that. Nothing but words. When the opportunity comes for you to personally get involved in screwing the working poor, then jump right into it, "nothing personal, strictly business."Originally posted by: senseamp
Originally posted by: Vic
Scum.Originally posted by: senseamp
I have a big position in SRS, the Ultra-Short Real Estate ETF. People are still in denial about the extent of what is coming.
You don't have to buy a house (no one cares, really), but to profit directly and intentionally from the misfortune of others is disgusting, and shows exactly what your ethics are. In that regard, the only denial is yours. You are literally betting on foreclosures, the burden of which will fall mostly on the working classes.
Aside from the personal attack, and your otherwise emotional approach to investment, do you really think the current real estate prices are good for the middle class? As a member of the middle class who is considering buying a house in the not too distant future, I disagree. I see tonnes of people, many with families, who are making decent wages, but are priced out of owning a home by people and real estate investment trusts who are flipping second houses for profit. So what we have now is that responsible middle class members, those who take fixed rate mortgages with down payments, cannot afford to buy a house while irresponsible flippers who take advantage of creative mortgages and easy credit drive up prices. The only people who are going to be foreclosing are those who bought up houses or took interest rate risks they could not afford, and who will be better off in foreclosure than living destitute to pay off a mortgage they can't afford. So you may call it profiting off the misfortune of others, but what about those who were profiting from the misfortune of people who had to take out enormous mortgages simply to provide middle class life for their family? SRS shorts real estate investment trusts, yep, the groups of people who were buying up properties to flip them to the middle class you love so much. Their investors took a calculated risk, hoping they would squeeze more money out of another home buyer later, just like I am now taking a calculated risk that they won't. If they are right, they make money, if they are wrong, I make money, and get to buy my middle class house for less money in the future to boot. It's nothing personal, strictly business.
Originally posted by: Vic
Originally posted by: TheSlamma
This is what the people wanted.. they asked to be able to buy a 3000sq ft house with a $35,000 a year salary.. the banks answered.
Now everything is inflated, people got ARM loans galore... but hey they got space to store all their Wal-Mart crap atleast until the forclose is final.
Bingo. Those companies that rate and purchase the securities, like the one LK (and should I say, "his ilk"?) works for, ran the market up buying every piece of scrap paper they could find, pretending they were gold, encouraging banks and lenders to sell them more and more at looser and looser guidelines and at ridiculously profitable margins, and then dumped them and started shorting when the market looked to turn the other way. They basically turned the housing market into an extension of the stock market, and now they're pretending that it's all those evil predatory lenders faults as they continue to profit as former homeowners get thrown out into the street. If you're looking for "fast and loose," that's where it always was at, with the securities traders on the Street, which is why I applaud the continuing investigations by the various state AG's who are not fooled by Wall Street's propaganda.
Originally posted by: Slew Foot
The funny thing about this thread is that everyone in the end wants the same thing, affordable houses for the masses. Some of us want to achieve that goal by lowering prices to normal levels, others by continuing the helicopter drops of money to people who'll never pay it back.
Ah... bit off more than you can chew? Maybe you shouldn't have started it then...Originally posted by: LegendKiller
Meh, I decided not to raise to the bait. All I'll say that this is typical "point the finger" attitude by somebody who was remotely connected (or directly) to part of the problem. This guy claims righteous indignation and some type of white-knight attitude while claiming the moral high-ground and chastising me for hurling insults, yet his shallow veneer has, yet again, been exposed. When you try to threaten other people from some supposed superior position, try not to undercut yourself, it just shows that you are a hypocrite.
Originally posted by: Vic
Ah... bit off more than you can chew? Maybe you shouldn't have started it then...Originally posted by: LegendKiller
Meh, I decided not to raise to the bait. All I'll say that this is typical "point the finger" attitude by somebody who was remotely connected (or directly) to part of the problem. This guy claims righteous indignation and some type of white-knight attitude while claiming the moral high-ground and chastising me for hurling insults, yet his shallow veneer has, yet again, been exposed. When you try to threaten other people from some supposed superior position, try not to undercut yourself, it just shows that you are a hypocrite.
Hmm... who shall we blame? (Because obviously you have required that people be blamed since the beginning of this thread).
So let's see... the beancounters who controlled the money?
Or the salesmen who sold the money like the beancounters told them to? Gee.... wow?
It's so black and white! Why didn't I see this before?
Obviously all those bankrupt imploded lenders are at fault while the guys with the money on the Street are getting paid yet more record bonuses.
Originally posted by: Vic
Originally posted by: Slew Foot
The funny thing about this thread is that everyone in the end wants the same thing, affordable houses for the masses. Some of us want to achieve that goal by lowering prices to normal levels, others by continuing the helicopter drops of money to people who'll never pay it back.
Spin it all you want, you can't pretend that either way doesn't have its negatives. "Lowering prices to normal levels" (and I won't dispute the "normal levels" bit beyond telling you to stick to medicine) means that millions of people who bought above "normal levels" will end up foreclosed and probably bankrupt. And don't give me that "they should have known" or "they deserved it" crap because it has no place in this discussion. You can't provide affordable houses to the masses by penalizing those who bought when financing was affordable.
