3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

[Camtender]

Chris Whalen, can't say enough about him.............. short video from today.

http://www.businessinsider.com/chris...e-gate-2010-10

More indepth analysis from Chris at 1 hour & 9min, must watch, only 10 min, but explains what the bank issues are, some of the best bank analysis you will find

http://www.ustream.tv/recorded/10034...edium=10034228

[tsetsefly]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

The second video is a must watch!

[Camtender]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

The second video is a must watch!

I hope everyone takes the time to download the second video (takes about 30 seconds to start) and fast forward to one hour and nine minute mark. Chris talks about the comming collapse of BofA and Wells due to "loan repurchases".

[GRG55]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

Looks like the banks are fighting back...and the bankers previously known as "fat cats" appear to have the White House on their side on this one?...

Monday, October 11, 2010

Bank Disinformation III: Obama Throws Weight Behind Banks, Housing “Market” Over Borrowers

[tsetsefly]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

I dont get what a national moratorium would do. Not every bank is doing a crappy job as the big four. Why bunch in alot of banks that might not have anything to do with this at all.

[Jay]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

I hope everyone takes the time to download the second video (takes about 30 seconds to start) and fast forward to one hour and nine minute mark. Chris talks about the comming collapse of BofA and Wells due to "loan repurchases".

Awww man, this means I will have to switch banks after all. I've been going with the TBTF theory, so thought the prospect of BoA shutting its doors wouldn't be an issue and have kept my checking account.

[Camtender]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

Awww man, this means I will have to switch banks after all. I've been going with the TBTF theory, so thought the prospect of BoA shutting its doors wouldn't be an issue and have kept my checking account.

They will be saved, so collapse not the best term. TARP 2.0 anyone?

[FRED]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

We like Chris but we're not with him on the BoA failure forecast. The trend in non-performing loans tells a different story.

Even if the trend reverses for some reason, the US Treasury market will be thrown under the bus before any major US bank.

[photoncounter]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

We like Chris but we're not with him on the BoA failure forecast. The trend in non-performing loans tells a different story.

Even if the trend reverses for some reason, the US Treasury market will be thrown under the bus before any major US bank.

Citi expects U.S. banks to outperform in near-term

(Reuters) - Citigroup said stocks of large U.S. banks such as Wells Fargo & Co, Bank of America Corp and JPMorgan Chase & CO are likely to outperform in the near-term, driven by better-than-expected third-quarter results.

The brokerage said the bar set for the larger banks in the third quarter is quite low, and they have a strong chance of surprising on the upside through better margin trends and optimism on loan outlook.


Wells Fargo is expected to report strong results from its mortgage banking operations, while JPMorgan's beat will be driven by a combination of better-than-expected fees from the investment bank and credit improvement, Citi analysts said.
...........

http://www.reuters.com/article/idUSTRE69A3AK20101011

[thriftyandboringinohio]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

I dont get what a national moratorium would do. Not every bank is doing a crappy job as the big four. Why bunch in alot of banks that might not have anything to do with this at all.

It puts the entire industry on notice that we will not tolerate fraudulent court filings.
Hanging a horse thief stops one thief plus it deters many others in the future.

[Camtender]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

We like Chris but we're not with him on the BoA failure forecast. The trend in non-performing loans tells a different story.

Even if the trend reverses for some reason, the US Treasury market will be thrown under the bus before any major US bank.

I don't think you can look at the entire population of non-performing and extrapolate that to the MBS guaranteed by the GSEs, I think the product mix of the loan porfolio is an important consideration given the current situation.

Fred, did you read the BAC SEC filing Chris was referring to? Do you want to graph the increase in BAC repurchases to your "non -performing loan" schedule and see that they are going in different directions?

Per the BAC 10Q dated 8.6.2010.

http://services.corporate-ir.net/SEC...95&fid=7073183

Representations and Warranties Obligations and Corporate Guarantees

"The Corporation securitizes first−lien mortgage loans, generally in the form of MBS guaranteed by GSEs. In addition, in prior years, legacy companies have sold pools of first−lien mortgage loans and home equity loans as private label MBS or in the form of whole loans. In connection with these securitizations and whole loan sales the Corporation and its legacy companies made various representations and warranties to the GSEs, private label MBS investors, financial guarantors (monolines), and other whole loan purchasers. These representations and warranties related to, among other things, the ownership of the loan, the validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, the process used to select the loan for inclusion in a transaction, the loan’s compliance with any applicable loan criteria established by the buyer, including underwriting standards, and the loan’s compliance with applicable federal, state and local laws. Violation of these representations and warranties may result in a requirement to repurchase mortgage loans, indemnify or provide other recourse to an investor or securitization trust. In such cases, the repurchaser bears any subsequent credit loss on the mortgage loans. The repurchaser’s credit loss may be reduced by any recourse to sellers of loans for representations and warranties previously provided. These representations and warranties can be enforced by the investor or, in certain first−lien and home equity securitizations where monolines have insured all or some of the related bonds issued, by the insurer at any time over the life of the loan. However, most demands for repurchase have occurred within the first few years of origination, generally after a loan has defaulted. Importantly, the contractual liability to repurchase arises only if there is a breach of the representations and warranties that materially and adversely affects the interest of the investor or securitization trust, or if there is a breach of other standards established by the terms of the related sale agreement...........

