WSJ article on Mortgage bond Meltdown

http://online.wsj.com/article/SB117150090506509262.html?mod=home_whats_news_us

Efforts by major banks and Wall Street firms to unload bad U.S. housing loans are speeding up a shakeout in the subprime mortgage industry.

As more Americans fall behind on mortgage payments, Merrill Lynch & Co., J.P. Morgan Chase & Co., HSBC Holdings PLC and others are trying to force mortgage originators to buy back the same high-risk, high-return loans that the big banks eagerly bought in 2005 and 2006.

The MSM has awoken to the fact that the MBS market is toast.

Investment-banking firms and investment firms that bought mortgage-backed securities are hiring firms to scrutinize subprime portfolios for loans that violate contracts.

Clayton Holdings Inc. is working with a half-dozen investment-banking firms to identify loans that should be repurchased. Clayton has also been hired by two hedge funds to review mortgage bonds they own for potential repurchases.

The bag holders realize they are holding a "hot potatoe."

Credit Suisse analyst Rod Dubitsky said he expects repurchases to continue to rise for the next six months.

Umm... wait a second. Current repurchases are bankrupting the mortgage companies. Six more months of RISING buybacks?

This means only one thing.

Got popcorn?
Neil

Stock market set for St. Valentine's day Massacre?

Thought for the day:
1. MBS backed bonds continue to fall at a rate only the most bearish bloggers could contemplate.
2. This is putting various hedge funds at risk (when compounded by the deflation in commodities).
3. One decent sized bank failing would "wake up" the system.
4. Several builders have to be feeling the cash flow pinch; an inopportune failure could push the market down.

So... the question, could we have a stock market drop on February 14Th 2007? If so, I already know the name for the day. I'm thinking that the market is getting nervous enough that one bit of bad news late Tuesday could push Wednesday's stock market down.

This could be interesting... maybe not 2/14/2007, but soon. I haven't "felt" a financial environment like this since the dot com bust.

Due to the time its been since we've last had a 2% market correction in a day... I'm not sure the next one will be a single digit correction. In fact, I'm betting before we see a 2% to 4% correction day we'll see an 8%+ correction in stocks.

Got popcorn?
Neil

Take your home equity and run

http://biz.yahoo.com/brn/070208/21029.html?.v=1&.pf=real-estate

Why the blog entry? It amused me to see a MSM article on cashing out and moving

Why? Because I know HUNDREDS of southern California aerospace engineers who need to do this in order to retire at a reasonable level.

Think they'll turn down a transfer to an area where $500k buys a mansion and $400k buys the McMansion on 3/4 acre bordering a forest? Ok, some will. A lot won't.

Interesting times.
Oh, the stock market was interesting today. But still no 2% decline in... forever.

Got popcorn?
Neil

My department should stay in state: mortgage assistance

Well... my department has decided to stay in state. Actually, a couple of departments that are grouped together are tarted to say in the south bay. This has me happy and sad. Happy as I love the south bay and wish to buy there. Sad as I see the home prices and I know a real estate downturn is slow. Incredibly slow.

But one other thing changed. The company is going to offer mortgage assistance. They'll buy it down 50 basis points, pay title insurance, and a few other closing costs. Hopefully this is around in 2 years. :)

This isn't to say my compan isn't moving people out of state. It says nothing about what is happening with other departments or divisions. Heck, the latest rumor is that Boeing commercial satellites is cutting consultants in a big way. Fact? Fiction? I don't know for sure. If you do, please tell. ;)



Got popcorn?
Neil

Best way to find a 3 bedroom apartment?

In a month or two I need to switch to a larger abode. As a bear, I'm certainly not purchasing. Not to mention I'm on a one year assignment.

The best compromise between my job and my fiancee looks to be Santa Clarita, CA. (Where the 14 and 5 intersect, north of the city.) Any recommendations on the lowest cost way to get an apartment/townhouse? We do not want to rent anything that takes effort to take care of (I've been warned, mandatory 60+ hour workweeks for this new position from late summer on.) Recommendations?

I'll certainly be able to save though in 2007! The new waiver came in, I'm salary yet I'm to be paid for every hour of overtime in 2007. :)


I've tried various web services... nothing too exciting. Yes, rents have dropped. Maybe I just have to negotiate? Oh... I'll have no trouble renting (1st, last, deposit is no problem. High FICO, good references, etc.)


Got popcorn?
Neil