Posted on 08/22/2007 5:03:44 AM PDT by Hydroshock
Countrywide Financial (CFC - Cramer's Take - Stockpickr - Rating) isn't the only big bank threatened by the deepening real estate crisis.
An analysis of the largest 20 banks and thrifts by TheStreet.com Ratings shows that four institutions are under-reserved for possible credit losses, a red flag as the economy slows and mortgage defaults rise.
Perhaps more troubling, the numbers show that one of those institutions -- Washington Mutual (WM - Cramer's Take - Stockpickr - Rating) -- could join Countrywide in facing serious liquidity problems as worries about the housing and mortgage markets multiply. Meanwhile, another big lender, National City (NCC - Cramer's Take - Stockpickr - Rating), could see its earnings and dividend come under pressure as a result of its low reserve levels.
Neither Washington Mutual nor National City immediately returned calls seeking comment. But the findings come as investors confront a rising tide of bad news in the U.S. credit markets. Foreclosures nearly doubled last month from a year ago, RealtyTrac reported Tuesday. Shares in bank and brokerage stocks have dropped sharply this summer. Countrywide alone has shed $13 billion in market value this year.
With the financial sector under increasing stress, TheStreet.com Ratings checked two key ratios to measure the strength of big banks' balance sheets: loan-loss reserves as a percentage of nonperforming loans, and nonperforming assets as a proportion of core capital and reserves.
(Excerpt) Read more at thestreet.com ...
How much advertising is bought on TV, newspapers and the internet for mortgage schemes? Trouble in this sector is going to have a dramatic effect on advertising revenue for all media.
This signals that the current credit cycle is over and risk premiums are going back to normal levels.
Too bad the debt junkies have to go into withdrawl because the economy became dependent upon their free spending ways.
BUMP
I think we have no were near seen the worst yet.
ping
The mortgage industry has a lot to answer for. For years they have been pushing products that encouraged people to buy houses they couldn’t afford and WaMu has been one of the biggest offenders. What with teaser rates, balloon payments, interest-only loans, negative amortization loans (loans that actually increase your debt despite your payments), WaMu and many others in the industry deliberately set up their customers so they would have to refinance their homes every five to ten years just so people could afford their increasing payments on houses they never should have bought in the first place. Frankly, it was a form of Ponzi scheme. It was bound to collapse and now the American economy is going to pay the price.
I chose 26 month Treasurys two weeks ago and wondered why the fellow I was dealing with was pushing the WAMU CD’s so hard.
26 month is supposed to be 26 WEEK...
B-B-B-B-B-B-B-BOOYAH FROM TEXAS!
I know this, I am happy my primary accounts are in a crexdit union that does not do mortgages.
BooYah! Countrywide, WaMu and Thornburg get a sell!
No, I have a very good rate thru BofA.
BofA is a BUY!!
What does that mean for people who have a mortgage with WaMu, I wonder?
Nothing yet, but it could mean that WAMU has to sell off some assests to raise cash in a hurry.
Commercials are running out here saying, "Borrow $ 100,000 for payments of only $ 250 per month." That must be based on a low 'teaser' rate. Details are not being disclosed by the television ad. But I suspect there is a much higher rate fall back rate. Suckers will wake up in two years and discover they owe $ 128,000 with a balloon payment due.
Then they will face foreclosure within 90 days. With additional late charges, penalties and legal fees they will probably owe about $ 150,000.
These schemers are all the same. They want to SEAL HOUSES!
That is why you always get a fixed loan.
EMC Mortgage is owned by Bear Stearns . . . Need I say more?
All those high risk loans. From mortgage companies based in California. Is it any wonder that there is MASSIVE credit bubble today ? All those people agreed to pay too much for houses in California 'Bubble Land.'
LOL ! LOL !
Countrywide appears to be trying to advertize its way out of financial crisis. Problem is there are not many customers out there.
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