I REPEAT THESE ARE RUMOURS ONLY BUT THE BROKER LINES AND SQUAWK BOXES ARE ALL TALKING ABOUT A MAJOR WEST COAST BANK/HOUSE IN TROUBLE. ALL TO DO WITH SUB PRIME ALT A EXPOSURE. AGAIN RUMOURS ONLY BUT SIGNIFICANT AMOUNT OF TRAFFIC REPORTING IT AND CALLING IT IN. NOTHING CONCRETE TO REPORT AT MOMENT.
Oh yeah...no doubt that the Alt-A companies are going to be in a lot of trouble. I think it's the next big lending crisis and is a lot larger than the subprime scare. CNN reported on it. Herb Greenberg has talked about it. Bloomberg had an article about it. Read the thread and news items I posted yesterday in another thread calls Alt-A something or other.
I actually believe it, that is one of the hottest real estate markets around that is finally starting to sell off.
'People's Choice' They already filed Chapter 11. http://money.cnn.com/2007/03/20/news/companies/people_choice.reut/ Mortgage lender People's Choice files bankruptcy The California-based subprime lender is seeking protection from creditors after struggling with delinquencies and defaults. March 20 2007: 1:54 PM EDT NEW YORK (Reuters) -- People's Choice Home Loan Inc., a California-based mortgage lender to people with poor credit histories, filed for Chapter 11 bankruptcy protection from creditors Tuesday, according to court papers. The Irvine, California-based company became at least the fourth large U.S. subprime lender to seek protection from creditors in the last three months. Many subprime lenders have struggled from rising delinquencies and defaults, and more than two dozen have quit the industry in the last year. People's Choice has wholesale lending and retail lending units, with the latter serving borrowers with less-than-perfect credit, according to the company's Web site. Founded in 1999 by Neil Kornsweit, its chief executive, People's Choice has retail offices in four states and wholesale offices in eight, and employs about 1,150 people nationwide, the Web site said. The company listed more than $100 million of assets and more than $100 million of liabilities in its filing with the U.S. Bankruptcy Court for the Central District of California. On March 14, People's Choice's parent, People's Choice Financial Corp., withdrew plans with U.S. securities regulators to register common stock, citing "various business and market reasons." People's Choice and its lawyers did not immediately return calls and e-mails seeking comment. Subprime mortgage lenders that recently sought Chapter 11 protection include Mortgage Lenders Network USA Inc., Ownit Mortgage Solutions Inc. and ResMae Mortgage Corp. Others, such as Irvine-based New Century Financial Corp. (down $0.21 to $1.96, Charts), have cut jobs in the last month.
I happened to hear a housing expert interviewed on NPR today say that 2 million foreclosures are expected in the next two years -- one mortgage in 5, or 20%! I believe this would be the largest number of foreclosures ever, and largest percentage since the Great Depression. Not a very cheerful thought either for the market or the many families who will be affected. Given this estimate, it is quite understandable that subprime lenders will be in trouble, but it seems unreasonable to think that the mainstream lenders will escape unscathed. If you dump twenty percent of mortgaged houses on the market over two to three years, an awful lot of remaining mortgages are going to go upside down because of declining prices. Imagine the beating you would take if you find yourself in the position of having to move and pay off your current mortgage.
This isn't a subprime problem in my opinion...there is going to be a bigger catalyst . Option ARM loans are fucking SCARY and when they reset, if prices have dropped, the homeowner will owe a shitload more than the house is worth, especially in a declining market. There are going to be mass defaults in my opinion. This is just starting now.
The West Coast market has been "correcting" for a full year now. It is not " finally starting to sell-off" as you stated. Totally inaccurate.
What do you mean correcting? Not all areas of California have "corrected" as of yet...what you stated is only slightly inaccurate, if that makes you feel better.