Originally posted by: Vic
Ah... bit off more than you can chew? Maybe you shouldn't have started it then...Originally posted by: LegendKiller
Meh, I decided not to raise to the bait. All I'll say that this is typical "point the finger" attitude by somebody who was remotely connected (or directly) to part of the problem. This guy claims righteous indignation and some type of white-knight attitude while claiming the moral high-ground and chastising me for hurling insults, yet his shallow veneer has, yet again, been exposed. When you try to threaten other people from some supposed superior position, try not to undercut yourself, it just shows that you are a hypocrite.
Hmm... who shall we blame? (Because obviously you have required that people be blamed since the beginning of this thread). So let's see... the beancounters who controlled the money? Or the salesmen who sold the money like the beancounters told them to? Gee.... wow? It's so black and white! Why didn't I see this before? Obviously all those bankrupt imploded lenders are at fault while the guys with the money on the Street are getting paid yet more record bonuses.
Why would I blame Clinton and the Democrats when I voted for them, troll? I put the blame where it belongs, with the people who controlled the money.Originally posted by: dmcowen674
I'm truly shocked you aren't blaming Clinton anymore or the Democrats now.
How come you don't put the blame where it does belong?
Your pro business buddies at all costs?
You and I both know 99.9% of those people involved in those so called bankrupt imploded lenders walked away with millions of dollars they would not have been able to had they been honest to begin with.
You can penalize greedy knuckleheads who put no money down on a home using a 5 year ARM or adjustable rate loan...especially the speculators and flippers. I have seen cases where these rocket scientists purchased a home for 500k, did minor modifications based on what they saw on HGTV, and then put the home back on the market 3 months later for 600k...I am sorry, but a new kitchen and a fresh coat of paint does not equate to a 100k in home equity.You can't provide affordable houses to the masses by penalizing those who bought when financing was affordable.
S&P may downgrade $12 bln of subprime securities
Rival rating agency Moody's cuts 399 mortgage-backed securities
By Alistair Barr, MarketWatch
Last Update: 5:28 PM ET Jul 10, 2007
SAN FRANCISCO (MarketWatch) - Wall Street's two largest rating agencies signaled on Tuesday that problems in the subprime mortgage market aren't going away and will probably get worse as rising delinquencies weigh on U.S. house prices.
Standard & Poor's said it may downgrade $12 billion of subprime mortgage-backed securities (RMBS), while rival Moody's Investors Service downgraded 399 RMBS.
S&P also said it's changing the way it evaluates subprime RMBS, partly because of unprecedented levels of misrepresentation and fraud, combined with potentially shoddy initial loan data. The new approach will be applied to new RMBS deals and could affect the ratings of other mortgage-backed securities, such as RMBS issued this year, the agency noted.
"This will impact everyone along the food chain," said Andy Chow, portfolio manager at SCM Advisors LLC, a $14 billion San Francisco-based investment firm specializing in fixed-income and structured-finance markets.
The announcements were a dramatic sign that subprime mortgage woes aren't going away and could prolong a downturn in the housing market. If that happens, U.S. economic growth could be hit harder and for longer than expected. Indeed, Home Depot (HD
Home Depot, said on Tuesday that a weakening U.S. housing market was affecting earnings more than anticipated just two months ago.
More specifically, moves by S&P and Moody's on Tuesday could mean that investors with exposure to these securities, and other derivatives linked to them, could face losses. S&P's new approach could also affect subprime mortgage originators and increase interest rates on subprime home loans.
S&P changes
Credit ratings on 612 classes of residential mortgage-backed securities (RMBS) backed by U.S. subprime collateral have been put on CreditWatch with negative implications, S&P said. Beginning in the next few days, the agency said most of these classes will be downgraded.
That covers about $12.078 billion in rated securities, or 2.13% of the $565.3 billion in U.S. RMBS rated by S&P between the fourth quarter of 2005 and the fourth quarter of 2006, the agency noted.
The agency said it's also reviewing ratings of Collateralized Debt Obligations (CDOs) that invested in the RMBS that could be downgraded. (CDOs are a bit like mutual funds that hold asset-backed securities. Many CDOs bought subprime RMBS, helping to fuel the housing boom earlier this decade.)
"It's had an impact on investor psychology," SCM's Chow said. "Even though investors should have known this was coming, the actual visibility of it has changed attitudes."
Shares of investment banks Lehman Brothers (LEH
Lehman Brothers Holdings Inc fell more than 3.5% on Tuesday.
The ABX indexes, which track derivatives linked to subprime RMBS, also declined. An ABX index linked to BBB- rated tranches of RMBS issued during the second half of 2006 closed at 58.58, down from 61.20 on Monday. ABX indexes linked to AAA and AA rated RMBS also fell.
S&P's changes mean subprime borrowers could end up paying higher interest rates on home loans, Chow added.
'The ongoing weakness in both national and regional property markets will exacerbate losses with little prospect for improvement in the near term.'
