Is this guy serious, does he really believe the banks could "LOSE" $80 billion, how many hundreds of billions did they lose during the biggest credit crisis in history, banks were bailed out once before and they will be bailed once again, $80 billion, $800 Billion or even $8 Trillion, it doesn't matter, they will get another round of bailouts so that this passes just as the last crisis passed. They will do what ever it takes to settle this problem and not a single person will have a care in the world why the banks keep getting free bailouts. This economy and the people haven't learned anything from this credit crisis.
Banks Could Lose $80 Billion From Mortgage Mess: Bove
Published: Friday, 15 Oct 2010 | 12:26 PM ET
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By: Jeff Cox
CNBC.com Staff Writer
Banks could face losses of over $80 billion from the foreclosure messânot so much from the moratorium on home seizures but from the flood of homeowner and investor lawsuits likely to follow, analyst Dick Bove said Friday.
The major issue for banks this quarter is that core earnings are going down for the industry, said Richard Bove, financial strategist at Rochdale Securities.
The lawsuits are likely to focus on "fraud at every level of the process"âfrom packaging mortgages into bonds to selling them to investors, the Rochdale Securities analyst said in a note to clients.
The legal fallout could cost the industry more than $80 billion, about 10 times the amount that Bove sees banks losing from the foreclosure halt itself.
"[H]uge amounts of monies have been lost and there are very angry participants at every level of the system seeking to recover the funds that they have lost," Bove wrote.
Financial stocks continued to get hammered Friday by growing worries about the fallout from the foreclosure mess. The KBW Bank Index [BKX 45.47 -0.87 (-1.88%) ] was down 3.3 percent.
S&P Equity cut Bank of America [BAC 12.0104 -0.5896 (-4.68%) ] to "hold" from "strong buy," saying the big bank is not as prepared for the fallout from the foreclosure crisis as JPMorgan Chase [JPM 37.54 -1.18 (-3.05%) ]. S&P also cut its price target for BofA to $14 from $17 as shares of the bank hit a 52-week low.
Earlier this week, attorneys general from all 50 states launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners. The move deepened worries that the use of so-called "robo-signers" to stamp mortgage documents could backfire on banks and lead to fines. Many banks have already voluntarily halted foreclosures while they look into the problem.
The growing mess has sparked fears that U.S. banks' tenuous profitability will be wiped out as they repurchase billions in home loans held by investors in mortgage-backed securities.
"This is a potential cost to factor into long-term profitability," said Jefferson Harralson, Atlanta-based bank analyst with Keefe, Bruyette & Woods "We have to understand banks could be dealing with this on a loan-by-loan basis for years."
Bank of America, the country's largest mortgage servicer, could be forced to repurchase as much as $74 billion in mortgages, according to one estimate by Branch Hill Capital.
"The housing crisis is not over," Bove said. "It has been extended. If the extension is too long everyone will be harmed. The entity harmed the most will be the homeowner making payments on his/her mortgage."
Bove noted that the inability to foreclose will hurt banks somewhat, but will injure homeowners more through declines in property values. When those homes subject to the moratorium come back into the market, the overabundance of supply will cripple prices and send the already-beleaguered market into another tailspin, he said.
"The combination of the moratorium and the lawsuits are likely to cause the major mortgage originators to withdraw from the markets while they deal with their problems. There is no one to replace them," he wrote. "This could cause the rates on mortgages to rise, further depress home mortgage prices, and increase foreclosures."
Housing stocks were reacting to the foreclosure crisis Friday, losing more than 1.5 percent in morning trading.
Banks Could Lose $80 Billion From Mortgage Mess: Bove
Published: Friday, 15 Oct 2010 | 12:26 PM ET
Text Size
By: Jeff Cox
CNBC.com Staff Writer
Banks could face losses of over $80 billion from the foreclosure messânot so much from the moratorium on home seizures but from the flood of homeowner and investor lawsuits likely to follow, analyst Dick Bove said Friday.
The major issue for banks this quarter is that core earnings are going down for the industry, said Richard Bove, financial strategist at Rochdale Securities.
The lawsuits are likely to focus on "fraud at every level of the process"âfrom packaging mortgages into bonds to selling them to investors, the Rochdale Securities analyst said in a note to clients.
The legal fallout could cost the industry more than $80 billion, about 10 times the amount that Bove sees banks losing from the foreclosure halt itself.
"[H]uge amounts of monies have been lost and there are very angry participants at every level of the system seeking to recover the funds that they have lost," Bove wrote.
Financial stocks continued to get hammered Friday by growing worries about the fallout from the foreclosure mess. The KBW Bank Index [BKX 45.47 -0.87 (-1.88%) ] was down 3.3 percent.
S&P Equity cut Bank of America [BAC 12.0104 -0.5896 (-4.68%) ] to "hold" from "strong buy," saying the big bank is not as prepared for the fallout from the foreclosure crisis as JPMorgan Chase [JPM 37.54 -1.18 (-3.05%) ]. S&P also cut its price target for BofA to $14 from $17 as shares of the bank hit a 52-week low.
Earlier this week, attorneys general from all 50 states launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners. The move deepened worries that the use of so-called "robo-signers" to stamp mortgage documents could backfire on banks and lead to fines. Many banks have already voluntarily halted foreclosures while they look into the problem.
The growing mess has sparked fears that U.S. banks' tenuous profitability will be wiped out as they repurchase billions in home loans held by investors in mortgage-backed securities.
"This is a potential cost to factor into long-term profitability," said Jefferson Harralson, Atlanta-based bank analyst with Keefe, Bruyette & Woods "We have to understand banks could be dealing with this on a loan-by-loan basis for years."
Bank of America, the country's largest mortgage servicer, could be forced to repurchase as much as $74 billion in mortgages, according to one estimate by Branch Hill Capital.
"The housing crisis is not over," Bove said. "It has been extended. If the extension is too long everyone will be harmed. The entity harmed the most will be the homeowner making payments on his/her mortgage."
Bove noted that the inability to foreclose will hurt banks somewhat, but will injure homeowners more through declines in property values. When those homes subject to the moratorium come back into the market, the overabundance of supply will cripple prices and send the already-beleaguered market into another tailspin, he said.
"The combination of the moratorium and the lawsuits are likely to cause the major mortgage originators to withdraw from the markets while they deal with their problems. There is no one to replace them," he wrote. "This could cause the rates on mortgages to rise, further depress home mortgage prices, and increase foreclosures."
Housing stocks were reacting to the foreclosure crisis Friday, losing more than 1.5 percent in morning trading.
well nuff said.