Although the timing and volume has varied, repurchase and similar requests have increased from buyers and insurers including monolines. However, a very limited number of repurchase requests have been received related to private label MBS transactions. A loan by loan review of all repurchase requests is performed and demands have been and will continue to be contested to the extent not considered valid. Overall, disputes have increased with buyers and insurers regarding representations and warranties. At June 30, 2010, the unpaid principal balance of loans related to unresolved repurchase requests previously received from investors and insurers was approximately $11.1 billion, including $5.6 billion from the GSEs, $4.0 billion from the monolines, and $1.4 billion from other investors, and $33 million from private label MBS transactions. Comparable amounts at December 31, 2009, were approximately $7.6 billion, including $3.3 billion from the GSEs, $2.9 billion from the monolines and $1.4 billion from other investors, and $30 million from private label MBS transactions............

At June 30, 2010, the unpaid principal balance of loans related to unresolved repurchase requests previously received from monolines was approximately $4.0 billion, including $2.3 billion that have been reviewed where it is believed a valid defect has not been identified which would constitute an actionable breach of representations and warranties and $1.7 billion that is in the process of review. At June 30, 2010, the unpaid principal balance of loans for which the monolines had requested loan files for review but for which no repurchase request has been received was approximately $9.8 billion. There will likely be additional requests for loan files in the future leading to repurchase requests.........."

Is Chris the only one who thinks that these amounts might cause BAC some cash flow issues going forward? Remember, the repurchases are true cash flow expenditures?????????????????

[Kadriana]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

It puts the entire industry on notice that we will not tolerate fraudulent court filings.
Hanging a horse thief stops one thief plus it deters many others in the future.

Oh, but I just heard some Bartlett guy on CNBC. People who are being foreclosed on don't want foreclosures suspended. They want all these foreclosures to be over with. Oh, and there isn't anything fraudulent with what's been going on. It's just a couple people signed the wrong papers and the judge sent them back and then they signed the right papers. Nothing fishy going on at all.;)

[ThePythonicCow]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

Awww man, this means I will have to switch banks after all. I've been going with the TBTF theory, so thought the prospect of BoA shutting its doors wouldn't be an issue and have kept my checking account.

I figure that JPMorgan Chase is the quintessential too big to fail bank, the last man standing if TSHTF. I have a small account there, like a squirrel storing a few spare nuts in an odd place, just in case. I've also made a little on the deal. Chase hands out $100 once per year to open a new checking account; twice now I've opened the account, avoided any fees (not easy), and collected my $100.

My favorite bank for my main activity is USAA. It's customer service is excellent. Its size is perhaps number 20 in the nation ... I forget exactly. It might have an exposure on the Commercial Real Estate side, I don't know. But they were rather conservative and limited in their Residential Real Estate, only extending second mortgages below 70% equity and on bone fide excellent credit.

[mesyn191]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

Even if the trend reverses for some reason, the US Treasury market will be thrown under the bus before any major US bank.

Wouldn't it be the other way around? If the currency goes tits up then the banks/rich would be screwed anyways.

[ThePythonicCow]

Re: 3-6 Months Until "Foreclosure-Gate" Really Gets Out Of Control

Even if the trend reverses for some reason, the US Treasury market will be thrown under the bus before any major US bank.

Wouldn't it be the other way around? If the currency goes tits up then the banks/rich would be screwed anyways.

What has been the case so far? When the big banks got in trouble in 2008, who paid who a trillion dollars, give or take a big political smoke screen, to stay in business? Who since then has been providing who a steady stream of income off the difference between short and medium term interest rates, and in interest on "reserves" (stashed securities of sometimes dubious value), all such payments courtesy of the US Treasury and American taxpayers, via increasing US debt?

In each case, it seems that the big banks get their way.

Note also that FRED said the Treasury market would lose, if push came to shove, to the big banks. He didn't say currency. The interplay between the Dollar and Treasury debt is, I submit, not that obvious.

The Fed (a consortium of the big banks) is the second biggest holder of Treasury debt (second only to China), and absolute dominates in the steady drumbeat of Treasury debt refinancing (or monetizing) operations. If we are all doomed, then we are all doomed. But if it comes down to a choice between the big banks (and their wholly owned subsidiary, the Fed) and the U.S. Treasury, the big banks are in the drivers seat, and have shown no shortage of willingness or cunning to do whatever it takes to survive.

If a big bank does fail, it will be because another, bigger, bank ate it for lunch.

Oh - one more thing - who controls the currency? The Fed.