? S&P
S&P said it was taking action because losses on the mortgages underlying these securities have risen more than expected and now exceed anything that happened before.
Losses will probably increase as the U.S. housing market -- especially parts financed with subprime loans -- continues to decline before it improves, S&P said. Property values will decline 8% on average between 2006 and 2008 and that will exacerbate losses on subprime RMBS, the agency explained.
The resetting of adjustable-rate subprime mortgages and the end of low teaser rates on fixed-rate home loans will also increase subprime RMBS losses, S&P added. Tighter underwriting standards imposed by lenders will leave fewer refinancing options for stretched borrowers, the agency also said.
"The ongoing weakness in both national and regional property markets will exacerbate losses with little prospect for improvement in the near term," the agency said. "Also, many of these transactions will likely encounter additional credit stress from upcoming interest rate and payment resets."
Moody's changes
Moody's said it downgraded 399 residential mortgage-backed securities because of higher-than-expected delinquencies on the underlying home loans.
The rating agency also said it put 32 other residential mortgage-backed securities (RMBS) under review for possible downgrades for the same reason.
The RMBS were sold in 2006 and are backed mainly by first lien adjustable- and fixed-rate subprime mortgage loans, Moody's added.
New data show that delinquencies and foreclosures continue to accumulate, S&P reported. Total aggregate losses on all subprime RMBS transactions since the final quarter of 2005 have reached 29 basis points, versus seven basis points in 2000. (A basis point is one hundredth of a percentage point).
S&P used 2000 as a comparison because, until now, that was the worse year for subprime losses in the past decade.
Alleged misrepresentations on credit reports were up significantly in 2006 and overall mortgage fraud has exceeded previous highs, S&P also reported.
The agency said borrower and loan data it used to rate RMBS may not have been accurate. That means important factors it analyzed to judge the risk of these securities -- such as borrowers' credit scores, loan-to-value levels and ownership status -- are proving less helpful in predicting performance, it explained.
S&P methodology changed
Given these problems, S&P said it's changing the way it analyzes and rates subprime RMBS. The agency said it will also apply much of this new methodology to subprime RMBS sold in 2007 (as well as the 2006 vintage) and future transactions.
When a part of a subprime RMBS is downgraded, the next highest-rated tranche will have to have a bigger cushion against losses (known as credit enhancement) to avoid being downgraded too, S&P said. In the past, higher-rated tranches weren't cut if they had the same level of credit enhancement as they had when they were first sold, the agency noted.
Assumptions on severity (how big losses will be when a property goes into foreclosure) have been ratcheted up to 40% from 33%, reflecting the current experience of businesses that service such loans, S&P said.
S&P's expectation for defaults on 30-year hybrid adjustable-rate mortgages with two-year initial teaser rates will jump by roughly 21%.
S&P said it will also step up its monitoring of how well subprime mortgage originators spot and limit fraud. That will include reviews of management experience and capabilities, use of mortgage brokers and other sales channels and underwriting guidelines, the agency explained.
Higher interest rates
S&P's changes will affect subprime RMBS that have already been rated and also securities that have yet to be rated, SCM's Chow explained.
The rating agency's new methodology may dent the pricing of future subprime RMBS and that could feed through to higher interest rates on subprime home loans, he explained.
Right now, roughly 75% of subprime RMBS transactions are rated AAA, while another 10% are rated AA and another 8% are rated single A. A further 7% are rated BBB or lower. The reason it is divided this way is that the lower-rated tranches provide credit support to the higher-rated parts, Chow said.
Under S&P's new system, it might be that only 70% of bonds can be AAA-rated and maybe 10% are AA, 10% are A and 10% are BBB or lower, Chow hypothesized.
"We don't know," he added. "We will get an idea relatively soon, but the full impact of this won't be known for a few months."
The final impact could be that subprime borrowers pay higher interest rates, he said.
When subprime bonds are divided up, the AAA parts sell at a higher price. When you can create fewer higher-rated bonds and have to issue more lower-rated bonds, the overall price has to be reduced. So the proceeds of these bonds will be lower.
That means subprime mortgage originators get less for the loans, which, in turn means the interest rate that prospective subprime home owners have to pay will likely go up, Chow explained.
Originally posted by: senseamp
My SRS is up 5.2% today When it dropped to 85 after Hilton was bought out, I doubled my position. I hope some of you guys didn't listen to Vic, and bought some. I don't think it's too late now, but I would let it pull back a little after a big jump. I am planning to double my position again, that's how strongly I believe that housing market is going down the drain. That's the only thing keeping my portfolio from declining since all my other holdings are down.
Originally posted by: OS
Originally posted by: senseamp
My SRS is up 5.2% today When it dropped to 85 after Hilton was bought out, I doubled my position. I hope some of you guys didn't listen to Vic, and bought some. I don't think it's too late now, but I would let it pull back a little after a big jump. I am planning to double my position again, that's how strongly I believe that housing market is going down the drain. That's the only thing keeping my portfolio from declining since all my other holdings are down.
btw, do you really think it is that important to time in a couple bucks low?
Realistically it doesn't look like the RE market is gonna recover for years.