"Prime" mortgage crisis

C

cgtrader

Forget the Subprime, Prime mortgages are the next catastrophe.

That's according to Jim Willie at Goldenjackass.com

I had the pleasure of watching him speak twice this weekend.

A good article that touches on the subject with the problems Fannie Mae faces.

"Fannie Mae has $227 billion of exposure to mortgage loans in which the LTV ratios are greater than 90%. Fannie Mae has just $39.9 billion of shareholder equity to absorb these losses."

http://www.thestreet.com/s/fannie-f...tools-serious-investors/10399882.html?puc=_dm
 
The use of irredeemable currency permeates practically all aspects of our economic, social, and political system and provides yet another
instance of how "corruption grows as naturally as fungus on a muck heap"

Andrew Dickson White in his classical book Fiat Money Inflation in France
 
add credit card delinquencies on top of that as well......ITS FAR FROM OVER.


I remember talking to some people about housing and I said its going to take a long time to recover from this, they laughed of course. The bottom is FAR from over, I see another 10-15% drop in housing prices by end of 2008, foreclosures are going to SKYROCKET in 2008 to 2 million, this should put more houses on the market dropping prices dramtically. I see some homebuilders filing for ch 11 as well. No bottom for at least 5 years. Housing prices should start to bottom in 2012. Prices will remain flat to down for at least another 4-5 yrs and start to move higher probably by 2015-2017.
 
You guys are looking in the wrong corner.............


Watch commercial real estate, that's the next "shoe to drop":D

PS. The same lax underwriting was going on. I had a dentist friend that re-financed 2 commercials buildings, 100%, with no appraisal. That was over 2 years ago, right at the height of the refi boom.
 
Quote from Arnie:

You guys are looking in the wrong corner.............


Watch commercial real estate, that's the next "shoe to drop":D

PS. The same lax underwriting was going on. I had a dentist friend that re-financed 2 commercials buildings, 100%, with no appraisal. That was over 2 years ago, right at the height of the refi boom.
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Have any articles or websites to look at on this commercial real estate story?
 
I posted one from the WSJ a week or so ago.

All the things they did with sub prime, they did in commercial...
Cdo's, low doc loans, high loan/value, no appraisals, etc...
Another thing to keep in mind is that developers tend to get ahead of the market. Everyone sees the same opportunity and by the time tey get THEIR project started, 3-4 other guys are doing the same thing. Once you start, its hard to just stop. Just look at the condo market in So Fla. You can't build half of a building. Once you start, you are committed, even if it doesn't make sense any longer.

I don't mean to sound like a doom and gloomer, but I really think the banks/Wall St. have some exposure here.
 
Quote from Arnie:

I posted one from the WSJ a week or so ago.

All the things they did with sub prime, they did in commercial...
Cdo's, low doc loans, high loan/value, no appraisals, etc...
Another thing to keep in mind is that developers tend to get ahead of the market. Everyone sees the same opportunity and by the time tey get THEIR project started, 3-4 other guys are doing the same thing. Once you start, its hard to just stop. Just look at the condo market in So Fla. You can't build half of a building. Once you start, you are committed, even if it doesn't make sense any longer.

I don't mean to sound like a doom and gloomer, but I really think the banks/Wall St. have some exposure here.
More...


Have a look what happened to commerical building construction due the Asian Financial Crisis in 1997. These pictures are from last year - ten years later.

1997-sv-city-2.jpg


http://www.thailandguru.com/1997-asian-financial-crisis.html

http://en.wikipedia.org/wiki/Asian_financial_crisis
 
Quote from S2007S:

add credit card delinquencies on top of that as well......ITS FAR FROM OVER.


I remember talking to some people about housing and I said its going to take a long time to recover from this, they laughed of course. The bottom is FAR from over, I see another 10-15% drop in housing prices by end of 2008, foreclosures are going to SKYROCKET in 2008 to 2 million, this should put more houses on the market dropping prices dramtically. I see some homebuilders filing for ch 11 as well. No bottom for at least 5 years. Housing prices should start to bottom in 2012. Prices will remain flat to down for at least another 4-5 yrs and start to move higher probably by 2015-2017.
More...

as someone who has witnessed 35 plus years(23 yrs as an adult) of the construction industry ups and downs i can agree and disagree. this downturn will "over sell" to the down side; but i see 3 years max until people forget and start speculating again. the drive to buy a home and maintain it is something that people of all socioeconomic levels will persue harder than you may think. i remember the s &l crisis was huge (100 billion plus in 1990 $$) and everyone thought it would last for a decade. by 93 we were emerging and forgeting all ill's. hell, in 90 i bought a condo at auction for 166k that a year earlier went for 300k.

i will go on record as saying this downturn will reverse starting in 2010. watching history (i don't believe the last boom/bust was any smaller than this one), and my obvious bias is where i am coming from. again, i agree with all you say, except your assessment of the length of the downturn.
 
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