Paulson Sees More Home Loan Defaults in 2008

http://www.cnbc.com/id/21909849 ^ | 11-21-07

[Hydroshock]

U.S. Treasury Secretary Henry Paulson said the number of potential U.S. home-loan defaults "will be significantly bigger" in 2008 than in 2007, the Wall Street Journal's online edition reported.

AP Treasury Secretary, Henry Paulson --------------------------------------------------------------------------------

"The nature of the problem will be significantly bigger next year because 2006 (mortgages) had lower underwriting standards, no amortization, and no down payments," Paulson said in an interview with the Wall Street Journal on Tuesday, according to an excerpt on the newspaper's Web site.

"We'll watch carefully mortgages that will be reset," Paulson was quoted as saying.

The newspaper said Paulson was pressing the mortgage-service industry to help a broad range of borrowers become eligible for better loans instead of dealing with mortgage problems on a case-by-case basis.

Currency traders in Tokyo cited Paulson's comments as a factor in the dollar's fall to a two-year low of 108.89 yen on electronic trading platform EBS on Wednesday, the lowest since September 2005.

[Hydroshock]

Economy/Credit/housing Issues Ping List

If you want on or off this list let me know

[Proverbs 3-5]

Paulson for President!!

[Proverbs 3-5]

Presidential Campaign Slogan: "I've upped my standards. Now, up yours."
wikipedia.org/wiki/Pat_Paulsen"

The article mentions the Smothers Brothers. It's funny I liked them when I was growing up. My parents had a comedy album of theirs. But once I grew up and started hearing them in other venues and heard their goofy personal views on things I got to where I can't stand them...

[Moonman62]

The newspaper said Paulson was pressing the mortgage-service industry to help a broad range of borrowers become eligible for better loans instead of dealing with mortgage problems on a case-by-case basis.

The mortgage industry is running out of capital. Look at the stock prices of Fannie Mae and Freddie Mac the past six weeks, especially yesterday.

[Hydroshock]

Fannie and Fredie are both scrambling to get cash.

http://www.freerepublic.com/focus/f-news/1928779/posts

[ex-Texan]

Wall Street Seen Falling as Oil Nears $100 . . .

Pump Prices Are Going Up in Beverly Hills -- Learn More: Click Image

Wall Street Seen Falling as Oil Nears $100

Shares Falling in Europe. After Shares Fell in Asia . . . Ouch !

[Moonman62]

I know, which makes your desire to have the Fed raise interest rate even more ridiculous.

[Hydroshock]

I am more worried about the value of the dollar and inflation then housing.

[Travis McGee]

I wonder if Paulson considers his “real job” to be treasury secretary, or shadow CEO of Goldman Sachs, his last and next job?

Ain’t it a cozy arrangement? And on the financial channels, the professional touts pretend wonder at Goldman Sach’s amazing run, even as the other investment banks and major brokerages slip and fall.

[Travis McGee]

Where will Fannie and Freddie get fresh injections of capital? Are they going to ring bells outside of department stores and in malls?

[Hydroshock]

Maybe their dear old Uncle Sam? If they go under look for the housing prices to nose dive.

[Moonman62]

Are you for intervention to protect the value of the dollar?

[ex-Texan]

Bernanke 's Mistake: Subprime Crisis Yields Subprime Currency

Excerpt:

Given that the Fed and European Central Bank have already injected well over $150 billion since August, Bernanke obviously lied about his ballpark figure. But just how big is this subprime mess?

To measure subprime losses, we have to first find out the size of the subprime market. Fed data pegs the total US residential value at $20 trillion and the US residential mortgage market at $10 trillion. This number is substantial, as it eclipses the US treasury market of $9 trillion.

As we have shown in the pie chart above, this 80% haircut applies to potentially $2 trillion worth of mortgages if investors of those mortgages were to exit today. The loss is not $150 billion, but more like $1.6 trillion.

What's more, the ABX shows that since September 2007, the value of AAA mortgages has begun to crater, and now trades at a stunning 70 cents on the dollar. This means if all AAA and Alt-A mortgage portfolios were to be marked to market, the loss would amount to another $2 trillion.

'Marked to Market' . . . Total $ 3.6 Trillion. . . . LOL, LOL !

Happy Thanksgiving!

[Hydroshock]

Yes, we need to fight inflation and shore up the dollar.

[sierrahome]

Back in the 1980’s I was managing a bank branch and folks were coming in to refi to get that “great” 10.5 and then allllll the way down to 9.875% rates. Seeing the end of the Carter era was a wonderful thing. Anyway, the only thing we had out on the street was a 30 year and a 15 year both fixed and at 80% or under. The basic (quick) qualification was that your new mortgage payment could not top 26% of your gross income and your total bills including the new mortgage was 36%. Nothing was going to happen until we had 2 years bank statements, written verification from employers and on open credit, a REAL appraisal and at that time an attorney letter reviewing the title of the house.
Anyway, that little 26/36% rule is something that is just a good rule of thumb in life but even that is a bit of a stretch when you do the math.

[Moonman62]

The destruction we’re seeing in the financial markets now is very deflationary, and it’s also way out of proportion to the problems with subprime loans.

[Hydroshock]

Sub prime was just the symptom. The disease is debt.

[rightinthemiddle]

2.89 in Missouri.

[ex-Texan]

Average Prices >>>>>.. Portland >>>>>.. USA

Today >>>>> >>>>>.. 3.095 >>>>>>>> 3.078

One Month Ago >>>>> 2.932 >>>>>>> 2.828

One Year Ago >>>>>.. 2.49 >>>>>>>>.. 2.28